How we… reduced rent arrears to an all-time low

What was the problem?

In July 2017 Lancaster became a Universal Credit (UC) ‘full service’ area, meaning many of Lancaster City Council’s tenants began to receive UC.

Before this, Lancaster historically had very low rates of rent arrears (around 2%), due to it being a stock-holding council, which meant the majority of its tenants were on housing benefit with their rent being paid directly to the council’s rent accounts.

But when UC full service started, the income team began to see rent arrears increasing.

Many tenants were struggling to cope with the complete U-turn in the way their benefit income was being paid, switching from staggered payments from multiple sources such as job seekers allowance, employment and support allowance, child benefit and housing benefit, to one large monthly payment.

The problem was exacerbated by delays in starting a new claim – initially six weeks between starting a claim and receiving money. Tenants who had never been in rent arrears before were becoming upset, angry or scared that they could be evicted.

Lancaster’s income officers were equally unprepared for the change, with little understanding of how UC payments worked, and suddenly having to chase tenants who had never been in rent arrears for money. Tenants were asking them: “How can I pay you when I have no money left?” Officers were stressed and struggling to see a way out of the situation.

What was our solution?

In 2018 the council redirected budget from income to staffing, in order to recruit a specialist income manager with a vision of what income collection would look like under the new UC system, plus two household intervention officers. 

In July 2018 I was recruited as the income manager. Using my background in tenancy support, debt advice and benefits, I could see that the way to prevent the escalation of increasing rent arrears was to retrain the income collection team to focus on preventing rent arrears, rather than chasing them.

In the first two years, I developed a team of highly trained income management officers, trained by me and external providers, and expanded the team from four officers to five. In 2021 I recruited an additional income management officer and household intervention officer after the case was made for an increased staffing budget.

The officers became highly skilled in benefits, income maximisation and factors that can influence tenancy sustainment – including debts and health issues.

I also developed a process of pre-tenancy assessments – tenancy health checks – to identify vulnerabilities and barriers that tenants might face in sustaining their tenancies. Where possible, we put plans in place to deal with these issues, including assistance with benefit claims, and with access to external funds and support from external agencies.

All new tenants go through the assessment with our household support team, and information is then shared with all resident-facing teams – including income teams, housing officers, community safety officers, independent living officers and income maximisation officers – so they aware of any support a tenant needs while working with them.

At Lancaster we do not use any automation in our rent collection process. Our strategy is to prevent tenants from getting into rent arrears wherever possible, and, if not possible, to identify any issues early on and support tenants to remedy them by working together to develop a sustainable payment plan.

Tips for housing officers

• Invest time in getting to know tenants. The more you know your tenants, the better equipped you will be to help them with income issues
• Understand the root cause of the problem. Understanding why the rent has not been paid is important to help find a solution
• Understand the barriers that can cause a tenancy to fail, and how to help a tenant reduce or remove these barriers
• Concentrate on preventing rent arrears, rather than chasing rent arrears

Tips for housing managers

• Give your tenants the tools they need to sustain a successful tenancy
• Make sure all front-facing officers know what help is available to their tenants
• Make sure all front-facing teams work together. A successful tenancy means more than just paying rent on time
• When recruiting income officers, seek out staff who can provide the support tenants need, especially around income maximisation and benefits knowledge – they will be the most effective income officers

What was the outcome?

The strategy proved highly successful and rent arrears have reduced year-on-year – including since Ella Hewitt, one of the income management officers, took over as income manager in July 2023 following my promotion to community housing manager.

Since 2017, rent arrears have fallen from 2.08% to an all-time low of 0.4%. However, a reduction in rent arrears is not the only benefit that has come from the implementation of our prevention strategy.

Other benefits:

• We have seen a significant reduction in court applications and evictions
• There is a significant reduction in our tenancy failures
• There is a positive impact on our tenants’ health and well-being, demonstrated by a wealth of positive feedback from tenants
• We now have more tenants in credit than we do in arrears – giving those tenants security that if their circumstances changed, their home would not be at risk

What were the challenges?

While the rent strategy proved highly effective, we came across other barriers that were affecting the success of tenants – including furniture poverty.

We identified an organisation that provides furniture via a rental scheme, and in 2022 we began offering furniture packages that tenants can pay for through a service charge, covered in full by their benefits.

Key takeaways for other landlords

The strategy I employed at Lancaster can be easily used by other social landlords. It is about redirecting focus away from chasing debts when they exceed a particular amount, and towards prevention and low-level arrears.

Do not let tenants get into hundreds or thousands of pounds of arrears before you take action, because this can seem like an uncoverable position for the tenant; they will be less likely to engage if they can’t see a way back.

And always look to solve the case, not just fix the problem at hand. Be understanding: in my experience, tenants want to pay their rent, and do not want to be in arrears, but may not know what help is available. I have yet to find a tenant who is unable to pay their rent and clear their arrears.

Make sure your officers are knowledgeable in income maximisation and benefits. Too little knowledge can be a dangerous thing, and tenants can face consequences if they follow misguided advice, so either train your officers or make sure you have a good relationship with a specialist support service or external agency such as Welfare Rights or Citizens Advice (I prefer in-house as you can lose tenants’ engagement by referring elsewhere).

At Lancaster, the way we mentor and support our resident-facing staff has been key to our successful and long-serving team (between them our five income management officers have 100-plus years of service at the council). As managers, we are very hands-on and integrated with our teams. And we do not set individual targets for our officers – they very much collaborate as a team to help each other with workload and difficult cases.

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