Opinion: landlords should get systems in place before Universal Credit

Published by Max Salsbury for 24dash.com in Universal Credit and also in Communities, Housing

Here Claire Turner, director of the Landlord Information Network (LIN), argues that landlords should take steps to prepare for Universal Credit before payments are made direct to tenants.

The majority of social sector tenants are reliant on the housing benefit system in order to pay their rent. According to the latest English Housing Survey, 63 percent of social sector tenants are in receipt of housing benefits.

With the under-occupation charges looming, benefits being slashed and restricted and with housing costs soon to be paid directly to tenants under Universal Credit, we at LIN believe that the key to weathering the forthcoming threat to landlords' income collection is to set in place solid foundations, before attempting to tackle the myriad of welfare reforms.

Social sector landlords will need to find the right balance between operating as a business whilst still supporting vulnerable tenants – get it wrong and the consequences will be dire.

At LIN we believe one of the most important parts to building a solid foundation is to know your tenants - tenant profiling is a vital and key contributing factor to developing a successful strategy to minimise the impact of welfare reforms and maximise the amount of rental income you collect (if the right questions are asked).

The DWP Direct Payment Demonstration Projects first report states: "Social landlords neither hold, nor have ready access to the information necessary to assess tenants' readiness for direct payment and support needs. Landlords themselves reported having been surprised at how little they know about their tenants."

Equality and Diversity data may have been the name of the game under the Audit Commission regime. However, knowing the religion of your tenants won’t tell you whether they can access the internet in order to make a claim for Universal Credit. Landlords need to decide which questions to ask of their current and future tenants in order to shape services and to maximise rental income collections in order to minimise arrears.

Now is the time to think about what new information landlords need in order to help you pro-actively plan for the introduction of the unprecedented changes to the benefits system.

LIN has worked with a number of landlords whose tenant profile questionnaires fail to collect the information needed to minimise the impact of welfare reforms. We work with landlords to drill down the list of questions on a tenant profiling form in order to establish the questions that you need answers to from your tenants.

Ask yourself these questions:

• Are your current tenant profiling questionnaires fit for purpose?
• Do they collect the right information to enable you to target your scarce resources to the areas where your risks are the highest and where extra resources will have most impact?
• Why am I asking this question?
• What am I going to do with the answers I get back?

Tenant profiling requires landlords to collect detailed profiling information on each and every one of their tenants, partners and any other household members, in order to understand the make-up of the household, income details, financial stability, preferred payment methods, debts, access to bank accounts, IT access, support required, vulnerabilities etc.

Landlords need to take into account data protection issues and need to remember that it’s also very important to profile all tenants, not just tenants in receipt of housing benefit – remember, no-one’s job is secure in a double dip recession.

A successful tenant profiling exercise also requires staff to be on board. Staff should understand why the information is required, what it will be used for and the consequences and implications of the welfare reforms on income collections (run welfare reform workshops for all staff, not just the select few).

Remember, poor cash flow is the thing that can crush the life from any business.

A recent National Housing Federation report suggests 84 percent of associations believe that rent arrears will increase as a direct result of welfare changes, with the average increase expected to be 51 percent. If this is replicated across the sector it would mean an additional £245m of arrears.

Add to this the recently published, second DWP Direct Payment Demonstration Project report which quotes one of the participants, Bron Afon Housing Association, as saying "Payments are taking longer to arrive and the trend we are seeing in arrears is an adverse upward one". This is particularly worrying as Bron Afon stated in the same report that "this is a concern as with one member of staff to every 160 tenants in the project our collection costs have risen significantly".

Following a recent LIN poll of social sector landlords, we have found that average patch sizes for rent recovery/income management staff dealing with arrears cases of £30+ is 475 arrears cases per member of staff, with patch sizes as high as 823 arrears cases per member of staff in some associations.

If social sector landlords have to triple the number of arrears staff (in-line with the findings of the Direct Payment Demonstration Project findings) this is also going to significantly increase collection costs. However, don’t despair as there are pro-active steps that landlords can take to protect their income, some of which have been mentioned above.

At LIN we have both social and private sector landlords as members and we policy track benefits from a landlord’s perspective on behalf of both sectors – which is a significant advantage to our social sector members, as they gain knowledge from the lessons learnt by private landlords following the introduction of Local Housing Allowance in 2008, when housing benefit payments started being paid directly to private sector tenants.

In addition we are working with both social and private sector landlords to ensure that income is maximised for both tenants and landlords in order to minimise arrears.

Claire Turner (pictured) is a corporate member of the Chartered Institute of Housing and a board member of the Sheffield credit union.