Universal Credit demonstration projects: 25% of tenants have direct payments switched back to landlord
Published by Jon Land for 24dash.com in Universal Credit and also in Bill Payments, Central Government, Housing, Local Government
Universal Credit demonstration projects: 25% of tenants have direct payments switched back to landlord
More than a quarter of tenants involved in the universal credit direct payment demonstration projects have had the payments switched back to their landlord, according to the latest figures from the Department for Work and Pensions.
A total of 4,719 tenants involved in the projects are currently paid by direct payment, another 1,647 tenants had been paid by direct payment but have now had the payments switched back to their landlord.
A further 107 tenants have had payments switched forward, so direct payments have been restored after a period of managed payments.
The latest update on the DWP pilots also show that rent collection rates across the six projects vary from 89% to 97%, with the average standing at 94%.
The figures have been calculated by comparing total payments received against the total rent charged for the first 14 payment periods in England and Wales’ projects and the first 13 payments in Edinburgh.
Lord Freud said: "I want to thank the councils and housing associations across the country that have helped with the demonstration projects. Their work has been invaluable ensuring claimants can benefit from direct payments, while strong protection is in place. I am pleased the learning from the projects has already influenced the design of universal credit.
"Paying housing support directly to claimants will break barriers that people face when moving into work. I hope social landlords will use the learning from the projects to begin preparing and start direct payments early ahead of universal credit."
Here is some of the feedback from the six projects:
• Dunedin Canmore Housing Association in Edinburgh, working in association with The City of Edinburgh Council
"Our involvement in the Project has demonstrated that the majority of tenants do take responsibility for paying their rent, although other landlord and service delivery activities had been limited due to the resources required in contacting, providing advice and collection to the DPDP participants.
"As a direct result of our experience we have taken the opportunity to re-organise and re-structure our housing management services. We have established a dedicated debt recovery team, enhanced support provision and introduced revised tenancy engagement practices which are proving to be successful. We have to date managed to stabilise arrears despite the introduction of the Spare Room Subsidy.
"Interestingly DCH has identified that a large number of those tenants in receipt of direct payment and taking responsibility for paying their rent each month have also been paying their Spare Room Subsidy despite being paid less Housing Benefit each month.
"Tenants on the project and receiving direct payments were 31% more likely to pay the Spare Room Subsidy in full that those tenants not receiving direct payments."
• Oxford City Council and Oxford Citizens, (part of the) Greensquare Group, Southern England
"The following figures represent the Key Performance Indicators for Income Collection:
1. Current Arrears Percentage (AP) is 2.79% compared to 2.47% at the end of the previous year - this figure represents the percentage of outstanding rent arrears against the predicted annual rent debit.
2. The rent percentage collected for the year currently stands at 93.53%; the monthly target is 94.65%. This figure is calculated as the rent collected as a percentage of the rent collectable this includes the current year rent roll and outstanding rent arrears at previous year end. The target has been calculated with profiling of expected payments for the current year.
3. Rent Collection – the team has collected 97.82% of rent without taking into account previous rent arrears, i.e. of the rent debit of £22,475,292.50 the total collected is £21,809,195.99, and the collection rate also includes total void loss to date of £181,038.42.
4. The predicted rent roll for 2013/14 is £44,122,708.00; therefore, the Rents Team has collected 48.68% against a predicted 49.75%.
"We are using the 8 Weeks Trigger for switchbacks. We saw a high volume of switchbacks earlier on in the project. To date, we have processed 389 switchbacks due to rent arrears, 95 of these are no longer live account for various reasons including stopped claiming Housing Benefit, moved and mutual exchanges. Of the 95 accounts no longer live, 14 have been switched forward following some intervention and support to help them manage their rent arrears. We have 294 live switchback accounts; no tenants have been evicted as a result of being on the Demonstration Project.
"The high number of switchbacks was mainly caused by two factors: using the 15% Trigger (switchback triggered when a tenantowed 15% of their rent either over a period of time or in one go) and the assessment criteria we used at the start of the project to select tenants on to the project. From the learning and experience of being on the project, we stopped using the selection criteria that contributed to an increase in the switchbacks and subsequently saw a decrease in the number of switchbacks.
"The 15% trigger has been replaced by an intervention, prevention and support process. This process is triggered whenever there has been an underpayment of rent of any amount or any percentage of the rent amount. Where underpayment has occurred, it triggers the Rent Officers to contact the tenant to discuss any issues they may be having. Since using the intervention process, we have seen a significant decrease in the number of switchbacks. Through the intervention, it’s emerging that failure to pay rent does not mean unnecessary expenditure on the tenant’s part. We have examples of tenants’ genuine short-term demands, such as funeral costs. We do however deal with each case on its own merit.
• Shropshire Unitary County Council and Bromford Group, Sanctuary Housing and The Wrekin Housing Trust, West Midlands
"1,851 were in scope for the project and the landlords found that the 700 residents who engaged at the very beginning and were open to the project have maintained payments with little or no intervention.
"However, comparatively 150 more residents who came onto the later phases of the Direct Payments project were found to require numerous levels of support and intervention from either the local authority or Landlords, to help them maintain their tenancies and payments.
"It also of note, that for those residents who were initially assessed as requiring no support, there were a number of them who went into rent arrears as the result of unforeseen personal circumstances during the project
"This goes to show that even those for whom support is not identified as required, there is still a risk of non payment and the requirement for interventions by landlords to prevent further arrears escalation."
• Southwark Council and Family Mosaic, London
"Analysis shows some tenants’ self assessments have proven unreliable – analysis of switchbacks shows 10% with significant additional issues uncovered during the support process.
"The 4 week switchback trigger is very resource intensive, leaving only 2 weeks to support tenants - hard to achieve in a project environment and impractical in business as usual. The close working relationship and data sharing between organisations proved vital to arrears trigger operation.
"With more tenants switched back than returned to DP, concerns are raised about the number who will successfully manage DP - although we are still learning how best to achieve this. If the UC support process fails, tenants could eventually face eviction with the financial risk falling to the Council to re-house them.
Tenants’ lack of engagement remains a big issue, although fuller engagement especially about their financial circumstances has been achieved following switchback.
"Family Mosaic remains cautiously optimistic. Key issues are:
• Timeliness of rent collection
• Proactive early intervention
• Effective IT solutions
• Income Officers’ commercial awareness / negotiation skills
• Understanding our customers better
"All areas which we identified prior to the Project as key to success. At the time of this report, arrears (including switchbacks) are 1.6% higher than before the Project but 0.8% lower than the peak of 2.4% reached during the summer. The collection rate is now in excess of 100%.
• Torfaen County Borough Council and Bron Afon Community Housing and Charter Housing, Wales
"Rent collection rates have continued to improve after a challenging period at the start of the project. DP nevertheless has increased indebtedness – in the six months from April to September 2013, the average monthly arrears figure for Bron Afon tenants on direct payments was £91 higher than those outside the project.
"Collection costs are higher – contact rates in the Bron Afon DP tenant group are 150% higher than outside and 219% up for Charter; this has to be resourced .
"Effective data sharing with the local HB team remains key to success – arrears and contact needs would increase significantly without it.
"In September 2013, 28.7% of tenants had been switched back to payment to landlord, supporting baseline studies by Policis and CRESR which indicated 31% of tenants considered they would cope poorly with the direct payments. We are pleased that DWP is reflecting this learning in a more pragmatic approach to UC payment arrangements.
"Step change is needed in collection and payment culture – existing IT systems have proven to be barriers & new tenancies provide opportunities to address this.
Tenants find it difficult to have conversations about their finances and have been less willing to open their doors to our money advisors than support workers – it is likely then that people who need help will answer “no” when asked by the online personal budgeting assessment triage proposed under UC if they need money advice or
• Wakefield Metropolitan District Council and Wakefield and District Housing, Northern England
"672 tenants received payment of Housing Benefit direct into their bank accounts at the end of July 2013 (payment 14); the total number of cases in payment had reduced over each of the previous four cycles, from 773 to 642, then increased with the inclusion of 47 tenants who had returned to direct payment having repaid rent arrears that had accrued earlier in the project.
"Particular issues have arisen around Direct Debits failing when there are insufficient funds available following a change in entitlement or Housing Benefit being suspended. Prompting payments and chasing up defaults continues to be time consuming and can also be a cause of frustration to the tenant.
"Some tenants have continued to cope well and around 25% of accounts are in credit at the end of the week that they receive Housing Benefit although this reduces quickly over the four week period. It compares with almost 50% of all WDH tenants who have a credit on their account at a similar time.
"It has remained an issue for tenants to understand the cycle of payments, particularly when ‘rent free weeks’ have occurred. However these weeks (four in each calendar year) when no rent is charged provide an opportunity for tenants to catch up on missed payments and there is clear evidence to show this occurring."