Ahead of the curve: Innovative solutions to the conundrum of collecting rents
With demand rising for housing providers to not only build new homes but to also improve the standards of existing ones, ensuring a steady stream of income to support such investment has never been more important. Recent statistics from the Regulator of Social Housing (RSH) found that last year housing associations had increased their expenditure by 12% to try and meet the rising level of reported disrepair in their homes. A number that will only continue to grow. Social housing providers are therefore under constant pressure to collect as much income as possible, whilst keeping their collection costs low – a task that has never been more challenging given today’s current tough economic climate.
Despite suggestions that inflation is slowing, the cost-of-living impact remains prevalent for consumers across the UK, with many struggling to afford their monthly rent payments as a result. In fact, further findings from the RSH suggest that rent arrears have risen by 8.4% to nearly £800m – the highest single-year jump since before the coronavirus pandemic. Additional research supports such claims, revealing that 85% of income managers had reported higher rent arrears in the last 12 months.
Balancing the need to drive income whilst supporting tenants through financial difficulty is a growing challenge for housing providers, requiring additional time and resource to manage. To address this, focus should be placed on providing proactive assistance, knowing which tenants will likely have trouble paying their rent before it becomes problematic and supporting them to reduce the risk and sustain their tenancy. Whilst traditional approaches relied on increasing staff numbers to support such a task, housing providers are increasingly turning to technology to stay ahead of the curve.
A proactive approach requires transparency
Proactive tenant engagement is certainly key when preventing potential rent arrears, however, identifying those at risk requires seamless data integration and accessibility across a number of systems – including financial/payment systems. A complete and transparent view of the tenant’s payment history must also be available in real time so that past payment data and rent payment patterns can be analysed effectively.
Fortunately, recent advancements in technology mean that rent management platforms are available with built-in algorithms and predictive analytics to study how people make payments, identify trends and predict which tenants risk falling behind. From there, any changes in payment behaviours can be automatically flagged and escalated, with tasks automatically generated for Income Officers to help manage resources and ensure support is provided where it is needed.
Supporting tenants during tough times
Arming income teams with this predictive information means that early action can be taken to prevent payment issues from arising. However, identifying tenants at risk of falling into rent arrears is only one piece of the puzzle. To set advisors up for success, up-to-date case notes and any relevant information to the tenant’s situation must be readily available and stored via one centralised digital platform. Talking to tenants about arrears and their financial circumstances can be a sensitive topic, particularly today when the high cost of living still weighs heavily on the public – with 7.4 million UK adults struggling to pay their bills. Conversations, therefore, are often emotionally charged and must be dealt with sensitively. Empowering advisors with the full picture in this situation is critical, and that extends beyond previous payment data to cover any previous engagement linked to the tenancy – including any previous complaints, or maintenance requests. Communication must also be available through a range of channels including voice, email and SMS to encourage tenants to take part in those early preventative conversations or take that first step by getting in touch with the Income Team. Being available via your tenant’s preferred channel can also help to increase comfort levels, and improve satisfaction.
A simple solution to a complex problem
For situations where falling into rent arrears is unavoidable, payment plans play a critical role and these too can be optimised using technology built into an all-encompassing rent management platform. Using solutions driven by low-code technologies means that these payment plans can be easily customised and tailored for the tenant in order to drive the best outcomes. The incorporation of automated reporting capabilities can then help to monitor performance and provide detailed reports on collection.
Financial sustainability is essential to the future of housing, however, this must be balanced with tenant care and effective internal resource management. From task automation and prioritisation to proactive communication capabilities and even automated payment behaviour alerts, embracing innovative solutions designed to tackle rent arrears head-on will be crucial.
Mark Gannon is Client Solutions Director at Netcall
Over 600 organisations in financial services, insurance, local government and healthcare use Netcall’s Liberty platform to make life easier for the people they serve.
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