A business case for social landlords

 

 

Early debt advice can prevent eviction

Early intervention debt advice for social housing tenants can prevent homelessness caused by debt related evictions says a new report.

Commissioned by The Hyde Group, Does debt advice pay? A business case for social landlords was written by the Financial Inclusion Centre and funded by Friends Provident Foundation. The report was launched on Wednesday 30 November at the House of Commons and includes the first ever toolkit for measuring the cost benefit of financial inclusion services.

The research, which involved close working between all partners, studied the practices of Hyde and six other leading housing associations: Affinity Sutton, AmicusHorizon, Circle, Metropolitan Housing Partnership, Southern Housing Group and Wandle.

The report demonstrates clear benefits to the government, housing providers and social housing tenants for investing in early intervention debt advice particularly in the context of the recession, high cost of living and welfare reforms such as universal credit.

The Does debt advice pay? report recommends that housing providers:

• Urgently start or maintain their investment in debt advice, to help people manage their finances. This is a crucial move as future benefit reforms could lead to an increase in rent arrears.
• Directly fund specialist debt advice but to also increase their investment to ensure more residents access services, and at an earlier stage.
• Review their own approach to debt advice delivery and make more informed and longer-term investment decisions.
• The report found that debt advice, when given in the early stages of the debt build up, could potentially prevent over 7,000[1] evictions due to rent arrears every year. Research also revealed that each prevented eviction saves associated eviction costs of up to £8k. This means potentially 2000 new homes could be built instead from the accumulated costs of evictions per year, according to the Homes and Communities Agency’s new funding system.
• There is a financial gain for social landlords through reductions in rent arrears which can be invested back into resident services. For every tenant who receives debt advice there is on average a rent arrears reduction of £360. After debt advice was given, rent arrears reduced for 71% of residents.
• Debt advice has wider and long-lasting benefits for tenants. It empowers them to not slip back into debt. It can be considered a one-off investment for life, breaking the vicious circle of debt by changing tenants’ behaviour and attitude towards the management of their debt and arrears. Debt advice supports tenants to manage their finances better and seek jobs and training, which increases their life skills and opportunities.

Key Statistics:

• For every £100 a social landlord invests in direct debt services, a financial net return of £122 is achieved, representing a 22% return on investment
• Over the 12 months following a referral to debt advice services, a rent arrears reduction of 37% or £550 per resident was achieved
• There is a £239 financial gain to social landlords for every supported resident, compared to those who received non specialist advice
• Debt advice is currently considered part of a social landlord’s corporate social responsibility; it should become part of core services
• 90% of residents accessing debt advice had rent arrears

Steve White, Hyde Group Chief Executive, said: “With the launch of Does debt advice pay? A business case for social landlords we, as a partnership of seven housing associations are calling for the Government and Local Authorities to recognise, through the eyes of social landlords, the importance of debt advice and early intervention and to fund where appropriate.

“Now is the time to invest in debt advice, and this report describes exactly how this can be achieved: by providing our residents with the financial confidence and knowledge to enable them to stabilise their financial situation.

“The timing of this report couldn’t be better, with the introduction of universal credit; social housing tenants will need to manage their finances more independently than ever before. Social landlords preparing for the challenges of universal credit must promote financial well-being, provide earlier support and take early and decisive action when escalating problems are identified. Social landlords should be encouraged by the Government and Local Authorities to step in and help society’s most vulnerable people with in-house debt advice.”