Some of the key findings from the report included:
- Rent collection rates have improved over the five-year period
- More money is being spent on collecting rent each year and is rising faster than inflation, driven by an increase in human resources
- Universal Credit has a considerable impact on arrears levels
Across each quartile, rent collection rates have improved over the five years between 2011/2012 and 2015/2016. In spite of this overall improvement, performance in the years 2012/2013 and 2013/2014 worsened before picking up. These years coincide with the introduction of many welfare reforms that affected tenants’ ability to pay the rent. Using estimates based on Housemark’s members’ data they found that more money is being spent on collecting rent each year, and this expenditure is rising faster than inflation. The estimate is that UK social landlords spent over £720m collecting rent in 2015/2016, a real terms rise of over £100m from 2011/2012.
The data suggests that the rise in expenditure on managing rent arrears and collection is driven by an increase in human resources – i.e. more people being employed to collect rent and manage arrears rather an increase in average pay costs. Using Tableau predictive analytics, it is estimated that rent collection rates will remain steady, but costs will continue to rise in the years up to 2020 – this is before taking into account external factors.
In October 2016 Housemark surveyed members of the Welfare Reform Impact Club on the effect of Universal Credit (UC) on arrears rates and found that the average rent arrears debt of a UC claimant is £618, compared to average non-UC arrears of £131 per property. With average social rents around £96 per week, this UC debt equates to six to seven weeks’ rent.
John Wickenden, our data analysis manager, said: “While income management performance has improved over the last five years, our feedback from members dealing with the rent arrears of Universal Credit claimants suggests that times are going to get tougher as more tenants move onto the new benefit.”