Rent arrears are a troublesome sight for both tenants and landlords in the social housing industry. On the tenant side, not only is there a severe risk of eviction, but personal credit score is also bound to plummet, making it more difficult to borrow in the future. On the landlord side, rent arrears often lead to a lower net profit and can even tarnish the reputation of your organisation if frequent. Tenant satisfaction is one of the most important parts of being successful in the social housing industry, as it often leads to a higher CSAT (customer satisfaction score) which alone has numerous benefits outlined in some of our previous blogs. However, in order to ensure that your tenants are satisfied, active involvement from your organisation is necessary. While some may believe that a large amount of resources must be allocated to achieve this, there are many small and relatively simple steps your organisation can take to support its tenants. In this blog, we will discuss some of the steps you can take to support your tenants and ultimately reduce the risk of rent arrears.
Tenant reminders
One of the most common reasons for rent arrears in the social housing industry is a lack of awareness by tenants. Social housing residents tend to come from communities who are often occupied with a number of difficult responsibilities such as attending to multiple jobs or tending to children. Remembering to pay off rent each month becomes a hassle for such individuals and losing track of such payments can become a frequent occurrence. This obviously leads to a greater risk of rent arrears and overall harm to both the tenant and the organisation.
To address this issue, a recent study analysing the effect of tenant reminders for rent was carried out by the Behavioural Insights Team (BIT). In the study, two groups composed of typical social housing tenants were created, with one group receiving a timely reminder when their rent was due and the other group receiving no reminder at all. The reminder included a short notice to the tenant that paying rent on time was a widespread “social norm”, a few personal details about the tenant such as their name, and a handwritten signature by a faculty member. After several iterations, it was found that the addition of the tenant reminder “led to a relative reduction of arrears cases of 10%” compared to the control group. Thus, there is quite convincing evidence to say that an association exists between issuing rent reminders for tenants and avoiding rent arrears.
Utilising Data and Faculty Training
On many occasions, tenants who rack up high sums of debt can be prevented from renting your organisation's property even before moving in. By making use of data and monitor potential tenants’ credit history, the organisation can determine whether an individual is likely to pay their rent on time. Based on this information, a company may save the trouble of dealing with any unruly tenants. Other common but less formalised versions of determining this include the “Money MOT” and the “Financial Health Check’.
On a more specific level, faculty can also be trained to ask questions to potential tenants in such a way that effectively reveals their ability to pay rent on time. For instance, by asking individuals about their past residency experiences or about their current employment situation, educated inferences can be made about them to assess the risk of any future rent arrears.
Faculty should also be encouraged to develop a strong and timely payment culture amongst residents. Considering the dangers of rent arrears, faculty should make it clear that any payments involving rent should be prioritised and that a failure to comply with such demands will lead to severe consequences. It is just as important, however, to display empathy towards your tenants and comply with their specific needs as well. For instance, by providing multiple payment options, tenants will feel more comfortable and inclined to pay their rent on time. While tenants should understand that they must adhere to strict guidelines regarding their rent payments, they should also feel safe and confident to discuss their issues with faculty. Rooting out any possible payment issues at their early stage by means of tenant-staff communication can provide your organisation with a massive advantage over competitors.
Conclusion
Rent arrears are not a pretty sight for both tenants and landlords. The consequences they lead to can often be catastrophic for both parties, resulting in an emphasised need for tenancy support in regards to paying rent. Many strategies, both large and small in scale, can be incorporated to prevent the issue from manifesting and should definitely be considered for your organisation if you happen to struggle with rent arrears.
About the author: Mark Roychowdhury is a Copywriter Intern at ei² niche consulting for #data #insights #performance www.eisquare.co.uk