Does Debt Advice Pay? A Business Case for Social Landlords
1st December 2011
Yesterday Alan Whitehead teamed up with Hyde Housing and the Financial Inclusion Centre to to make a powerful business case for increasing early access to debt advice services.
The report, titled "Does Debt Advice Pay? A Business Case for Social Landlords" looked at how a number of housing associations provided debt advice to their tenants; and found that where good quality debt advice services were provided, they made a significant difference to tenants' rent arrears and saved both the tenant and the housing association substantial sums.
Proper provision of debt advice services could keep 7000 people from ending up on the street and save social landlords enough money to build 2000 more homes every year, the report found.
Alan Whitehead, Labour MP for Southampton Test, was asked to help launch the report due to his previous work on this issue with the National Housing Federation and specialist debt advice teams assigned to Southampton.
The report found:
- 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 percent of residents.
- Debt advice, when given in the early stages of the debt build up, could potentially prevent over 7,000 evictions due to rent arrears every year.
- Prevented eviction saves associated eviction costs of up to £8,000, meaning potentially 2,000 new homes could be built instead from the accumulated costs of evictions per year.
The 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.
Alan Whitehead MP said:
"This report shows that there is a strong business case, that goes hand in hand with the social justice case, for social landlords to provide good and early access to debt advice services for their tenants.
"The growing economic problems and the government's imminent welfare changes mean more and more families who are just getting by at present may be tipped over the edge and forced towards exploitative doorstep lenders and loansharks. This report gives social landlords a roadmap for how to help their tenants avoid predatory money lenders, as well as avoid spiralling eviction rates and arrears.
"I'll certainly be encouraging housing providers in Southampton to look at the findings seriously and make sure their residents do have access to good quality- preferably face to face- debt advice services."
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.”
More information
- The report also found that debt advice, when given in the early stages of the debt build up, could potentially prevent over 7,000 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
What do you think about this story? Email Alan