What Factors Reduce Rent Arrears?
Our staff are experienced in reducing rent arrears and maximising the rent roll. We therefor believe it’s worth sharing our knowledge in belief that the Social Housing Sector will benefit. See what factors you could use to improve your Housing Association.
Debt Collection Agency Behaviour
Let’s assume that most Housing Associations have some rent arrears that may turn into bad debts. One way to increase collection is to use a debt collection agency. That much is obvious right? Well did you know that most agencies performance is better in the first few months of a contract? No? Well here’s why…
Most debt recovery agencies operate on an algorithm (a set of rules) that is determined as they work through your data. For example at the start of the contract, they may call a number that the agency believes is the contact number for a parent of the person who’s in debt. At that point there is a chance that the parent won’t pass on any forwarding details and in most cases the trail will go cold. However in some cases you’ll be lucky, get a forwarding number for the person in debt, subsequently contact them and make a collection. This type of avenue will be explored at the start of a contract to see how fruitful it is, but as the company learns that some avenues are not cost effective to explore, costing more in time than is collected on average, some are therefor closed and no-longer explored. This means that during the algorithms creation all avenues are explored, and debt recovered is at its maximum, but as time passes avenues are closed and the level of recovery will drop.
To counter this – Gabriel Star offer a trace and collect service where all avenues of collection are left open for the duration of the contract.
The Optimum Data Fields
We rarely see a housing association where all data fields are complete and are actively being collected, despite there being a clear correlation between the quality of your data and rent collection rates.
You should be collecting the following information on your tenants:
Full Name ¦ First ¦ Middle ¦ Last
Last Known Address ¦ Typically the address of your property
Forwarding Address ¦ Most housing associations don’t ask for this, but our research has found it can increase rent collection by 0.2%!
E-mail ¦ We often find this is blank or input within a “notes” field. Capturing e-mail in the correct field can improve rent collection by a further 0.2%!
Mobile Number ¦ All of them – don’t delete old ones
Land-line Number ¦ This is likely to change as the tenant moves, but it may have links to the tenant that can subsequently be traced.
Next of Kin ¦ Their Name and address.
D/O/B ¦ Not for collection but to allow recovery agencies to double check they have the right person
NI # ¦ As above – to check you have the right person
We have worked with many HA’s and have found names that are just the 1st initial, e-mail fields that are blank for thousands of tenants, and a no forwarding address being collected for any of the departing tenants. Call us today, and we can present our findings to your income team. Together we can improve Housing Associations efficiency.
Each and every housing association typically has masses of data that can be used to their advantage in the war against bad debts. It is worth noting that we find most rent arrears are generated by new tenants, that’s tenants who have spent 2 years of less in their housing association property. This points towards, “bad rent payers” being passed around the sector, and this knowledge allows you to act differently.
You can use your own data to create a profile of the typical person who’d turn into a bad debt in the future. When a potential resident is nominated that fits the bill of your newly generated profile, you can then legitimately ask different questions. Firstly, for proof that the previous landlord (if applicable) was happy with the tenancy prior to the request to move into one of your properties. This is a simple check that doesn’t have to be undertaken for all tenants, but used in the right way can efficiently reduce the amount of inherently bad rent payers being taken on as residents.
Gabriel Star is the home of data excellence – we can help you create your own “risky tenant profile”.
2nd Pass Recovery
What do the digital TV and Utilities markets have in common? Don’t know? Well both industries attempt to collect upon bad debts six separate times before giving up. That’s often six different collection agencies! However, our findings indicate that most Housing Associations only attempt to collect bad debts once, if that!
Try Gabriel Star’s trace and collect service that is specifically targeted at the social housing market.
Efficiency of Turn Around
In the world of tenant arrears and bad debts…speed is everything. The sooner you can generate a report in the format your agency requires the greater the chance you’ll receive favourable collection results. We see many HA’s holding onto their data too long. Sometimes in the belief that they’ll get around to chasing themselves (one day) and sometimes because their systems don’t easily generate the required format. In some cases housing associations spend hours of time preparing the data tables for agencies to use. This is clearly in-efficient.
Speak to us about generating timeless reports that can be passed over to collection agencies simply and speedily. It’s also worth considering re-vamping your rent policy to ensure it covers the time you’re willing to wait before passing the debt over for collection. We’ve re-written several rent policies and are happy to help.
Book a meeting with one of our skilled team today and let’s reduce rent arrears within the social housing sector one housing association at a time.