Wednesday, 25 November 2015

I think chasing debts is one of the most helpful things we do for tenants

Nobody likes debt chasing.  That's both the people doing it and the people being chased.

If ever l forget to pay a bill l am always worried someone thinks either:
(a) I did it on purpose or
(b) I am having trouble keeping up
Even if the above aren't true a call about an outstanding bill is always a bit uncomfortable.

To be honest, I've spent time in our call centre chasing debt and it's not always that great to be making the calls either.  Sometimes no matter how polite you are, people can get pretty irritable or upset. But, I think it is one of the most important things we do!  And we couldn't be doing it at a better time of year!

The trouble with debt is that it is easy to get out of control.  Also sometimes if you leave things too long sorting it out later could either become demoralising or even impossible. It's a bit like getting something repaired or putting off a visit to the doctors.  Leave it too long and it could end up too late to fix things.

Owing a few weeks' rent may not seem too bad, but bear in mind it is Christmas next month.  Heap on top of rent arrears a bill for Christmas presents and new year celebrations and it is easy to find yourself owing £1,000 + come January.

What we're trying to do with our arrears fortnight is very simple.  We're trying to keep people in their homes.  Ignoring a rent arrear now could mean you find yourself in so much debt come the new year that the problem will be much more difficult if not impossible to sort out.

In that respect debt is very much like grass.  Leave it too long and you can't cut it easily - as a worse case it gets simply too bad to cut at all.  Focusing on clearing your rent account now could save you from a mountain of problems later.

Here's to arrears fortnight and a Christmas with less worry about debt!  If you get a letter or a call please see it as an opportunity; our staff are focused and ready and waiting to keep on top of your rent.

Friday, 7 August 2015

Social Value Accounting doesn't always add up

I want to tell you a story about Doris and Dave.  Doris wanted to grab some bargains down the shops but she knew she wasn't that good at driving a hard bargain.  She usually got around £80 off the bill but she thought if she asked her friend Dave he'd do a better job.

Dave came with her and netted a £100 saving.

Dave was happy with his work and told everyone his personal input to help her with the shopping had generated a £100 saving.  Doris also told people that she'd saved £100 from the day too. 

If they'd both saved £100, that would be £200 - but clearly that would be double counting.  So who had generated what saving?

My view on it is as follows:

Doris was the person making the purchases.  Dave was her agent.  She would have saved £80 anyway.  Therefore the added value Dave had created was £20.

What is the importance of the above and how does it relate to social value accounting?

Well, it defines the commissioner / agent relationship - and how it should be accounted for.

Take an example where a service commissioner wants its agent to provide a service like day care.

At a naïve level you could say the agent is providing the service so it should be able to claim the social benefits for itself.

However, the commissioner is paying for the service so the social benefits should be scored against them.  The service provider is just the agent, what is really generating the social benefit ultimately is the investment being made by the commissioner.  The commissioner has every right to talk about this as the benefits generated by its investment.

If the agent is providing an element of social value it is like Dave's element not like Doris's.  In other words, if the agent is doing the job cheaper than the alternative provider then the social benefit is the cash value of the saving the commissioner is making that can be used on other things to create other social benefits.  Alternatively, if the commissioner maintains its spending overall the extra social benefit from the agent is the value of the extra units of care etc. that it is providing.

Ultimately for it to be credible social value accounting has to be sound accounting.  If everyone in the social supply chain is claiming the full social value of the service rather that simply the added value they add themselves have added, the result is just pure nonsense.

Although social value accounting is theoretical we need to be clear about what social value we are really adding from our involvement in the process.

Thursday, 6 August 2015

how will 'social' market rents work?

how will 'social' market rents work?

Implementing market rents for social tenants will be a complex process.  There needs to be a consultation on how it will work and then  an implementation process that may well involve some complex computing issues.  l'd put money on the earliest start date being April 2017.  A go live date of April 2018 or later wouldn't surprise me though!

What are the issues?

Firstly, who is going to be affected - who could see their social rent move to a market rent?

What we don't know at the moment is whether we are talking about individuals (the main bread winner at the property) being the driver for triggering a market rent or not. 

Even if the scenario was the named tenant on the tenancy agreement the market rate trigger was based on, what if it was a joint tenancy?  Would it be both the named tenants or just one of them?  Would it be an average of the two?

Also what if the named tenant was not the main bread winner but someone else on a higher income lived at the property, either temporarily or permanently, what would happen then?

If l was having a punt, I'd speculate that it will be a concept of the two main incomes or total income coming into the property being the trigger for market rents.

This is on the basis that the whole idea of moving properties to market rents must be either to encourage right to buy or to get a better return on public assets or both.  So a model that sees more addresses impacted by the policy is likely to be the model of choice at the end of the day.

Consequently, l think the £30,000 income threshold will be based on either the 2 highest incomes or total household income.  The original consultation leading to council's having the discretion to introduce market rents for households with income over £60,000 included this 2 highest incomes as the trigger. 

To my mind, when a £30,000 income figure is quoted it makes you think of top end skilled manual workers and experienced teachers.  However the net for moving social tenants onto market rents could be much wider than this if we are talking about household incomes rather than individual incomes.  The model with the widest impact would be based on TOTAL household income.  It might surprise many to find that potentially it could lead to market rents being enforced for households on minimum wage.
The national living wage will be paid to all workers aged 25 and above. Initially, it will be set at £7.20 an hour from April 2016.  There is a target of it reaching more than £9 an hour by 2020. Both part-time and full-time workers will get it.  Pretty much any full time working couple in social housing would find themselves paying a market rent based on these figures.
When you think about it £30,000 / 2 is an income of £15,000 per year.  Based on a 50 week year this is £300 per week.  Two people working a 40 hour week on only £7.50 per hour would trigger a £30,000 market rent in this scenario.  Please remember the living wage will be £7.20 next year but it will move to £9 by 2020.  It wouldn't be an exaggeration to say any full time working couple could trigger a market rent if it were based on a combined income of £30,000.

Even with the current minimum wage, the national minimum wage for workers over 21 is £6.50 per hour.  If the market rent assessment is based on joint incomes it would impact on anyone earning £1 per hour over minimum wage based on these figures.
Even on current minimum wages the 'hard working' family working long hours, often spoken about by politicians, could easily top a family income of £30,000 per year.

But what are the logistics of implementing market rents?


Firstly, Council's and housing associations currently don't know what people earn.  so they couldn't implement this on their own or without changes.

The simple option would be self-assessment and declaration of income by tenants. It could be done by making tenants legally responsible for declaring if they earn over £30K either individually or jointly depending on whether the £30K is a joint / family figure or a top earner figure.  There would be a risk of non-disclosure people might be confused as to what they earn on an annual basis.  They could be confused about whether it is based for example on this year or last year or a rolling year or on how to allow for over time, contractual or otherwise and the timing of annual bonuses.  Then you have potentially a new cottage industry of identifying and prosecuting deliberate non-disclosure.  I don't think government will go down this route.

I see two options
Option 1

Option 1 or a variant on it, is the only option if the calculation has to be based on household rather than individual incomes rather than couples or families.
In this scenario the council / housing association supplies HMRC (the tax man) with details of who lives in all the properties, essentially their names and national insurance numbers. 
HMRC would then have to data match with income figures.  I think they'd then look at income in the last twelve months or for self-employed what it was on their last tax return.

Individuals / couples (depending on the rules) earning over £30K would then go on a list sent back to the council.

The council would notify people of higher charges, make the extra charge and then send the extra back to HMRC.

Obviously there would need to be national standards for software for the file transfers and software both for the housing providers and HMRC would need to be written.

An obvious problem would be people dipping in and out of the £30K limit.  When incomes changed I'd imagine this would have to be taken up with HMRC like a tax code query.  The housing provider would have to keep charging the higher rent until told to do otherwise by HMRC.  This would put financial pressure on people forced to pay the higher rent until the provider was authorised to make the adjustments.
Refunds may prove complicated.  it would be an overpayment of rent by the tenant, and an overpayment by the housing provider to the revenue.  Who would be responsible for sorting things out?
You could easily see people caused problems by this if their income dropped.  They could end up not paying the rent or not paying the extra until the mess was sorted out.  This would lead to arrears chasing and costs to tenants and housing providers.

Clearly there will be a whole new layer of rent changes having to be undertaken by providers, and extra admin work caused by the new system as people moved in and out of arrears?  If market rents aren't paid in full who would be deemed not to have been paid, the housing provider or the treasury?  We'll need rules to cover this too.

A simpler option, which probably only works if the £30K figure is applied to the main bread winner would be to do it through the tax code.  There could be a second suffix applied to the code.  For example rather than a code of 200L all codes could have a second suffix 'M', e.g. 200LM.  If someone has an 'M' after their code they pay the market rent rent.  However, without a national file transfer system letting the housing providers know the tax codes the system would have to rely on tenants telling providers if their tax code has changed. 

The Market Rent by default option

What about the option of putting everyone on a market rent unless they can prove that their income in the household is below £30k?
Historically, HMRC have always been reluctant to give up any information; there are around 60% to 70% of tenants on benefits so their income is known, that leaves a little under a million households nationally who could fall into the market rent category.  An option in legislative terms would be to put their rents up and let them prove whether or not they should not be charged.  HMRC could even calculate how much they expect from every council with an HRAs on a quarterly basis.  As for non-collection (see also below) HMRC could build a collection rent into the figures.  Failure to hit the target would then be a problem for the council not HMRC.  Councils could find themselves on the sharp end of a financial loss if they failed to collect as much as had been specified!

What will the market rents be?

Again this will require new work, new software and new link ups between local and national systems.  I'd imagine it would be the local valuations offices (District Valuer) who would have to make the calculations across the country.  There might be scope for appeals, which would be a new level of bureaucracy, as people contest market rents set against their homes.

Housing providers will need to provide the district valuer with lists of addresses.  The DV will have to carry out the valuations and inform the provider.  The provider will have to load the 'shadow' rents and then apply them based on the information from the revenue if a market rent was triggered.

All the above will require new software, new administrative processes and extra administration staff and legal action for non-payment of market rents across the country.

What happens with arrears?
Will housing providers be liable to pay HMRC when the debit is raised or when the rent is paid?  If it is the former the provider might be liable to hand money over to HMRC even if the tenant hasn't paid the rent!  Could we end up with credits going back and forth between providers and the HMRC.  Money could be paid over by providers, refunded by HMRC and then paid back by the provider if the rent is successfully chased at the end of the day.

I think the conclusion is the execution of the idea will be way more complex than the idea itself, and having got to the end of this I've reached the following conclusions:
  • If the £30K limit is applied to households rather than individuals it is likely to impact on a high proportion of all households with two full time earners
  • Irrespective of all the housing and policy issues, I think it will generate masses of administrative work for social housing providers, the HMRC and the District Valuer
  • tenants losing overtime or jobs will have the double blow of waiting for their rent to go back to social rent levels, adding to budgeting problems
  • arrears are likely to go up as housing providers will have to chase higher rents

Monday, 20 July 2015

No wriggle room on rent settting following summer budget

I'm not convinced everyone is taking the 1% cut in rents year-on-year for social housing seriously enough.  I've heard people referring to revaluations, moving to target for new tenants etc. etc.

The plain answer is NO!  READ THE BILL, paragraph 19.

Whether or not you agree with the rent cuts the legislation is a masterpiece of tight drafting.  The key to it all is 8 July 2015.  Once you sift through the legal language what is it saying very simply is: the starting point is what rent you were charging on each and every property individually as at 8 July 2015.  You can't change that because it's been and gone.  It is a matter of history and record.  As this is the starting point rent from 1 April 2016 is the 8 July 2015 rent figure less 1%.  FULL STOP, END OF STORY!  There is no wriggle room!

Even if you have a new tenant the starting point for the new tenant is what the old tenant was paying...err... on 8 July 2015.  THERE IS NO MOVING THE RENT UP TO TARGET WITH NEW TENANTS!

The other old chestnut I've heard is "the Chancellor meant everyone has to set a rent increase 1% less than what they would have set", again, "Absolute Rubbish!"

Whether or not you agree with what the Chancellor's done, as far as the draft legislation goes it couldn't have been any clearer - or more tightly worded.

Friday, 9 January 2015

those who find it hardest to pay for home contents insurance can least afford to go without it

Wolverhampton Homes offer incredibly cheap home contents insurance to its customers.

Quite honestly, it is half what l pay personally.  If l was offered a similar deal myself I'd have someone's arm off to get it!

understandably, for people with restricted incomes you need to think very carefully about what you spend.  On occasions people on a budget say they can't afford insurance - or they'll get around to it if their circumstances improve.

In reality, it is those who can least afford to buy home contents insurance who need it the most.

Perversley, if someone is in a position that they have so much money they don't even have to think about what home contents insurance costs them they need it the least.

The question is:  if you lost everything could you afford to replace the essentials?  If the answer isn 'no', then you really need home contents cover -whatever the cost!

as an important footnote please don't get a false sense of security that tenants in the UK are automatically covered by their landlord for leaks.

Who ever the landlord is, what a lot of people don't realise is that for example just because a pipe leaks and a tenant's property is damaged, it does not mean the landlord is legally liable.  The law says pipes leak.  Landlords cannot be expected to routinely check pipes and be responsible if they fail.  Courts recognise that this kind of incident is predictable and the market offers insurance to tenants so they can protect themselves from the consequences.  As harsh as it may seem, as far as the courts are concerned if someone chooses not to insure, and suffers a loss as a result they only have themselves to blame.

Again, l come back to my main point, those who can least afford to pay for home contents insurance are the ones who can't afford to go without it (because they are the ones who can least afford to replace their contents themselves).

Wednesday, 7 January 2015

How happy are Wolverhampton Homes Tenants?

We're still working through the data on our recent customer satisfaction survey on Wolverhampton Homes services to tenants (leaseholders have thier own survey).  It is too early to say anything on this, but there was one very interesting result on the issue of happiness in general.

As part of our recent customer satisfaction survey, tenants who were surveyed were asked to rate their satisfaction with their life nowadays on a scale of 0 to 10.

The scale was based on a 0 if people felt 'not at all satisfied ' to 10 for 'completely satisfied'.

Interestingly the most common single response was 10 out of 10 given by 26% of tenants!

If those who gave a rating of 7 or more out of 10 are considered to be satisfied, 64% of Wolverhampton Home tenants fall within this category.

Defining dissatisfied as those giving a rating of 0-3, 8% of tenants are dissatisfied with their life nowadays.

The reason why we asked this question was to put a bit of mood music in the background to the survey.  Generally if people are feeling upbeat they're more likely to ignore faults with a service overall.  Similarly if they're feeling downbeat there more likely to find fault.

My idea was that if we had a satisfaction with life score everytime we did a survey it would give us some context.

If customer satisfaction went up, but people were generally feeling more satisfied with life anyway, it probably indicated that the improved satisfaction wasn't all down to us.  On the otherhand if satisfaction went up against a background of generally increased dissatisfaction - then chances are we had really improved the service.

As this was the first time we'd asked the question we had no benchmark to compare to from the 2012 satisfaction survey.  We asked a supplimentary question this time about how happy people felt now compared to 2012.

Compared to two years ago, almost two thirds (63%) of tenants think they would have given the same rating to their satisfaction with life. Among the remainder, equal proportions say their rating would have been higher (19%) or lower (18%). On this basis, although a simplistic measure, these results suggest that there has been no obvious shift in contentment within the Wolverhampton Homes customer base in either direction that could account for changes in perceptions since 2012.
The result surprised me.  As an accountant l believe to a great extent money makes people happy(er). I would have thought that 5 years of austerity would mean people were less happy now than in the recent past. On reflection though, I'm not sure if l could answer the question of how happy am l now compared to 2 years ago terribly well myself.  I might remember what l was doing two years, but I'm not sure l could say accurately how happy l was.  If other people are like me it could explain why most people said they felt the same level of happiness now as in 2012. I look forward to seeing if the 6.4 happiness score has gone up or down next time we ask the question!