Rent flexibility - can it help in addressing in-work poverty?
On June 17th the SFHA is hosting a briefing on supported rent flexibility, an initiative that has been piloted in London to support tenants at risk of in-work poverty. Damon Gibbons, Direct of the Centre for Responsible Credit, which was involved in the pilot, will be providing the briefing and he describes here its key features.
Prior research indicates that low income families face reasonably predictable pressures on their budgets at various points in the year, such as at Christmas and during the school holidays. These pressures often lead to rent arrears or to people taking out expensive forms of credit.
Rent-flex offers families an alternative. It provides for tenants to agree a personalised schedule of rent payments over the year, allowing over and under-payments in various months to be agreed with the tenant, to help them navigate financial ‘pinch-points’ without the need to borrow. The on-boarding process also helps tenants address any current financial problems and provides budgeting support.
The initial pilot was focused on working age, ‘financially squeezed’, tenants. These were eligible for the pilot if they were
- Responsible for the payment of at least some part of their rent (i.e. not in receipt of full Housing Benefit being paid directly from the local authority to the landlord);
- Had dependent children, and
- Either had outstanding rent arrears of up to £500 or had been in arrears at any point in the previous twelve months.
Tenants generally used the scheme to help with the cost of buying presents for their children at Christmas; paying for extra heating during winter; and coping with the costs of the school holidays and school uniforms. Most tenants reported that this helped them avoid getting into debt (or further debt) at these times. Some tenants used the scheme to pay off existing debt, including payday loans and door to door lenders. And some used the scheme to help them buy essential items, including fridge-freezers, beds, and furniture.
Tenants reported a wide range of improvements in well-being; including being better able to afford healthy diets; warmer homes and less stress and anxiety about money. One tenant told us the scheme allowed her to go on her first family holiday with her daughter in eleven years.
Rent payment performance improved for just over one third of tenants using the scheme (21 tenants), and in eight cases this improvement was significant (an average uplift on the rent account of over £250 per tenant). In virtually all these cases this was directly attributable to the Rent-flex scheme. Average rent arrears for these 21 tenants reduced from £200 to just £8. For a further nine tenants in the scheme, rent arrears levels remained broadly unchanged. These tenants still reported considerable benefits from the scheme.
For the tenants in the scheme that continued to struggle financially, most of these had experienced a very negative shock to their incomes over the course of the year (loss of job, relationship breakdown, ill-health) and they needed further support. They may have been in a worse position had the scheme not been in place, and in many cases Rent-flex appears to have improved the contact levels with tenants experiencing these financial problems. Nevertheless, there is a risk that Rent-flex could increase rent arrears levels if it is not targeted correctly or there is no ongoing support provided to tenants.
The Centre for Responsible Credit has now obtained funding from JPMorgan Chase Charitable Foundation to pursue a number of larger scale trials over the next three years. Each of these will involve a minimum of 350 tenants. These will provide for a rigorous analysis of the impacts, costs and benefits of Rent-flex and build a scale-able delivery model.