AGENDA ITEM NO.
REPORT TO: Social Affairs, Health and Housing Scrutiny Committee
REPORT OF: Head of Housing and Public Protection
REPORT NO: HHPP/67/11s
DATE: 27 September 2011
CONTACT OFFICER: David Parry (Tel 315437)
SUBJECT: Housing Debt Recovery - Update
1 PURPOSE OF THE REPORT
To provide Members with a performance update on the recovery of Housing Revenue Account debt.
2 SUMMARY
2.1 At the Social Affairs, Health and Housing Scrutiny Committee meeting of 9 February 2011, Members considered a report on Housing Debt Recovery and requested a further performance update in six months (Report No: CHPPO/20/11s).
2.2 This report details procedures for recovering the following housing related debts and provides performance information on:-
· Court Costs
· Former Tenant Arrears
3 RECOMMENDATIONS
3.1 For Members to consider the current procedures in place for the recovery of Court Costs and Former Tenant Arrears and to note the Department’s performance figures.
4 INFORMATION
4.1 At the Social Affairs, Health and Housing Scrutiny Committee meeting held on 9 February 2011, Members requested a performance update on the recovery of housing related debt.
Court Costs/Former Tenant Arrears
4.2 Former tenant debt is widely regarded as being the most difficult to recover. The ultimate sanction in housing debt recovery is eviction. As this threat of eviction and potential homelessness did not secure repayment of the debt whilst the person was a tenant, there are only limited legal options available.
4.3 Former tenant arrears and court costs arise for the following reasons:-
§ Eviction: Tenants are mainly evicted as a result of high rent arrears and outstanding court costs. Eviction can also take place as a result of extreme anti-social behaviour and these cases also accrue court costs and quite often rent arrears.
§ Abandonment: Tenants may abandon properties prior to court action/ eviction or because of personal or external factors, e.g. anti-social behaviour.
§ Deceased: Sole tenants passing away, leaving monies owed. Generally these are small amounts.
§ Tenancy Relinquishment: Can be for a wide range of reasons, e.g. leaving the area, moving to a different tenancy, personal/family reasons etc.
4.4 There is a comprehensive procedure for the recovery of former tenant rent arrears and court costs.
4.5 Former tenants who provide forwarding addresses are written to on several occasions. If a response is received, a payment plan is made with the former tenant and subsequently monitored. If no response is received, the debt is then referred to a debt collection agency.
4.6 If a former tenant does not provide a forwarding address, searches of all available Council systems are performed. Where an address is obtained, the debt is pursued as above. All other cases are referred to a debt collection agency.
4.7 The debt collection agency pursues this debt using letters, visits and tracing systems. They then arrange payment plans and monies recovered are forwarded to the Council on a fortnightly basis. The debt recovery service company Jacobs, receive 15% commission of the monies they recover.
4.8 Any former tenant debt which the collection agency is unsuccessful in pursuing is returned. A final review is completed prior to preparing to write the debt off. A write-off list is then produced.
4.9 The total amount of Former Tenant Arrears as at the start of the financial year amounted to £282,093, which represents 0.78% of the total debit.
4.10 Since the start of this financial year £89,465 in new former tenant arrears debt has been incurred. The total figure as at the end of August was £310,218. This figure represents 0.81% of the total debit. During the same period a total £29,190 has been collected and an amount £32,149 has been written off under write off procedures.
4.11 We remain on track to meet the end of year performance targets for Former Tenant Arrears (the total FTA debt to be less than 1.25% of the total debit and the total amount written off not to exceed 0.5% of the total debit). Since this date, a total of £29,190 has been collected and an amount of £32,149 has been written off under write-off procedures.
Court Costs
4.12 Court costs owed by current tenants are dealt with by the six estate offices, as part of the current arrears process. Court costs are awarded by judgement in court. These costs (£100 Court Fees, £110 Warrant Fees, £56 Legal Costs, Full Order Application £45) are met by the Housing and Public Protection Department and subsequently recovered from the tenant.
4.13 There are two types of court costs. Firstly, court costs with current tenants which are dealt with by Estate Offices and secondly, former tenant court costs which are dealt with by the Former Tenant Arrears Officer.
4.14 The current amount of tenant court costs outstanding as at the 3 April 2011 stood at £97,581 and former tenant court costs stood at £59,974. As at 28 August 2011, current court costs were £98,987 and former tenant court costs were £55,297. During this period £7,000 court costs were written off. This is an overall reduction of £3,271 since the start of the financial year.
4.15 From the start of the financial year to the end of July, the current costs incurred as a result of the following action being taken:
70 New Possession cases £10,920
41 Warrants applied £4,910
Current Rent Arrears
4.16 The performance as at the end of the financial year for the 6 estate offices was:
Office / Arrears Total as at 3/4/11Broughton / £33,014
Caia / £121,653
Gwersyllt / £18,059
Plas Madoc / £49,065
Rhos / £18,185
Wrexham Central / £66,995
The gross debit for the end of the financial year was 0.83%.
4.17 The current rent arrears as at the end of August stood at £617,197. A reduction of £45,782 compared with the same period of the last financial year. The Estate Offices remain on track to achieve the end of year targets.
4.18 Officers have previously met with Court Judges to discuss the current rent recovery process and the preventative work that is undertaken before cases are actioned. Judges were satisfied that the policies, procedures and all the correspondence were of a high standard and that a thorough approach was taken by the Department in the recovery process. A meeting has been arranged for October with the new and existing District Judges. They will be given a presentation on our recovery process and the relevant procedures that are adhered to.
Government Welfare Benefit Reform
4.19 The Reform to Welfare Benefit and particularly Housing Benefit and changes to Local Housing Allowance (LHA) will have a considerable impact on Housing Services provided by the Council. The DWP’s Impact Assessment has warned that the changes to housing benefits, may result in an increase in rent arrears, evictions, homelessness and the use of temporary accommodation. It is also clear that the workload of officers managing rent arrears will increase with the proposed introduction of Housing Benefit payments direct to tenants, instead of electronically to Landlords, as part of a claimant’s benefit entitlement. The reduction in housing benefits will also impact dramatically on the service, particularly on cash collection, rent arrears recovery and consequential homelessness.
Conclusion
4.20 A new IT system for recovering and monitoring former tenant arrears has been implemented. Staffing levels are under review and will be included in the Review of the Housing Management Service.
4.21 The performance target for 2010/11 was exceeded and we are currently on track to achieve both performance indicators for 2011.
5. EQUALITIES IMPACT ASSESSMENT
5.1 This report is for Social Affairs, Health and Housing Scrutiny Committee Members only. Rent arrears recovery, collection of former tenants’ arrears and rechargeable repairs procedures have been subject to individual impact assessments.
6. RESOURCE IMPLICATIONS
None.
7. LEAD MEMBER COMMENT
The Lead Member has been consulted.
BACKGROUND PAPERS / LOCATION / WEBSITE INFOHousing Debt Recovery
9 February 2011 Social Affairs, Health & Housing Scrutiny Committee
(Report No: CHPPO/20/11s)
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UPDATED ACTION PLAN
ACTION / RECOMMENDATION / TARGET DATE / WORK COMPLETED/FURTHER ACTIONFormer Tenant Arrears/Court Costs / Review staffing Level in accordance with staffing review / Quarter 1 2011/12
Reschedule to Quarter 4 / To review staffing as part of the Review of the Housing Management Service following report to Social Affairs, Health & Housing Scrutiny Committee and Executive Board
Introduce new streamlined procedures using the new IT work flow system to recover former tenant debts / End of Quarter 4 2010/11 / Complete
Rechargeable Repairs / Review current arrangements for recovering rechargeable repairs / Quarter 1 2011/12 / Complete
Sundry Debts
(Garage plots and Council garages rented to non Council tenants) / Review current arrangements for recovering sundry debts / End Quarter 1 2011/12 / Reviewed current arrangements and to continue to use the Council’s Debtors Section to raise and pursue sundry debts.
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