Tangram Housing Co-Op Rent Arrears Policy

TANGRAM HOUSING CO-OPERATIVE

RENT ARREARS POLICY & PROCEDURE

Approved by General Meeting 9 March 2014

Contents

1. Aims of the policy2
2. General principles3
3. Targets 6
4. Reportingarrears7
5. Recoveringarrears8
6. Appeals11
7. Appendices12

I – Sources of free advice12

II – Notice to quit13

III – Summary of arrears process14

IV – Letters15

1. AIMS OF THE POLICY

The aim of the rent arrears policy and procedure is to ensure that:

a)The long-term financial viability of the Co-operative is safeguarded by ensuring the maximum amount of rent receivable is collected promptly.

b)The well-being of the Co-operative’s members is safeguarded by ensuring those falling into financial difficulty are treated consistently and their individual circumstances are taken into account.

1. GENERAL PRINCIPLES

2.1.A nominated Management Committee member to oversee rent issues

A nominated member of Management Committee will act as contact point for rent arrears issues. Throughout this policy, this role will be termed ‘the rent officer’. The Co-operative may decide to re-establish a rent group sub-committee, though it is not envisaged this should be necessary.

2.2.Prompt and timely intervention

The longer arrears are allowed to build up, the more difficult they will be to repay. Therefore, based on best practice in the social housing sector, the trigger point for the first letter in the arrears process is set deliberately low at £200. This does not mean that arrears of under £200 are ‘okay’ and tenants should aim to have no arrears.

Although £200 may seem a small amount, by the later stages in the arrears process this will have built up into a much larger debt (see Appendix III). If the Co-operative waited until a tenant had a larger amount of arrears before first contacting them, it would make repayment harder, longer and less likely.

2.3.Consistent process followed for all members

Each tenant’s arrears situation will be unique and it is important to respect this when considering the amount and term of repayment. However, to be fair to all tenants it is important that the arrears process is followed identically for all. For example, the same letters must be sent at the same intervals in all cases.

2.4.A constructive and personal approach

Rent arrears rarely happen in isolation and helping the tenant stabilise any wider financial problems will enable them to clear their rent arrears more easily. Throughout the arrears process, the Co-operative should acknowledge that the tenant may benefit from the following:

• Income maximisation. Check the member is getting all benefits they are entitled to.
• Budgeting advice. Practical advice on managing their money.
• Grants and trust funds. For example, trust funds operated by utility companies.
• Prioritising debts. Knowing which debts are more or less important to pay.

The rent officer should work constructively with the tenant in these matters where possible. Knowledge of benefits (especially housing benefit) and the principles of debt advice are essential for this role and the Co-operative should arrange training where necessary. Where necessary, the rent officer should signpost the tenant to other advice agencies who can give specialist help (see Appendix I).

2.5.Realistic repayments agreed

The agreed repayment amount must take into account both the tenant’s ability to pay and the Co-operative’s requirement to have arrears repaid in a reasonable time. This amount should be agreed based on the individual’s circumstances.

The minimum amount should match the DWP third party deduction rate which is updated annually (currently £3.55 per week in the 2012-13 tax year), unless the member can demonstrate unusually severe hardship.

It is recommended that an offer of repayment below this threshold should be supported by a budget prepared by an independent debt adviser. In this case the rent officer or worker should signpost the tenant to a source of free debt advice (see Appendix I) before Management Committee formally agrees to the offer on a long-term basis.

2.6.Reviewing arrangements

Agreed repayment amounts should be subject to periodic review and the tenant should be contacted six-monthly to confirm if the amount is still appropriate to their current circumstances. If their situation has changed, it would be expected that the rate of repayment should be changed accordingly. Letter 4 in Appendix IV should be sent every six months to all tenants who are repaying arrears under an agreed arrangement.

2.7.Confidentiality

The Co-operative should ensure that confidential information regarding arrears cases is not made public in an identifiable form. Members will not be named in any minutes and arrears should not be discussed outside of Management Committee meetings unless the member involved requests this, other than reports made to General Meetings as outlined in stages 4 and 5 of the arrears policy.

2.8.Careful recording at all stages

Copies of all letters sent should be retained, along with accurate records of all meetings.

2.9.Conflicts of interest

The rent officer and members of Management Committee are not disbarred from these roles if they have rent arrears. However, any arrears must be repaid under an agreement which must be maintained in good order. If arrears escalate to the point a Notice to Quit is issued, the tenant must resign their position on Management Committee. In all decisions and discussions about the rent arrears of a Management Committee member, the member must leave the room.

If any member of Management Committee has a personal conflict of interest which may prejudice their approach to a tenant in arrears, they should leave the meeting while the issue is discussed.

2.10.A tenant is unable to make an agreed arrears repayment

If a tenant is unable to make a payment due under an arrangement to repay arrears, they must contact Management Committee at the earliest opportunity to explain this. Where reasonably possible, the tenant should make up the missed payment(s).

If the tenant does not resume agreed payments or communicate with Management Committee, or where missed payments occur more than once in a rolling twelve month period, Management Committee may decide to proceed with a Notice to Quit.

Where agreed repayments are missed more than once in a rolling twelve month period, Management Committee will respond as follows:

• For the second breach in a rolling twelve month period, Management Committee will instruct the tenant to take independent debt advice from an agency in Appendix I and report back with the outcome. If the tenant fails to do this within 4 weeks, Management Committee may proceed with a Notice to Quit.
• For the third breach in a rolling twelve months period, Management Committee will proceed straight to stage 4 of the arrears process and issue a Notice to Quit.

2.11.Accessibility

The Co-operative aims to ensure that all tenants understand the arrears process. This policy is available for all tenants to read and Appendix III includes a brief summary of the stages involved.

The Co-operative will provide this document in alternative formats (e.g. large print) where reasonably possible based on the tenant’s genuine needs. If a tenant feels they need help to understand this policy, the rent officer, worker or another Management Committee member can explain it.

2.12.Evidence

Management Committee may request evidence from the tenant before agreeing to a long-term repayment arrangement. Examples might include evidence of a reduction in income or an increase in living costs or priority expenses.

2.13.Housing benefit applications

If a member needs assistance applying for housing benefit, the rent officer will assist with the application or signpost the tenant to a suitable source of help if required. The tenant may use the Tangram office facilities (i.e. phone, PC and photocopier) to assist in making a housing benefit claim.

Where a tenant has submitted an application for housing benefit that has a reasonable chance of success, the Co-operative will suspend any action to collect arrears pending the outcome of the application. Management Committee may request evidence that an application has been made before agreeing to suspend action.

2.14.Timescales

The arrears recovery process in section 5 includes timescales for the stages which are in multiples of 14 days to coincide with Management Committee meetings. The Co-operative will endeavour to stick to these timescales and will never take an action before the stated date. However, where it is not possible to take an action on the specified date (e.g. due to sickness or similar), it will be taken as soon as possible afterwards. A delay in sending a letter does not invalidate the arrears process.

1. TARGETS

The Tenant Services Authority (now superseded by the Homes & Communities Agency) reported in March 2010 that the mean level of rent arrears for housing associations nationally stood at 5.3%. The Co-operative’s target should be to keep arrears below this level.

This target may be varied if agreed by a General Meeting.

1. REPORTING ARREARS

4.1.Arrears reporting to Management Committee

The rent officer will meet with the worker fortnightly to review the increase or decrease in total rent arrears and the numbers of tenants in different arrears bands.

The worker will produce the following figures on a fortnightly basis, and these will be reported to Management Committee and entered in the minutes so they are easily accessible to all members:

• Total arrears £
• Arrears as a percentage of rent due

The worker and rent officerwill also highlight to Management Committee any developments such as:

• A tenant ceasing to pay rent.
• Erratic or fluctuating payments
• A previous arrangement to repay arrears being broken.
• A lump sum paid off existing arrears.

4.2.Arrears reporting to General Meetings

A summary of the rent arrears will be prepared on a quarterly basis by Treasury group to present to a General Meeting alongside the outturn report. Any positive or negative trends in arrears will be highlighted.

4.3.Arrears reporting to tenant members

All tenant members should receive a monthly rent statement showing recent transactions and any arrears owing on their rent account. These will be printed by the worker mid-month so they show all transactions up to the last day of the preceding month. Rent statements will be delivered in sealed envelopes.

1. RECOVERING ARREARS

The arrears process is triggered by one of the following:

• Arrears on the tenant member’s rent account exceed £200.
• One or more instalments due under an existing arrangement to repay arrears are missed.

At any point in this process if the tenant agrees to repay arrears by instalments and begins making payments, all further action will be halted as long as the arrangement is maintained.

Copies of all letters can be found in Appendix IV below and a summary of this process can be found in Appendix III.

STAGE 1A– informal letter

An informal letter (letter 1A) issent by the worker within a week of one of the above conditions occurring. This asks the tenant to

• Bring their arrears up to date, or
• Contact the worker or Management Committee to arrange to repay the arrears.

In joint tenancies, a copy of letter 1A should be sent separately to each person named on the tenancy.

STAGE 1B – existing arrangement broken

Where an existing arrangement to repay arrears is not maintained and the tenant has not contacted the worker or Management Committee themselves, letter 1B will be sent. This asks the tenant to:

• Immediately resume arrears payments at the agreed amount, or
• Contact Management Committee to discuss altering the amount.

In joint tenancies, a copy of letter 1B should be sent separately to each person named on the tenancy. In this scenario stage 2 is omitted.

Note that this applies only to the first period of missed payments in a rolling twelve month period. For any subsequent periods of missed payment, refer to paragraph 2.10 above.

STAGE 2 – request to discuss with Management Committee

If four weeks have passed since letter 1A was sent and the tenant has notrepaid the arrears or set up an arrangement, letter 2 will be sent. This letter outlines three options:

• Pay the arrears in full, or
• Contact the worker to agree payments over six months, or
• Attend the next available Management Committee to discuss a longer payment arrangement based on the tenant’s circumstances and ability to pay.

In joint tenancies, a copy of letter 2 should be sent separately to each person named on the tenancy.

STAGE 3 – agree further action to be taken

If two weeks have passed since letter 1B or 2 was sent and the tenant has not made contact to agree a suitable repayment arrangement, Management Committee will discuss how to proceed.

Options at this point are:

• Notice to Quit (see Appendix II below)

• Application to the DWP to deduct arrears from a qualifying benefit (currently income-based JSA, Incapacity Benefit, ESA etc). Where a tenant receives a suitable benefit, this option should always be attempted. Note that a tenant can contact the DWP to object to the deduction, and if they do this a Notice to Quit should be used instead.

Letter 3 will be sent to the tenant following this decision to advise them of the options that Management Committee intend to pursue and again inviting them to make contact to arrange repayment. In joint tenancies, a copy of letter 3 should be sent separately to each person named on the tenancy.

STAGE 4 – further action commenced and report to General Meeting

If a two weeks have elapsed since letter 3 was sent and the tenant has not made contact to agree a suitable repayment arrangement, the actions agreed at stage 3 will be started.

A report should be prepared by the worker and delivered to the next available General Meeting as a point of information. The report should identify the case by a reference number only and the tenant’s name, address and other identifying details should be omitted. It should detail the level of arrears, any arrangements previously made, the circumstances of the individual and the further action agreed by Management Committee.

This report should be presented to the General Meeting by the rent officer, or another Management Committee member if the rent officer is unavailable.

STAGE 5 – preparing to evict

If the Notice to Quit expires and the tenant has not made a suitable repayment arrangement, the next available Management Committee should discuss enforcing the Notice and seeking possession of the property. It should always be assumed that possession is the next step unless the tenant has serious mitigating factors.

If this is agreed, the decision must be taken to the next available General Meeting for approval. At the General Meeting approval should be sought by majority vote. The vote should be made in accordance with policy and procedure and with the best interests of the Co-operative in mind. Assuming that all stages in the arrears process have been correctly followed, the only reason to vote against possession should be previously undisclosed relevant information.

Following the General Meeting’s approval, the worker should commence possession proceedings straight away. Specialist advice is likely to be required from the Co-operative’s solicitors at this point.

1. APPEALS

If the member disagrees with a decision made at any stage by Management Committee, they may appeal.

An appeal should be submitted in writing to Management Committee and should outline any relevant facts. It will be discussed at the next available Management Committee meeting and the tenant is welcome to attend.

If the tenant does not agree with the decision of the Management Committee following their appeal, they may escalate this by following the Co-operative’s Complaints & Mediation process.

Note that an unsuccessful appeal will not prevent the rent arrears process continuing and should not be employed as a delaying tactic.

1. APPENDICES

APPENDIX I – Sources of free advice

These are correct as of September 2012. These should be reviewed and periodically updated by the rent officer.

• Chapeltown Citizens Advice Bureau – 0113 262 9479 (face-to-face advice locally, including debt, benefits and housing)

• Leeds Citizens Advice Bureau – 0844 477 4788 (face-to-face advice in central Leeds and by phone, including debt, benefits and housing)

• Leeds City Council – 0113 222 4404 (housing benefit applications)

• Leeds City Council Welfare Rights Unit – 0113 376 0452 (independent benefits advice)

• National Debt Line – 0808 808 4000 (charity offering debt advice by phone)

• Shelter – 0808 800 4444 (charity offeringhousing advice by phone)

• Step Change– 0800 138 1111 (charity offering debt advice by phone)

These contact details should be included in all arrears letters to tenants (see Appendix IV)
APPENDIX II- Notice to Quit

A Notice to Quit ends the current tenancy and once it expires (a month after service) the only option available to a court is to grant possession to the Co-operative unless the Notice is invalid.

The options available to the Co-operative after the service of a Notice are:

1. If the tenant comes to a suitable arrangement begins making payments before the Notice expires, withdraw the Notice in writing.

1. If no contact or payment is made and the Notice expires, send a letter explaining that if the tenant remains in situ any rent paid will be treated as mesne profits*or ‘damages for use and occupation’ until possession is granted or the arrears are repaid in full. The Co-operative may then apply to the county court for a possession hearing or agree to suspend action if an agreement is reached to repay the arrears (in this case, monies received for the period after the Notice expires continue to be mesne profits not rent)

1. If no contact or payment is made and the Notice expires, any further acceptance of rent (as opposed to mesne profits) by the Co-operative creates a new implied tenancy. Any outstanding arrears cannot be included on a second Notice to Quit served on this new tenancy. The Co-operative would therefore need to issue a separate money claim for the arrears. This situation should be avoided, so it is important to send a letter about mesne profits immediately the Notice expires.

*Pronounced ‘mean’

APPENDIX III–Summary of arrears process

Approximate

arrears (letter 1A