Arrears: A People Problem, Not A Finance Problem
It’s often assumed that those who run up rent arrears are simply bad at managing finances and/or so financially stretched that they prioritise other outgoings over paying the rent on their property. However, there is increasing evidence that this is a popular misconception and that there are many causal factors that contribute to tenants falling into rent arrears including fluctuating incomes, and physical and mental health issues.
According to a study by the Money and Mental Health Policy Institute, “34% of people struggling with housing payments are experiencing mental health problems, and people experiencing mental health problems are one-and-a-half times as likely to report problems paying for housing”. This not only points towards those accruing rent arrears having low ‘financial resilience’ i.e. not being able to cope when an unexpected cost crops up, but also a number of other non-financial barriers that prevent tenants affected by such issue from being able to pay.
Complex Safety Net
The safety net that exists to support low-income tenants is complex. 38% of social housing tenants pay their rent by two or more methods (such as partial Housing Benefit and paying the rest themselves). Research by Mobysoft found that tenants who pay by three methods or more (of which there is around 424,000 tenancies doing this) are twice as likely to be at risk of arrears or in arrears than those that pay by a single method.
![](https://www.mobysoft.com/wp-content/uploads/2022/10/upset-person-1024x673.jpg)
Understanding Tenants’ Situation Is Key
To combat this, social housing providers can take pre-emptive steps in the form of data-analysis to understand not just how many tenants are in debt, but how many of that cohort are in an unmanaged debt situation. Adopting new systems and metrics will always be met with some apprehension internally but if the weight of evidence forthcoming from a comprehensive review points towards current processes and failing to be equitable then key decision makers will undoubtedly be prompted to take notice.
If you’re a social housing provider that doesn’t currently use RentSense, but would be keen to understand the potential risk to your tenants then Mobysoft can provide a bespoke Tenant and Income Risk Analysis Report for your organisation. Fill out our contact form to learn more.
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