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Mental health and rent arrears

As new evidence reveals the prevalence of mental health issues among social tenants in rent arrears, Maggie Houghton explains how Hyde Group is tackling the issue, including pausing formal debt recovery action while tenants seek debt advice

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Picture: Getty
Picture: Getty

The Hyde Group, alongside five other social landlords, recently worked with the Money and Mental Health Policy Institute to establish an evidence base for prevalence of mental health issues among residents in rent arrears.

Money and Mental Health was also asked to develop practical recommendations for how social landlords can implement – or adapt existing – rent collection practises which increase the likelihood of resolving the rent arrears, and in doing so protect the landlord’s bottom line.

The resulting report, Where The Heart Is, is a great addition to the evidence base of the challenges faced by the sector and its residents, as the welfare reform and cuts in social care and health provision creates the perfect storm for some of our most vulnerable residents.

“A third of people in arrears struggle with a mental health problem.”

It acknowledges the fiscal challenge our sector experiences and highlights how, despite this, we are able to safeguard our residents in ways the private sector cannot.

However, it also establishes the scale of the challenge we are faced with: a third of people in arrears struggle with a mental health problem, and the cognitive and psychological impacts of mental health problems mean that following a standard arrears recovery escalation process will often not lead to a successful outcome.

Hyde staff are familiar with the cycle of mental stress, income shocks and fear of homelessness described in the report.


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We were pleased to see that many of our current practises to support residents in this situation are reflected in the report’s recommendations and listed in the good practise checklist, which was published alongside the report.

Most importantly Hyde has already adopted a version of ‘breathing space’, a concept which in the consumer debt sector means freezing charges and interest for a set period of time whilst a debtor seeks formal debt advice.

At Hyde, if a tenant in vulnerable circumstances – for example, due to a mental health issue – is engaging with our money and debt advice service, we will hold off further formal action so that a resolution to the resident’s situation can be found.

This is not a carrot employed to increase engagement with the advice service, but a pragmatic tool which allows the space and time to resolve often highly complex situations that are rarely about financial circumstances alone.

“If a tenant in vulnerable circumstances is engaging with our money and debt advice service, we will hold off further formal action so that a resolution can be found.”

The outcome we are all seeking in these situations is for our resident to succeed in their tenancy, the cost of tenancy failure is high, not just for Hyde and wider society, but above all for the tenant who could lose their home.

The success of the joint approach by Hyde’s income team, our money and debt advisors is evident in the change in payment behaviour of our residents in arrears; we estimate that in 2016/17 it prevented 70 tenancy failures.

However, if we get to the stage of considering formal action, we have in some ways already failed. While many organisations, like Hyde, are able to look to the research and the best practise checklist and confirm that they are already doing a good job, we should also look at it and decide that we can do an even better job. Hyde has spearheaded the use of nudge and behavioural economics to increase engagement with hard to reach residents.

We delivered our Better Money Behaviours toolkit and have run random control trials confirming the effectiveness of nudge techniques to increase engagement.

The recommendation in the report to review messaging provides us with an opportunity to further this work.

Furthermore Hyde has a strong focus on developing digital solutions for customer interaction with our landlord services.

This provides a timely opportunity for us to meet the report’s recommendation to expand the offer of channels for customers with mental health issues to interact with our staff.

Maggie Houghton, Hyde Foundation programme manager, Hyde Group

 

UPDATE: 5.04pm 10.5.18: The article has been amended slightly to clarify that Hyde is pausing formal debt recovery action for vulnerable tenants arrears, and not pausing their rent payments. The tenants will still be required to pay their rent on time.

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