New banking concept to protect rents
A housing association is in talks with credit unions about setting up ‘jam jar accounts’ to protect its income stream.
Sunderland-based Gentoo, which owns around 30,000 homes, is investigating ways to protect its £99 million annual rental income once universal credit begins to be phased in from October 2013.
Universal credit combines several benefits, including housing benefit, into one monthly payment. Under the scheme, benefit will be paid directly to the tenant instead of the landlord.
This has prompted fears that rent arrears may arise, hitting landlords’ revenue streams and potentially affecting their credit ratings.
Gentoo is investigating the possibility of setting up jam jar accounts for tenants to protect rent payments. Under the jam jar concept, payments can be separated into a separate ‘jar’ from which rent payments are taken.
The association believes the move could help tenants who are unable to get bank accounts because of their income. Gentoo is also understood to be looking at the possibility of setting up the accounts without passing the cost onto tenants.
A spokesperson for Gentoo said: ‘We recognise that traditional bank accounts are not always a suitable solution for all of our customers, in particular those on low incomes.
‘At present we are exploring a number of alternative banking options to help our customers to manage their money more effectively. Together with housing associations and local credit unions we are in the process of investigating the jam jar concept and the associated costs.’
