Managed arrears: How housing associations can combat consistently growing arrears
The second of Occupi’s five SMART values is Managed Arrears. Since COVID first hit the UK, the total arrears being managed by housing associations has been rising consistently. Managing large debts is nothing new for housing associations, however the dramatic increase in arrears over the last few years, compounded by the increased cost of borrowing for housing associations, is causing housing directors to question their arrears management strategies.
The root of this arrears issue is twofold. Firstly, income teams in housing associations simply do not have enough time to properly support all the tenants in their patch, meaning that only those tenants with the greatest debt are being regularly contacted. Those with smaller, but quickly escalating debts are often ignored until their situations become unmanageable. As such, income teams are only able to be reactive to arrears within their patch, rather than working proactively and intervening early to minimise their growth.
Secondly, the current cost-of-living crisis is pushing more people into financial insecurity, leading to more tenants being unable to afford their rental payments. This has been especially true over the winter months, during which families are spending more on heating costs, and consequently are more likely to be unable to afford rent.
Managed Arrears is about tackling these issues by providing income teams with the tools they need to act proactively, limiting or preventing arrears before they occur. Occupi’s AI is able to reduce income officers’ caseloads by up to 40% just by removing false positive cases (i.e. arrears cases that are caused by a tenant’s income being paid after their rent is due). The remainder of the caseload is then prioritised based on the stability of each tenant’s debt, meaning that those cases where the debt is likely to get worse are tackled first.
Finally, thanks to the sophisticated AI and machine learning technology utilised by Occupi, our software can also predict when a tenant will fall into arrears up to four months before it happens. By highlighting to income teams which tenancies are most at risk of falling into arrears, they can intervene early and provide financial support. Giving income and financial inclusion teams this information will allow them to curb the worst effects of the cost-of-living crisis by proactively preventing arrears before they materialise.
Occupi gives income teams the time and tools required to properly manage their housing association’s arrears. By reducing caseloads, prioritising support for those with the least stable debts, and giving teams the insight required to act proactively to prevent arrears, Occupi is helping housing associations to finally manage their arrears properly.