|To enable Mount Green Housing Association (“Mount Green”) to maximise income, minimise debt, limit the level of arrears written off, and act in a way that sustains all tenancies.
|All current and former residents of Mount Green including Leaseholders and Shared Owners
|Date first implemented
|Assistant Director of Finance
|Date first approved by Senior
|Date first approved by Audit &
|Every 3 years
Document Status: This is a controlled document. Any printed copies of this document are not controlled. As a controlled document, this document should not be saved onto local drives but always accessed from the Policy Library.
|Assistant Director of Finance
|Audit & Risk Committee
Current Policy Revision
|Assistant Director of Finance
|SLT approval date
|Audit & Risk Committee Approval date
|Next revision due
1. Policy Statement
1.1 Mount Green Housing Association (“Mount Green”) aims to deliver an efficient income collection service which safeguards our financial position, the foundation to provide a wide range of services to residents. We aim to maximise income, minimise debt, limit the level of arrears written off, and act in a way that sustains all our tenancies.
1.2 Income management is no longer just about rent collection and arrears reduction. We must maintain an effective and efficient income service to both arrears prevention and collection. This policy sets out our approach to income collection and arrears management.
1.3 Mount Green recognises the economic and social cost of eviction and therefore we will take a preventative and proactive approach to dealing with rent arrears. The Pre-action Protocol for Possession based on Rent Arrears, which came into effect in October 2006, applies only to assured and secure tenancies. However, we will follow this protocol when recovering monies owed by residents with assured shorthold tenancies or residents occupying accommodation provided by any other agreement. As an example of best practice, we will also follow this protocol when recovering monies owed by leaseholders and shared owners.
1.4 We recognise that engaging with residents, helping them to overcome financial problems, and fostering a payment culture is the most effective method of income recovery. We are committed to being proactive in establishing direct contract at all stages of income collection and arrears management.
1.5 This policy applies to collection of arrears of rent and occupancy charges which include service charges and to all current and former residents of Mount Green, including shared owners or leaseholders. This policy will also apply to the collection of garage rental income and arrears.
1.6 For the purposes of this policy the term rent implies the total monthly or weekly charge inclusive of any service, heating charge, water rates or independent living charges.
2. Policy Principles
The key principles relating to the policy are to:
- Promote a payment culture, encouraging early payment and preventing residents falling into arrears.
- Identify arrears at an early stage and manage them in a firm, fair and proactive manner.
- Limit the level of arrears written off.
- Support residents to sustain their tenancies by working with residents to enable financial inclusion and to minimise debt and rent arrears.
- Make referrals to internal and external advice and support agencies as appropriate.
- Communicate with residents in a manner that is positive and solution oriented at all times.
- Encourage residents to contact us regarding any changes in their financial circumstances or if they are experiencing difficulties with managing their finances that will result in missed rent payments.
- Tailor our approach to individual residents and families, responding sensitively and being flexible to their needs.
3.1 All team members will be made aware of this policy through Mount Green’s internal communication channels, including email. Everyone will pay a role in the process of rent collection.
3.2 Changes to this policy and its associated procedure if applicable will be communicated to all team members.
3.3 All team members will be required to read this policy, and to confirm that they have read and understood it.
3.4 This policy will be published to residents through our website and Resident Engagement Forums.
4. Other Policies
This policy should be used in conjunction with the following policies:
- Data Protection and Confidentiality Policy
- Grounds for Possession Policy
- Financial Regulations and Delegated Authority
- Starter Tenancy Policy
- Vulnerable Residents Policy
- Allocations Policy
5.1 The Audit and Risk Committee (ARC) on behalf of the Board review and approve this policy.
5.2 The Finance and Resource Director (F&RD) carries overall responsibility for ensuring that this policy has been conducted effectively with appropriate processes in place. Regularly reporting back to ARC on our arrears management performance.
5.3 The Assistant Director of Finance is responsible for reviewing, updating and amending this policy and associated procedures to reflect required changes, appearing internally and externally.
5.4 The Income Supervisor is responsible for providing advice, guidance and training on the procedures, and for assessing how this policy and associated procedures have been conducted in day-to-day work.
5.5 The front-line team members are responsible for executing and embedding the policy in their daily work. All team members are responsible for feeding back any improvements that could be made to this policy (and its associated procedure if applicable) or problems they have found while trying to implement it.
6. Policy Detail
6.1 Rent – A payment due to us, as set out in the occupancy agreement or the remaining proportion of rent where the leaseholder doesn’t own 100% of the property.
6.2 Service charge – To cover the cost of a range of services provided for in the occupancy agreement or lease, including but not limited to estate management, cleaning and management fees, minor maintenance, and major works costs.
6.3 Ground rent – Where we do not own the freehold, we must pay the ground rent and pass the cost on to leaseholders. Where applicable we will charge ground rent to leaseholders.
6.4 Arrears – Monies owed to us by a resident when payments have not been made.
6.5 Discretionary grounds for possession – Grounds for possession we use when serving a notice in which the court can make a discretionary decision to grant an order for possession.
6.6 Mandatory grounds for possession – Grounds for possession we use when serving a notice in which the court must make a mandatory decision to grant an order for possession.
6.7 Alternative Payment Arrangements (APA) – An arrangement where Universal Credit can be paid in an alternative way to one monthly payment, this may include paying the Universal Credit more often than monthly, splitting it between the claimant and their partner, or paying Universal Credit directly to Mount Green as landlord.
6.7 Write off – removing the rent and service charges owed from an account
6.8 Write back – this is where we write off the credit if a former tenant has not requested a refund within 6 years.
6.9 Attachment of earnings – this is an order enabling us to deduct a sum direct from the former tenant’s pay/wage to meet the debt.
6.10 Debt collection agency – an external company employed to collect debt on our behalf.
6.11 Probate Court – the segment of the judicial system charged with handling matters of an estate of the deceased tenant.
6.12 Debt Relief Order (DRO) – a form of bankruptcy for people with minimal assets and an outstanding debt.
7. Resident Obligations
7.1 We consider rent a priority debt and therefore residents are responsible for paying their rent, service charges and/or Independent Living charges as set out in their agreement or in their lease. It is also the residents’ obligation to inform us if they are having any problems paying their rent or if they are likely to fall into arrears.
7.2 All our occupancy agreements state that rent must be paid in advance irrespective of the method of payment. Housing Benefit and Universal Credit is usually paid in arrears. All residents must have a credit on their rent account to comply with their occupancy conditions.
7.3 For monthly tenancies, the credit should be a minimum of a quarter of a month’s rent and for weekly tenancies, the credit should be a minimum of one week’s rent. Generally, leaseholders should pay rent and charges on a monthly basis in advance unless their lease stated otherwise. This will help to promote a positive payment culture and will mean that the resident has a small buffer should their circumstances change.
7.4 Rent accounts must be cleared at the end of the tenancy and a forwarding address provided before becoming former tenants.
8.1 Ensuring that residents comply with their legal rent payment obligations from the start of the tenancy is essential to ensure tenancies are sustained in the long term. Mount Green will;
- Complete an affordability assessment before any offer of accommodation is made. This will ensure that the prospective tenant is aware of the cost of their new home and Mount Green are confident that they can afford it.
- Refuse nominations where a prospective resident is assessed as being unable to afford to live in a Mount Green property.
- Before a new tenancy agreement is signed the prospective resident will be required to pay the rent in advance. We may make exceptions to this policy if an applicant can evidence that they are facing extreme financial hardship. Any exceptions will be subject to the approval of Assistant Director of Housing Services.
8.2 Where a new resident is claiming Universal Credit and is identified as vulnerable in accordance with definitions set out by the Department for Work and Pensions, an immediate request for an Alternative Payment Arrangement (APA) will be made. This means that the rent element of Universal Credit will be paid directly to Mount Green.
8.3 Mount Green will carry out affordability assessments with new leaseholders as part of our sales process to ensure that they are aware of the cost of their new home and that both Mount Green and the shared owner or leaseholder are confident the property is affordable.
9. Promoting a Payment Culture
9.1 Encouraging early payment and preventing residents falling into arrears will always be our first step. We understand the value of using a range of preventative measures to help sustain tenancies and minimise the use of possession action. Our preferred payment method is payment by Direct Debit, however we will accept alternative payment methods based on tenant need. Mount Green will;
- Promote a rent payment culture, highlighting the connection between rent payments and our ability to provide a high-quality service.
- Refer residents who require advice and support with welfare benefit applications to other agencies or Mount Green’s welfare benefit service.
- Foster a positive relationship between officers managing rent accounts, local authorities, the Department of Work and Pensions and the Court User Groups.
- Encourage payment by Direct Debit, as our preferred payment option, and provide residents with alternative payment options if required.
- Closely monitor rent accounts to identify problems at an early stage.
- Empower residents to keep themselves informed about their rent account balance through an online resident’s portal.
- Identify any vulnerabilities or additional needs and refer residents to appropriate support services.
- Identify any communication needs and provide information in alternative formats if required.
- Publicise the consequences of accumulating arrears via Newsletters and other resident communications.
- Provide residents with clear and straight forward information on their responsibilities, payment methods and available support at sign-up. This will be followed up with a settling-in visit after a specified period to ensure a rent payment method is in place.
- Take steps to maximise income, including promoting benefit take-up, training, employment support, offering assistance in managing finances and referring to appropriate agencies where necessary.
- Encourage residents to inform us of any change in personal circumstances and any likelihood of missing a payment.
- Encourage residents to pay their rent directly to Mount Green out of their Universal Credit payments via Direct Debit.
- Make applications for direct payments from a resident’s Universal Credit claim where they fall within Department for Work and Pensions vulnerability criteria.
- New Leaseholders will be asked to complete a Direct Debit mandate upon completion of sale.
10. Providing Assistance for Residents in Arrears
10.1 If arrears do arise, we will engage with the resident to identify and tackle the causes. We are aware that one missed payment, no matter how small, could place low-income households in a financial position that it is difficult to recover from. Mount Green will;
- Present information in easily accessible formats and ensure residents understand that they are in arrears and what this means.
- Understand the personal circumstances of the resident and any household members, wherever possible through personal contact.
- If a resident in arrears is identified as vulnerable or in need of debt advice we will liaise with the relevant support agencies and internal departments as appropriate
- Complete income and expenditure forms with residents in rent arrears and provide budgeting advice.
- Make every effort to make an affordable agreement with the resident to repay the arrears within a set time period.
- Liaise with Housing Benefit officers where the resident is eligible for Housing Benefit.
- Signpost residents to debt counselling or other relevant advice agencies.
- Accept Third Party Deductions from the legacy benefits of income support/job seekers allowance as a repayment arrangement.
- Seek direct payments from Universal Credit where agreements to repay arears have been broken.
- Provide housing options advice where rent arrears have arisen due to a change of circumstances, such as under occupation.
10.2 If a resident falls into arrears we will work with them to make arrangements to clear their debt with us, outlining the importance of maintaining regular payments to their account and highlighting the consequences of not doing so.
10.3 We do not offer our residents financial advice or debt counselling. Our Welfare Benefit Officer will offer assistance where appropriate and refer to appropriate agencies. Residents wishing to seek financial advice or debt counselling will be signposted to suitable independent agencies which can include the Citizens Advice or the Money Advice Service.
10.4 We will make arrangements with shared owners or leaseholders who fall into arrears, to clear arrears over a stated period of time, usually up to six months or by the end of the financial year. We will use our discretion when agreeing to repayment arrangements and will refer to specific terms in the lease where this is applicable. Where the lease permits, we may charge interest on any debt according to the specific lease.
10.5 If Leaseholders are in dispute with Mount Green we will try to reach agreement with them and/or sign post them to the Government backed Leasehold Advisory Service.
11. Taking Enforcement Action
11.1 Possession proceedings will only commence when all other steps have been taken and all reasonable options to tackle the debt have been attempted. Mount Green will ensure it is operating within the law at all times and may seek external legal advice at any point in this process.
11.2 Details of the specific grounds we use for possession can be found in our Grounds for Possession Policy. Mount Green will;
- Identify any vulnerabilities before any proceedings are issued, paying particular regard to the Equality Act 2010 and will refer residents to relevant support agencies as appropriate.
- Consider alternative options to possession action at all stages of the process.
- Consider using the mandatory Ground 8 in Notices of Seeking Possession where it is proportionate to do so.
- Take all reasonable steps to prevent evictions from occurring
- Keep the resident informed of all the action we take and continue to offer advice and information to the resident on debt repayments, the requirements of court orders and where to obtain independent legal advice.
- Encourage residents to attend court as appropriate and give information on sources of independent advice and support
- Liaise with relevant internal departments
- Notify Local Authority homelessness teams of households at risk of homelessness.
We will not normally issue possession proceedings for arrears if:
- The resident is complying with an arrears repayment agreement; or there is a reasonable expectation that the Housing Benefit claim will be paid within an acceptable period.
- The resident has provided the local authority with all the evidence necessary to process a Housing Benefit claim and the resident has paid other sums due not covered by Housing Benefit
- A resident is verified to be in receipt of the housing element of Universal Credit or an application has been made for a direct payment and the resident has been making payments towards a proportion of the rent.
Shared Owner and Leasehold Arrears
11.4 Enforcement action will only commence when all other steps have been taken and all reasonable options to tackle the debt have been attempted. Where a leaseholder does not keep to a repayment arrangement or fails to engage with us to resolve their arrears we will pursue one or more of the following enforcement options to recover the debt in line with our
- Contracting the mortgage lender – We will only approach the mortgage lender once we have exhausted all other means of recovering the arrears in line with our internal procedures and have given adequate warning to the leaseholder. If the mortgage lender refuses to satisfy the arrears we will seek alternative enforcement action against the leaseholder.
- Civil Action – We will initially pursue arrears as a civil debt by taking small claims action or seeking a county court judgement. We will seek a money judgement to enforce compliance with the lease.
- Forfeiture – We will only seek forfeiture of the lease for arrears as a last resort. We will not take court action without informing the leaseholder of our intention by serving a notice under section 146 of the Law of Property Act 1925. We will also inform the mortgage lender of our intention.
- Possession Action – In the case of a shared owner, we will consider taking possession action to terminate a lease as if it is an assured tenancy. In such cases, we will pursue rent arrears under Grounds 8 and 10 of the Housing Act 1988 by serving a notice of seeking possession.
- Resale of a property following repossession – Where the court has granted forfeiture of the lease, we will inform the leaseholder of the decision and instruct the bailiff to gain possession.
11.5 When applying for forfeiture, we will follow the Commonhold and Leasehold Reform Act 2002. This is a complex area of law and any action under this provision will be dealt with by specialist solicitors.
11.6 Prior to taking legal action, we will identify any vulnerability or support needs paying particular regard to the Disability Discrimination Act and refer leaseholders to relevant support agencies as appropriate.
11.7 Where we have a commitment to sell shared ownership properties, we will refer any repossessed shared ownership properties to the Growth and Development team to enable them to market and re-sell the property in accordance with the local eligibility criteria. Where 100% of the property was owned, the property will be sold on the open market.
11.8 Once the property is sold, we will deduct any relevant expenses from the proceeds of the sale; for example outstanding service charges and legal fees. We will recover all internal and external costs associated with the property. If there are insufficient funds to cover these costs, we will consider making a claim for the remaining balance and any outstanding debts. If there are any proceeds remaining from the sale, we will consider returning them to the former leaseholder, based on the circumstances of the case but we have no legal obligation to do so.
12.1 We aim to minimise losses from former residents who leave owing rent by:
- Pro-active early intervention and arrears management while the tenant is still in residence
- Stipulating that rent accounts must be cleared at the end of the tenancy and a forwarding address is provided.
- Making every effort to ensure that when a tenancy is terminated and the resident is claiming Housing Benefit or Universal Credit, the Local Authority and the Department for Work and Pensions are informed.
- Remaining deposit monies held against a tenancy are used to reduce the tenant’s debts such as rent arrears, court costs, garage and parking charges.
13. Former Tenant Credits
13.1 If there is a credit balance on a former tenant’s account (and no other charges are owed to Mount Green), the former resident must apply for a refund. Where a credit refund has not been requested by a former resident within 6 years of termination of the tenancy, we will submit the credit for write back.
13.2 Where a credit refund has been requested by the executor of a deceased resident’s will or next of kin; we will require documentation confirming that the said person has authority to make this refund request. If the credit is over £250, we require proof of entitlement in the form of a Will, Power of Attorney or other evidence that proves the applicant is the administrator of the deceased’s affairs.
14. Former Tenant Debt Recovery Actions
14.1 Where a former tenant cannot afford to repay the debt in full, we negotiate a mutually acceptable repayment agreement with them. We will encourage former tenants to set up a direct debit for repayment of the debt.
14.2 We confirm all repayment agreements to a former tenant in writing (which can be via email). If a repayment agreement is broken we may refer the case to a debt collection agency or seek payment of the debt via legal remedies.
14.3 Legal action will comprise of an application for a money judgement (where this has not already been obtained at the possession hearing) and any resulting action to enforce the order such as an attachment of earnings.
14.4 We only make referrals following the completion of our own recovery action which includes a minimum of 2 formal communication actions. This could be any type of communication requesting settlement of the debt, if the former tenant’s address is known and;
- Instructing a tracing service to trace the former tenant’s address where the address is not known.
- We do not refer to a debt collection agency if the former resident is adhering to a repayment agreement; or if they have died.
- We may decide not to refer to a debt collection agency where the former resident has a known vulnerability that significantly affects our ability to recover the debt. Cases will be reviewed on a case-by-case basis.
14.5 Accounts will be returned to us where the debt collection agency has been unable to make contact with the former resident after 2 years. We will then take steps to write off the debt.
15. Former Arrears Write Off
15.1 We only consider a write off of bad debt after we have exhausted our process to recover the former tenant arrears or under the following circumstances:
- If the debt is under £50.00.
- Where a debt collection agency has been unsuccessful in recovering the debt.
- Where probate has been unsuccessful in recovering the full debt.
- Where the debt has been outstanding for over 6 years without any form of contact or payment.
15.2 All write offs will be approved in accordance with the delegated authorities set out in Mount Green’s Financial Regulations. High value write offs can only be authorised by the Board.
16. Former Arrears Settlements
16.1 We may agree to enter into a settlement with the former tenant to clear a percentage of the debt while agreeing not to pursue the balance.
16.2 Cases will be reviewed on a case-by-case basis and this must be approved by the Assistant Director of Finance; in accordance with the limits assigned by the Director of Finance and Resources, the Chief Executive and Mount Green’s Board.
17. Recovery of debt from deceased residents
17.1 We handle cases in a professional but sensitive manner. Where the Next of Kin or Executor is known to us we make contact with them in writing no sooner than 4 weeks after the account has closed.
17.2 We request for the full outstanding arrears to be repaid from the proceeds of the estate. Where this is not possible or declined, we request confirmation in writing from the Next of Kin or Executor and proceed to a probate search.
17.3 Where the Next of Kin or Executor is not known to us we will proceed directly to a probate search. Probate searches are completed quarterly. Where an estate is listed, we are eligible and it is cost effective for us to do so, we may make an application to clear the debt owed.
17.4 We may agree to defer payments of charges relating to a property which has recently been vacated following the death of the leaseholder until Probate is granted. Such agreements will be made at our discretion and will not affect our rights under the terms of the lease to take action. Principally this also applies to a leaseholder going to residential care.
18. Contact with Residents
18.1 We will be proactive in establishing direct personal contact at all stages of income collection and arrears management. As well as writing to residents, we will use a variety of methods to facilitate personal contact, including home visits, telephone contact, e-mail and text messaging.
18.2 We will provide information in alternative languages or alternative formats if required. We will log and maintain records of all communication and correspondence made with residents regarding their arrears.
19. Loss of Rights for Residents in Arrears with Assured and Secure Tenancies
19.1 Residents in arrears of a specified period may not be granted a joint tenancy from a sole tenancy and will not normally be eligible for transfer or mutual exchange. There may be situations where discretion can be used to allow a management transfer for a resident in rent arrears. This may be when a resident is being harassed or where the resident is experiencing severe financial hardship.
19.2 Residents on a starter tenancy will not immediately move onto an assured tenancy if they are in rent arrears. Mount Green will consider extending the starter period up to 18 months with an agreement in place to clear arrears within this time.
19.3 Where and in accordance with our Allocations Policy we agree for a resident in arrears to transfer to another of our properties, it will be a condition of the transfer that the resident signs an appropriation agreement as part of their new tenancy agreement.
20. Arrears on Debt Relief Order (DRO) and bankruptcy
20.1 Where residents have been declared bankrupt or have obtained a Debt Relief Order (DRO), they may have included rent arrears within their list of debts. If so, we are bound by the Insolvency Act 1986. Section 285(3) for bankrupt residents and Section 251G for residents who have included arrears in DRO indicate that we may be obliged to write-off any relevant
debt. However, we do not necessarily have to write off rent arrears and we will take legal advice as necessary.
20.2 When Mount Green has been informed (written DRO should be obtained) that a current or former tenant has their DRO approved, we can’t chase the listed debts during the DRO period. However, we should continue collecting unlisted arrears from the current tenant if there are any arears accumulated since by following normal arrears management procedure.
20.3 A DRO only stops Mount Green asking tenants to pay listed debts back during the DRO period. The existence of a DRO does not prevent the court from making a possession order against a tenant on the ground of rent arrears. Mount Green still has the right to evict tenants based on our general arrears policy.
20.4 Once the DRO expires, Mount Green can legally chase total outstanding arrears. However, this will be done on a case-by-case after being assessed for Value for Money. Opt-out from continuing pursuing debts must be approved by the Finance and Resources Director with practical evidence.
21. Compensation / Rent Refunds
21.1 Where a resident has been awarded compensation or a rent refund, we may offset any such payment against any outstanding debts, including the current month’s rent.
21.2 Rent is payable in advance so any compensation payment or rent refund will be offset against any rent arrears.
22. Other Debts
22.1 We recognise that residents in rent arrears may also owe other debts to Mount Green, such as court costs, rechargeable repairs and other sundry debts. Where multiple debts exist, we prioritise debts in the following order:
- Current rent and service charge arrears
- Unpaid current Independent Living charges
- Garage Rent Arrears
- Current repairs recharges
- Court costs, former resident recharges and miscellaneous debts
- Former resident arrears
23.1 All interviews regarding arrears will be carried out in confidence. The details of a resident’s rent account will not be made known to people outside Mount Green except where court action is being taken. When dealing with a phone query, we will not disclose personal information without first confirming the resident’s identity.
23.2 Should the resident be deceased, we will ask to see proof of Power of Attorney or Executor of the Will prior to discussing the deceased residents rent account.
23.3 Where we have identified that a resident is vulnerable and is at risk of eviction, we may contact the relevant support services, as appropriate. This will only be done on a case-by-case basis, and in line with our data protection policy.
23.4 We will release information on residents who are at risk of homelessness to the Local Authority and as part of our duty of care to prevent homelessness. The type of information and the purposes for which it can be used will be governed by the individual protocols we have in place with each local authority. We will share information with the Department of Work and Pensions where relevant.
23.5 We will only release information on accounts to our working partners when referring to our debt collection agency and legal actions have been identified.
24.1 We will monitor arrears performance and evictions regularly to ensure the effectiveness of this policy.
24.2 We will regularly report to the Board of Mount Green on arrears performance against annual targets and an Annual Write Off report.
24.3 When a breach is discovered, for any circumstance, an initial investigation should be conducted immediately. The outcome from the investigation could be a lesson to be learned or might trigger our disciplinary policies.
25. Equality, Diversity, and Inclusion
25.1 For Mount Green, diversity is about respecting people’s individual differences and ensuring that all people that come into contact with us have access to the same high standards of behaviour and service.
25.2 We are committed to ensuring that no resident or team member will be treated less favourably because of their age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion and belief, sex or sexual orientation.
25.3 For residents whose first language is not English, we will provide any necessary support they need throughout the arrears process, this could include translating information or providing an interpreter if needed. We will communicate with residents in the way that suits them wherever possible. We will provide tenancy information that is easy to understand,
and we will communicate in an appropriate way. We will use a combination of letters, visits, text, email and telephone contact to ensure that residents are able to understand the issues and the potential consequences of nonpayment of rent.
25.4 We will monitor evictions to identify any trends and any equality and diversity issues that may arise.