HRABP - Draft 8 - Flipbook - Page 24
8. Rent arrears
The impact of the range of changes above, reducing welfare benefits and changing the way in
which they are paid, together with other general factors relating to the economy and wages,
has increased the risk of rent not being collected.
Rent arrears as at 31st March 2018 were £921k, compared to 31st March 2017 at £739k and
31st March 2016 at £511k. This is an increase of £410k (80%) in the 2 years since UC was
introduced. The table below shows a 12 month rolling average for rent arrears over a 23
month period and the trend is clearly upwards, though with a reducing average growth in
later months (confirming the improved management of rent arrears). With the extension of
the ‘Full Service’ UC to the rest of the district and the migration of existing claimants by
2023, it is expected that in the pressure on arrears will continue for a period until new
claimants adjust to the very different system of benefit payment.
12 Month
rolling average
This table includes pre-payment of rent as well as rent arrears resulting in a lower debt level.
A range of mitigating measures have been
taken to ensure that the rise in arrears is
managed and reduced over time, and
additional provision made for bad debt
repayment to take account of this issue.
A range of actions have been taken that
appear to be having an impact:
•
Improved tenancy sign-ups with
a comprehensive council service
offered, including a Universal
Credit claim process;
•
Appointment of a Financial
Inclusion Officer;
•
ICT system improvements and
new analytics to be introduced
to bring ‘smarter’ debt recovery
processes.
24 East Suffolk HRA Business Plan 2018 - 2048
9. Increased Bad Debt
Provision
The bad debt provision at the end of
2017/18 was calculated using actual rent
arrear statistics as well as outstanding
debtor payments as at 31st March 2018.
The provision for bad debt was budgeted
at 4.4% (£902k) of budgeted income in
2018. However, the outturn position as at
31st March 2018 was 3.34% (£690k).
10. Debt Repayment Reserve
As at 31st March 2018 the debt repayment
reserve balance of the HRA increased to
£9m. We increased the transfer to the debt
repayment reserve in 2017/18 to reduce
the HRA working balance from 34.58% of
total income to 23.87% as at 31st March
2018. This gave the HRA the ability to
reduce future year transfers to the debt
