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									                              FIFE COUNCIL

                                                     Housing and Communities
                                                     4th September 2007
                                                     Agenda Item No:………….

                      MANAGING RENT ARREARS

1. Introduction
1.1. The purpose of this report is to bring Members up to date on current
     issues in debt management in Fife Council as requested at the meeting of
     the Housing & Communities Committee in June 2007. While in past years
     the large amount of outstanding arrears has been reduced there is still
     work to be done to meet the challenges of continuous improvement
     through working together, understanding the issues from the tenants’
     point of view and by streamlining processes.

2. Policy
2.1. The Council’s Debt Management Policy was developed to be firm but fair,
     balancing the need to support people with genuine problems and the
     need to maximise rental income.

2.2. The principles which guide the current working arrangements are:
        - Adopt a firm but non-threatening approach
        - Encourage tenants to make early contact
        - Aim for personal contact with every tenant in arrears
        - Take a staged approach to recovery, including legal action after
            advising tenants of the consequences.
        - Pursue all options to resolve the situation before seeking a decree
            for eviction, which will only be used as a last resort

2.3. The policy was last reviewed in 2001, and it is proposed to bring forward
     proposals for early review of the policy and to involve Members in this
     process. As required by law, we will also consult with tenants on the
     review. To feed into the review, an officer group is looking at alternatives
     to eviction. Performance And Organisational Support Service, through its
     lead on Financial Inclusion, will provide research support with clients in
     debt to find out why they do not seek advice, and thus how we can better
     shape resources to support preventative action. It is hoped that proposals
     for revisions to the policy will be brought to Members for consideration in
     Spring 2008.

3. Process
3.1. The current policy is applied through an agreed procedure for debt
     recovery which is efficient, effective and sensitive to the situation of
     individual tenants in arrears. The procedure is available to all staff
     through the process mapping section of FISH.

3.2. The procedure builds up the contact with the tenant through a number of
     stages, each succeeding stage is more serious than the last. At each
     stage we offer advice and assistance, including referral to money advice

3.3. The first stages are automated arrears letters which are sent each rent
     period as arrears escalate. Tenants are asked to contact the Council
     failing which the Council will attempt to make contact directly with tenant.
     Tenants are asked to make an arrangement and complete and income
     and expenditure form to ensure that regular payments are within their
     means and of course to provide information regarding benefit entitlement
     and particularly Housing Benefit.

3.4. If the arrangement fails or there is continued lack of contact, we will serve
     a Notice of Proceedings. This indicates our intention to take the tenant to
     Court within 6 months. The notice often has the effect of persuading
     tenants to make contact and treat the arrears seriously. This allows an
     opportunity to make an arrangement to clear the debt and tackle any
     income issues.

3.5. A great deal of effort is made to make contact and sustain arrangements
     with tenants in order to prevent further escalation. However, if we have
     exhausted all possibilities, we will then seek permission from the court to
     evict the tenant. We need to do two things: show that there is a debt and
     to show it is reasonable to pursue the action. Again, when the tenant is
     advised that the case will be heard in court there is frequently increased

3.6. The tenant may be represented in Court and the Council’s Legal Service
     has to represent the Council’s interest. In appropriate circumstances the
     Sheriff will continue a case for a period while the tenant takes up the
     assistance that has been offered from early stages but has hitherto not
     done so.

3.7. If a decree for eviction is granted, the Homelessness Service is advised.
     When Sheriff Officers carry out an eviction Council staff are always

4. Performance
4.1. Over the past 5 years, we have reduced rent arrears as a percentage of
     the rent due. We compare well to other similar authorities but have a
     significant way to go to match the very best Councils.(Fig 1).

4.2. However, it is not enough just to show an improvement in the monetary
     aspect of debt management. We need to show we are using best practice
     and meeting the Activity Standards set by Communities Scotland. The
     Debt Management Team Improvement Plan for the next three years has
     been developed to ensure the Council meets the requirements of the
     Activity Standards, audits of the service, Standard Delivery Plan and
     2012 Homeless agenda. A copy of the plan is available on request from
     the Housing Service.

4.3. Performance is monitored and audited in a series of annual support visits.
     The support visits have proved, after some settling in, to be a worthwhile
       exercise in joint working to improve service. An action plan is developed
       after the visits to ensure recommendations are carried through.

       Figure 1: Percentage of net rent lost to rent arrears

                                        2004/2005 2005/2006 2006/2007
       Aberdeen City                       9.7%     10.0%      9.1%
       East Dunbartonshire                 8.3%      7.5%       n/k
       Edinburgh, City of                 11.8%      9.3%      7.5%
       Fife                                6.7%      6.6%      6.3%
       North Ayrshire                      9.2%      7.4%       n/k
       North Lanarkshire                   4.9%      5.0%      3.7%
       Renfrewshire                       14.9%     12.9%     11.6%
       South Ayrshire                      6.3%      5.3%      4.9%
       South Lanarkshire                   4.4%      4.1%      4.1%
       West Dunbartonshire                15.8%     14.5%     12.7%

5. Current Issues for Debt Management
5.1. Despite improvements, we still have 1275 tenancies with rent arrears of
     over £ 500. At this level, it is difficult for tenants on low incomes to see an
     end to the debt. They will be unable to apply for Tenants Improvement
     Grant (TIGS), miss out on disturbance allowances and may not qualify for
     transfer. If they give up their house, they will find it difficult to access
     public sector or Registered Social Landlord (RSL) housing and may run
     the risk of being considered intentionally homeless.

5.2. To get a better understanding of the issues that lead people to this
     situation a number of sample cases being prepared for Court were
     selected at random covering both larger and smaller locality offices.
     Given that early contact is the key to prevention one of the most
     disappointing statistics was that 24% of the tenants had not responded to
     contact from us.

                             Number of evictions and trend
                  2002-03 2003-04 2004-05 2005-06 2006-07

5.3. The Audit Commission estimated in 1998 that it cost a Local Authority
     £2100 to carry out an eviction for rent arrears. Allowing for rising costs,
     we are indirectly paying a quarter of a million pounds for evictions.

       Around 30% of the evictions are for relatively short term tenancies and
       this increase the amount of rent lost to void as well as impacting on levels
       of homelessness. Preventing homelessness, especially repeat
       homelessness, is an area on which work is already being done as
       described below.

   6. What we plan to address these issues
   6.1. Our Contact Centre is first point of contact, and we have set up an online
        request form for outward calling with the objective of established greater
        contact with tenants in arrears. This allows the Council to contact tenants
        outwith normal office hours.

   6.2. We provide funding to support Money Advice Services and voluntary
        sector organisations such as Frontline to allow them to offer specialist
        advice. The objective of this work is again to increase the take-up of
        support at an earlier stage.

   6.3. We are working on ways to encourage tenants to return their Housing
        Benefit (HB) forms and the necessary proofs for verification. This includes
        working with Fife Rights Forum on referrals and on-line HB applications.

   6.4. The Local Services Network has been developing an Intervention
        Strategy, which offers a short burst of tenancy support to assist
        customers in difficult situations. The Intervention Strategy is being piloted
        in 5 Localities and will be evaluated in Autumn 2007. More generally, the
        network is promoting better advice-giving by putting staff through the
        HomePoint (the National Housing Information & Advice Standards)

7. Conclusion
   7.1. Real progress has been made in Fife in tackling rent arrears. However,
        there is no complacency as is evidenced by the approaches indicated
        above to both prevent and reduce rent arrears. In seeking to meet these
        challenges it is essential to ensure that performance does not diminish.
        For this reason new initiatives would be introduced in a planned manner,
        supported by Housing, Local Service Network and Finance Services.

8. Recommendations
   8.1. Members are asked to note:

      8.1.1. The current policy and procedure in place to manage rent arrears
      8.1.2. The improving performance of Fife Council, and the comparison
             with other Local Authorities in our “family group”
      8.1.3. The intention to review the policy in Spring 2008

                                                       Alan Davidson,
                                                       Head of Housing
Report Author:
Louise Sutherland
Team Manager, Housing Service
Rothesay House, Glenrothes
8th August 2007


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