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Agenda Item No. 6
FINANCE SUB COMMITTEE 20.3.12
Date of Report: 5.3.12
Title: Debt Collection
Purpose of the report: This report summarises the current levels of
debt and performance indicators for current
tenant, former tenants and leaseholder debt.
Prepared by:
Status: For Information
Summary and Finance Committee are asked to comment on
Recommendation: the report.
Financial and VFM Noted in the body of the report
Implications:
Resident Income collection Performance data is included
Consultation/Feedback: in the corporate dashboard & performance
report to the Area Forums
LBH considerations:
Risk Implications Manageable risk – Risk Register Item 2 - Tenants
(cross reference to risk getting into increasing rent arrears – Action taken:
register): Financial Inclusion Strategy developed with various
support provisions including publication of alternative
methods of payments.
Equality and Diversity Compliant with equality and diversity
Implications:
Responsible for Suneeta Lakhenpaul – Current Rent
Implementation: Janet Wade – Former Tenants Arrears (FTA)
Geraldine Goodwin- Leaseholder & Freeholder
Charges
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1. Current levels of debt and performance indicators for
current, tenant, former tenants and leaseholder debt.
Key points to note are:
• Current rent collection – HMPI 210 (HouseMark
Performance Indicator) as at February is 100.21%.
• Current tenant arrears as at 13.2.12 were £1,922,978 which
is a decrease of £35k from the arrears last reported on 9.1.12.
• Former tenant arrears as at 05.03.12 were £695k which is an
increase of £29K from the arrears last reported 9.1.12.
• Home Ownership –The overall service charge collection is
95% to January. The collection of the 2011/12 annual estimate
is above the target of 105% at 111%. Over £1.4m has been
collected for major works towards the collection target of
£1.5m. The ground rent was raised in January at £10 per
leasehold property.
2. Rent Collection
2.1 Percentage of current rent collected
2.1.1 The percentage of current rent collected is monitored by both
Housemark Performance Indicator HMPI 210 in year and
Performance Indicator BVPI66a (Best Value Performance
Indicator) annually.
2.1.2 Performance Indicator HMPI 210
The table below shows the percentage of rent collected from
April 2011 to February 2012.
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Rent Collection – April 2011 to February 2012
Table 1: rent collection
Year 2011/12 Target Actual Under/
% Over Target
2012 (to February) 101.14% 100.21% (0.93)
2012 to (January) 101.14% 100.09% (1.05)
2011 to (December) 101.14% 100.01% (1.13)
2011 to (November) 101.14% 100.24% (0.90)
2011 to (October) 101.14% 100.27% (0.87)
2011 (to September) 101.14% 100.18% (0.96)
2011 (to August) 101.14% 100.26% (0.88)
2011 (to July) 101.14% 100.27% (0.87)
2011 (to June) 101.14% 100.27% (0.87)
2011 (to May) 101.14% 99.91% (1.23)%
2011 (to April) 101.14% 97.45% (3.69)%
2.1.3 The above table shows we have kept the HMPI collection rate
at above a 100% for the last 9 consecutive months - June to,
February 2012.
2.1.4 The HMPI collection rate for February has increased by 0.12%
from 100.09% in January to 100.21% in February.
2.1.5 Some welfare reforms, such as the annual rise in non-
dependent deductions continue to have a direct impact on
tenants. Since April 2011, we have seen a significant increase
of £141k in non-dependent deductions totals from £97k to a
total of £238k as of February 2012. The number of cases since
April has also increased from 216 to 526 in February 2012.
We continue to closely monitor these cases to proactively
identify and provide advice & support to tenants who run into
tenancy difficulty.
2.1.6 Work continues under our Financial Inclusion and Capability
Action Plan, which aims to ensure HH tenants, are routinely
assessed and given advice on; cheap insurance, cheap
tariffs, credit unions services including cheap loans, savings,
and basic bank accounts via them and Local High St banks etc
– with the aim to minimise residents’ engagement with loan
sharks and door step lenders.
2.1.7 We are continuing with proactive personal contact with tenants
in debt, on the telephone, face-to-face, through home visits and
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office interviews. We are proactively texting tenants with good
response rates.
2.1.8 The team is working additional hours on Saturday mornings
between 9.00am and 1.00pm and during the evenings from
5.00pm to 7.00pm. The work commenced as of 28th January
2012 and will finish by the end of this financial year. A targeted
approach involving tenants usually difficult to reach during the
week is followed whereby staff proactively contact tenants by
telephone, texting and arrange appointments. Payments are
encouraged to reduce and clear rent arrears. We will losely
monitor the impact of this work and report back to Finance Sub.
2.2 Current tenant arrears by Housing Area
2.2.1 Table 2 below shows debt levels by Housing Area.
Table 2: Arrears reduction from from 12.12.11 to 13.2.12
Area Arrears as Arrears as Arrears as
at 12.12.11 at 4.1.12 at 13.2.12
East 580,467 582,701 533,073
West 569,676 573,458 581521
Central 779,792 792,075 798,734
Hostels 7,818 9,417 9,650
TOTAL 1,937,753 1,957,651 1,922,978
2.2.2 There is a decrease in arrears of £35k between 4.1.12 to
13.2.12. Please note hostel arrears are Council services
managed by the council’s Housing Income Team.
2.3 Former Tenant Arrears
2.3.1 Former tenant arrears are divided between ‘true former tenant
arrears’ and ‘former current arrears’. ‘True former tenant arrears
are when the debtor no longer has a tenancy with the London
Borough of Hounslow. These debts are more difficult to collect,
as there are fewer sanctions available to Hounslow Homes in
collecting the debt. ’Former current’ arrears are when a tenant
has been moved to another LBH property and had arrears
relating to their previous property. Tenants should only be
moved with arrears in exceptional circumstances such as
domestic violence, harassment and anti social behaviour. FTA
is recognised as being hard to collect and there is provision in
the HRA budget to write off 100% of former tenant debt
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2.3.2 Performance against the indicators for 2011/12 is shown in the
table below
Target Actual as at (Under)/over
2011/12 March 12 target
True former 17.5% 13.4% (4.1%)
arrears
Former current 70% 85.24% 15.24%
arrears
2.3.3 The actual level of all former tenant arrears is:
As at As at As at As at As at
05.03.12 17.01.12 30.12.11 14.1.11 12.09.11
£695K £666K £663K £818K £783K
2.3.4 The following table shows former tenant arrears split by age of
debt.
Age of debt Number of Total arrears in each
cases category
Less than 3 months 101 £59,417
3-6 months 65 £41,933
6 months – 1 year 119 £164,359
1-2 years 156 £184,567
2-3 years 56 £136,387
3-4 years 29 £52,919
4-5 years 8 £8,283
5-6 years 9 £10,026
6 years + 29 £37,591
Total 572 £695,482
2.3.5 The average FTA debt is £1,216 per case. Of the total FTA debt
of £695K, 38% is less than 1 year old, 27% is between 1 and 2
years old, 30% is between 2 and 6 years old and 5% is over 6
years old.
2.3.6 The amount of new FTA debt each month for 2011/12 is l
below there were 324 new cases between April and February
totalling £228,389. There are 309 properties totalling £226,791
the average debt being £734 and 15 garages totalling £1,598
the average debt being £107.
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2.3.7 New Former Tenant Arrears Debts by Month
All Hostels Total Cases Garages Cases
Areas
April £24,840 £116 £24,956 36 £108 1
May £19,902 £699 £20,601 29 £526 1
June £22,142 £209 £22,351 37 0 0
July £14,151 £600 £14,751 24 £238 2
Aug £27,325 £148 £27,473 31 £310 3
Sept £20,431 £670 £21,102 20 £171 2
Oct £26,061 £197 £26,258 22 £118 2
Nov £19,121 £163 £19,284 34 £55 2
Dec £18,182 £479 £18,660 21 £41 1
Jan £18,594 £337 £18,931 36 0 0
Feb £11,283 £1,141 £12,424 19 £31 1
Total £222,032 £4,759 £226,791 309 £1,598 15
3. Leaseholder and Freeholder Charges
3.1 The levels of leaseholder and freeholder debt as at 31st January
2012 are given in the Tables below.
3.2 Annual Service Charges for Leaseholders and Freeholders
Table 1: Leaseholder & Freeholder Charges : Collection
Performance - April 2011 to March 2012
Leasehold and Freehold Service Charge £000
Balance 31 March 2011 488
Monthly debits raised Apr-Jan 2012 1699
Payments Apr-Jan 2012 -1620
Total debt outstanding at 31st Jan 2012 567
Collection rate 2011/12 financial year to
95%
date.
The service charge certificate (actual) for 2010/11 was sent out in
October and showed an overall increase of 11.39% on the
estimate. The overall collection rate therefore reduced to 84% but
has gradually increased each month to 95% in January. The
collection against the service charge estimate is significantly
higher at 111%.
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3.3 Ground Rent
Table 2: Ground Rent Collection Performance
April to January 2012
Ground Rent £000
Balance 31st March 2011 9
Charges raised April-Jan 2012 29
Payments April-Jan 2012 -29
Total debt outstanding 31st Jan 2012 9
Ground rent of £10 per leaseholder is raised annually on the first
working day in January. The outstanding balance has reduced by
£2k on the corresponding period last year.
3.4 Leasehold and Freehold Building Insurance
Table 3: Leasehold & Freehold Building Insurance
Collections Performance - April to January 2012.
Leasehold and Freehold Building
£000
Insurance
Balance 31 March 2011 105
Charges raised April-Jan 2012 443
Payments April-Jan 2012 -383
Total debt outstanding 31st Jan 2012 165
The insurance premium was raised in October for the new
insurance year. This is the last year of the current contract with
OCASO.
3.5 Major Works Charges
Table 4: Major Works Charges Collection Performance
Variable amounts invoiced throughout 2011/12
Major Works (Variable) £000
Balance 31 March 2011 3,867
Charges raised April-Jan 2012 892
Payments April-Jan 2012 -1439
Total debt outstanding 31st Jan 2012 3320
Revised Collection Target 2011/12 1,500
Performance April 2010-March 2011 1,500
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Due to the nature of major works billing, the balance will
fluctuate as high value invoices are raised. Over £1.4m has
been collected so far this financial year towards the year end
target of £1.5m.
4. Equalities Impact
Issues around vulnerability and equalities are addressed through
our rent policy and procedure. For example, we routinely provide
interpretation and translation services for non-English
speaking customers. We also undertake home visits, money and
other benefit related advice via our SLAs with Hounslow Money
Advice Unit, the Council’s client unit & Liberata – the benefits
service contractor.
Contact:
Please advise
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