The Real Costs of Evictions – What Are They?
Evicting tenants is certainly not an easy job – but can anyone really answer this: what are the associated costs in carrying out these often long and difficult actions?
Anna O’Halloran, MD at Just Housing Group has been unearthing and spotlighting the fact that there is currently no evidence available in the social housing sector that accurately portrays the true cost of evictions, and all the associated court actions. The cost to each individual landlord, the cost to the public purse and of course, the cost to the tenant is currently unknown.
This lack of evidence is highly disconcerting, particularly as there is very little understanding of the full scope of reasoning behind claims and evictions. Anna’s work so far has shown that many landlords do not understand which parts of their rent arrears processes actually work by encouraging payment thereby preventing eviction and ultimately reducing costs to everyone.
UK government figures reveal that in 2016 a staggering 19,601 tenants were evicted by UK social landlords, equating to 1633 tenants each month. In England and Wales alone, 79,000 claims for possession were lodged with the courts, 60% of which were from the social sector (source Ministry of Justice). In court fees alone, this resulted in a hefty spend of £28m.
Homelessness acceptances in England increased to 59,250 last year (source: Homeless Link) from a total of over 116,000 presentations. Social landlords’ interaction with, and sanctions against, tenants must play a pivotal role in prevention, while at the same time significantly reducing spiralling escalation and possession costs.
It is inevitable that rent arrears are only likely to get worse with welfare reforms – including Universal Credit, benefit caps and LHA reforms – placing a significant squeeze on personal incomes. This will only further increase stresses faced by social landlords for effective and efficient income collection methods, particularly as the impact of universal credit will mean a landlord of 6,000 homes needing to collect an extra £15m a year in rent that is currently paid directly through housing benefit.
Social landlords are likely to be managing around 60% of their tenants who are in breach of tenancy to some extent. And although landlords build in timescales to facilitate escalation procedures, the cost and value in proceeding with eviction, from issuing notices right through to potential court proceedings, is not considered, neither is the cost to the public purse.
Senior associate of JHG, Barry Marlow, draws upon a report published by Shelter Cymru highlighting the impact of its social landlord evictions in 2015 on families in Wales. From 914 evictions – including 500 children being made homeless – the cost to the Welsh economy was reported at £24.3 million (£26,600 for each eviction) and £7.5 million (assuming an average of £8,200 for each eviction) to social landlords.
Although practices are in place to notify local authorities in advance of possession proceedings, Barry suggests that the evidence of whether this is happening is not available. –
Barry, who has a wealth of experience in the area, also suggests that the evidence currently available is not enough to determine whether the actions of social landlords in repossessing tenancies provide a net contribution to homeless acceptances, temporary accommodation and the scope for housing options.
At JHG, we strongly believe that – gaps in knowledge need- to be significantly reduced in order to properly analyse the impact of extremely costly eviction and escalation activity by social landlords.
Our aim is to tackle this issue and to work alongside social landlords to help them determine and reduce the true cost of their evictions through understanding the real impact of their rent arrears activity. And then to present solutions as to how – levels of possession actions can be significantly reduced in order to prevent homelessness.
For example, we will ask why landlords seem not to know the impact of-, rent arrears letter 1 and the cost. If the answer is that the letter costs more than the income it generates we will offer alternative solutions, drawing on our extensive and unique work including the use of behavioural insights.
This work very clearly builds on our existing track record of using evidence to inform decision-making; leading to increased success, reduced costs, addressing employee frustration and most importantly tenancy sustainability.
This may seem ‘hard-nosed’ and more business-like than the social housing sector is used to; but isn’t there an obligation to ensure that effectiveness is truly understood, freeing up valuable time and resources to support tenancy sustainment, rather than eviction?