The housing management systems (HMS) available today are very rarely fit for purpose when it comes to making and managing repayment agreements. The difficulties in identifying the status of agreements, due to a lack of visibility, make it no easy task. This often results in chasing agreements that aren’t broken or overlooking agreements that are. That fact alone actually needs urgent attention, and speaking with our customers, it’s clear that the one thing missing in every income management tool is an agile, repayment agreements solution.
However, there is a new behavioural science-backed approach and solution in the market for this very issue. At this year’s Housing conference, we co-hosted a talk on tackling agreements with:
- Gary Haynes, MD at Voicescape
- Steven Johnson, Independent Behavioural Scientist
- Helen Bruce, Customer Accounts Manager at Onward Homes
In this blog, we’ll discuss their key thoughts on managing repayment agreements, look at the current state of HMS and explain how housing associations can approach agreements with tenants differently when equipped with a new mindset and software solution.
Contents:
- The problem with repayment agreements
- Why current HMS are ineffective for arrears prevention
- The behavioural insights behind agreements: Why tenant welfare is priority
- Why Agreements Manager outperforms a traditional HMS
- Agreements Manager in action: With Helen Bruce from Onward Homes
- Discover our Agreements Manager whitepaper
The problem with repayment agreements
Most agreements break within three to six months. Quite often, the break isn’t spotted because the underlying systems aren’t surfacing agreements that are broken, and teams are too busy to manually check each agreement. It’s a real problem, and a real shame – agreements are a flexible and ethical vehicle for working with a tenant to repay arrears, and to fulfil your obligations as a landlord.
With a HMS, housing teams often think agreements are under control and are being repaid as planned in the agreement. But in reality, they’re accumulating further debt. This means there are numerous cases that aren’t being flagged by the HMS as needing some kind of intervention, and a huge window of time that you could have been intervening.
Hearing this, Voicescape researched the root of the problem with repayment agreements. We discovered existing agreement tools often come without:
- High-quality agreement data
- Bespoke solutions for each organisation
- Reporting capabilities
To take this further, Voicescape also researched the life cycles of agreements. Based on informal and formal analysis across 30 landlords over five years, we discovered that:
- 25-30% of a landlord’s total arrears are tied up in informal repayment agreements or arrangements
- 4 years is the average duration of a repayment agreement
- £500-£700 is the average total repayment agreement amount
- <£10 is the average repayment agreement amount paid per week
- 3-6 months is the average duration of a repayment agreement before it breaks
It’s clear from the data that, when you haven’t been intervening, you haven’t had visibility of what your tenants have been paying. That’s the problem that we looked to solve with our Agreements Manager solution.
Why current HMS are ineffective for arrears prevention
Arrears management is challenging in a typical HMS. And when it goes wrong, it negatively impacts every area of the business – whether that’s incorrect data causing you to chase the wrong tenants or false positives causing a considerable amount of problems long-term.
Most repayment agreements break a lot quicker than HMS predict. This means:
- Money in the organisation that you thought was recovered hasn’t been
- Money owed isn’t repaid or flagged as needing intervention
- There’s no visibility of what tenants have paid or not paid
As for your data in an HMS, looking at alternatives will allow your income officers to prioritise cases with accurate, real-time information.
The behavioural insights behind agreements: Why tenant welfare is priority
Based on our behavioural research findings, we discovered that repayment agreements can offer tenants commitment over their debt when communicated well. This is especially important for mental health and approaching the stigma of debt, allowing vulnerable tenants to have control over a stressful situation, such as:
- Chasing them for money they don’t have.
- Being embarrassed at being chased for money.
- The behaviour around repayment – There are rarely any consequences for not making repayments, which may create a culture where non-payment is accepted. However, there is often not enough gratitude towards tenants when a payment is made.
Small behavioural aspects surrounding the way in which repayment agreements are handled really do make a difference when it comes to mitigating broken agreements. Arrears can be mitigated better with consideration of these behavioural insights in a systematic and evidence-based way.
How do you give tenants ownership over their debt?
A key challenge of repayment agreements is negotiating the right terms with a tenant from the start. If the amount is too high, the customer can’t afford it. If it’s too low, then the arrangement goes on for several years – with the business and the customer carrying that debt for the entire time.
When we’re giving the tenant an option, a sense of control and agency, it's not only critical for their mental health, but it also gives officers a choice as well. Officers don’t enjoy escalating a case towards legal action and eviction; it’s a stressful situation. An agreement becomes a tool that also assists in more solutions-focused conversations. Therefore, when managed well with this mindset, an agreement can increase collections and reduce arrears.
In partnership with Steven Johnson, Voicescape have developed a best practice behavioural framework, the “Golden Moments” framework, to help train teams and optimise agreement processes. Why not read our full blog for further insights?
Why Agreements Manager outperforms a traditional HMS
Unlike a traditional HMS, Voicescape Agreements Manager is an efficient agreements tool which greatly assists with social housing income recovery against unsecured repayment agreements. Its key objective is to help empower customers and effectively manage, report, track and recommend actions for high-risk cases to ultimately reduce broken agreements.
There’s also a range of more nuanced benefits of Agreements Manager, especially through a psychological lens for tenants, teams and the business more generally. With Voicescape Agreements Manager, you can automate and guide conversations as well as reinforce commitments, leaving high-risk cases available for human contact where it's needed most and to keep their wellbeing a priority. All these behavioural aspects make it easier to recognise the key times (“Golden Moments”) to intervene with tenants at points where the opportunity is greatest, increasing the chance of an agreement sticking.
Here’s what Onward Homes’ team said:
“I really like that, when making an agreement, it tells us how long it will take for the debt to be cleared. This saves us working it out and means we can advise the customer when they ask.”
“Agreements Manager is a great way to see how well a customer’s payment pattern compares to the agreement … it’s also useful to have information about adherence to previous arrangements, which can help inform decisions on how to proceed with a case.”
“I’m really impressed with Agreements Manager. It’s easy to use and all the information is displayed clearly. It makes the different agreement options easy to understand for both us and the customer.”
Discover our Agreements Manager whitepaper
Claim your copy of our Agreements Manager whitepaper and uncover the details of Voicescape’s latest solution. Alternatively, start a conversation with us on how you too can implement this solution into your agreement approach to maximise your team’s work efficiency and tenant success.