Effective income management is central to the financial health and viability of housing associations. Rent and other arrears represent a real income or cash flow loss, even if associations allow for it in their financial and business planning. Reducing arrears can release resources that could, for example, fund repairs and maintenance or help to meet development costs.
Housing associations' performance in collecting rent has, on average, been deteriorating. This is despite a long-standing consensus about, and widespread availability of, good practice. Evidence also shows that associations are paying increasing attention to arrears and are now more willing to take legal action. It is not the purpose of this report to replicate previous good practice advice. Instead, it identifies the importance and impact on associations of collecting rent, explores differences in performance between associations, identifies any barriers to adopting good practice and identifies any previously unrecognised good practice.
This study was carried out under S. 55 and Schedule 3 of the Housing Act 1996, and S. 40 of the Audit Commission Act 1998. Under this legislation, the Housing Corporation and the Audit Commission may agree programmes of comparative studies that are designed to allow the Commission to make recommendations for improving the economy, efficiency and effectiveness of housing associations. Considerations of economy, efficiency and effectiveness are clearly key to maximising rent collection performance. However, a simple focus on economy could be counter productive, as cost savings in relation to rent collection and arrears recovery are not necessarily the most important issue. Instead the focus is on efficiency and effectiveness; efficiency because this has the biggest impact for the tenant as the "user" of the housing service, and effectiveness because of housing associations' primary focus on providing social housing.