The latest findings from a data science project by Behavioural Insights consultancy Collaborative Change, show in detail how tenants are struggling with Universal Credit.
- Average tenant arrears increase by £300
- Three-fold increase in number of NOSPs
- Between £60k and £130k total increase in arrears per 1000 tenants
- Providers typically only 9% of the way through the number of UC claimants they will have to deal with between now and March 2022
UCReal is a sophisticated data analysis system that gives social landlords a clear picture of tenant behaviour during the switch to UC. Using statistical modelling it then predicts future behaviours, quantifies risk and helps drive evidence-based responses.
The model was originally built through a collaboration with 5 Registered Social Landlords, drawn from across the UK. This yielded a data set of some 48,000 tenants and 1.3 million rent transactions.
Sample Summary from a Landlord’s UC Real report
As more and more landlords sign-up, this dataset continues to grow, building further sophistication and accuracy into the modelling.
By segmenting tenants according to their payment behaviours UCReal is able to highlight where resource needs to be focused to support tenants who are facing the greatest challenge in managing their payments.
Behavioural Segmentation clusters tenants according to their payment behaviours.
Uniquely, UCReal then models future behaviour and risk, allowing landlords to plan for increased demand on income teams and support services, not to mention the cash flow implications of significant increases in arrears. Using landlords’ own data, a UC Real report is specific to the organisation’s population but allows benchmarking of key metrics amongst the landlords who have signed up.
The difference (UC compared to HB) in impact on average weekly account balances in the 6 months following the start of a benefit claim is typically around £300. Furthermore, this detrimental impact persists for long periods, frequently showing only minor improvement 1 year or even 2 years on.
At an organisational level this means significant increases in overall debt as full service roll out picks up. On current predictions, landlords can typically expect to see an increase in arrears of between £60,000 and £130,000 per 1000 tenants.
Furthermore, continuing with existing escalation policies in light of these significant impacts, results in substantial increases in both the volume and severity of arrears cases. It is typical to see a two-fold or even three-fold increase in the number of tenants being escalated beyond NOSP (notice of seeking possession)
On average, the landlords currently signed up to UCReal are only 9% of the way through the number of UC claimants they will have to deal with between now and March 2022. Clearly, current impacts are but the tip of the iceberg unless new approaches are development quickly.
Stephen Evans Director of Operations at the Pobl Group in Wales and one of the original providers to sign-up to the project said, “We now have a much clearer picture of the current, and potential, impact of UC on the business with much greater understanding of the detail of this, including at customer level. We have also made the decision to stop using some predictive software which, after the analysis, we felt was likely to become less useful as payment patterns become less regular and predictable. The investment was definitely worthwhile.”
Steven Johnson, Director at Collaborative Change said, “The impact of the roll out of UC on social housing providers and the balances of their tenants cannot be underestimated. Using UCReal can help to manage this situation and minimise the financial risk to the organisation. These emerging trends are really just the tip of the iceberg for our housing providers.”
Find out more about UC Real here UCReal