Our innovative FlexMyRent scheme, which is now open to residents in two Housing Associations – Optivo and MTVH – has so far engaged more than 650 tenants. Around one third of those opening a FlexMyRent account have now proceeded to submit a proposal.
However, the cost-of-living crisis has impacted the proposal acceptance rate. Around half of all proposals are currently being deferred – in which case the residents are offered other forms of support to help with their underlying financial problems instead.
In this blog, Damon Gibbons reviews the position of tenants who have recently submitted proposals, and also reports the positive evidence emerging for those who have been on the scheme for over 12 months.
Recent proposals: our applicants are under significant financial pressure
FlexMyRent invites proposals from eligible tenants within our participating Housing Associations. These are residents who are less than six weeks in rent arrears; aren’t subject to the benefit cap and are responsible for paying at least some of their rent to the landlord (i.e., they aren’t in receipt of full Housing Benefit, which is being paid directly to their Housing Association, or on an Alternative Payment Arrangement for the payment of the housing element of Universal Credit).
FlexMyRent proposals therefore come from a very wide range of residents, but not from those in the very worst of financial circumstances. Although our core demographic are single parents, three quarters of these are in employment and half are working full-time. This is despite over half of households also containing someone with a long-term health condition or disability.
Nevertheless, recent proposals indicate that these residents are under significant financial pressure. Two thirds owe money to credit companies, and the majority of these (70%) indicate that they have struggled with repayments in the past three months. Just under half of all applicants have had to borrow money to buy food or pay bills in at least one of the three months prior to submitting their proposals, and one in eight have had to do so every month. Worryingly, as the weather is turning colder, around half of all applicants are paying for fuel through prepayment meters, and a quarter tell us that their financial situation makes them “stressed, anxious or depressed”. Three quarters have had to cut back on food, heating, or other essentials at least “sometimes” in the three months preceding their proposal, and a quarter have had to do so “very often”.
How much rent flexibility do these residents want?
Perhaps surprisingly, around one third of all recently submitted proposals did not request any flexibility regarding rent payments at all. In these cases, residents in rent arrears simply wished to set up a plan to repay those in equal monthly instalments over the year. Around half of these were approved by their income officers, but in other cases the resident’s answers to our support needs questionnaire also highlighted the need for a referral to the landlord’s financial support team.
However, two-thirds of rent proposals have contained requests for flexibility. The amounts have varied considerably – from just £60 to £3,500. The typical amount has been for around £600, and residents have normally wanted to spread this over two or three months of the year. Repaying this over the remaining nine months adds about £66 to their usual rent payments.
What have we been able to deliver?
Looking at just the most recent sixty proposals containing requests for flexibility, income officers have been able to approve thirty-five (58%) of these, with the remainder deferred pending further support. The outcomes arising from that support are being monitored and will be reported as part of our overall evaluation of the scheme towards the end of next year.
Of the approved proposals, the amount of flexibility granted has ranged from just £50 to over £2,500 and averaged £550 for the year. This is an interest-free input of liquidity into those households. The sums involved are very similar to those reported by Fair4All Finance in respect of the No Interest Loan Scheme, but our approval rate appears high relative to ‘affordable credit’ lenders serving similar demographics. For example, some CDFI’s have recently reported loan rejection rates of between 60% and 75%. It also hard to see how any lender could sustainably provide some of the smaller sums of liquidity that residents have requested, and providing these through the rent account is also likely to be cheaper than administering food or fuel vouchers.
We also now have some emerging evidence of the benefits that the scheme is delivering for those residents who have used this for at least a year. Qualitative interviews with these residents - conducted by our evaluation partner, IFF Research - revealed universal support for FlexMyRent and indicate that it has improved overall satisfaction with landlords. The interviews also highlighted how FlexMyRent can be used to meet several different needs. For example, some residents told us that they have used the scheme to fund the purchase of new appliances, whilst others have included a 'savings target' within their plans so they end the year in credit on their accounts. Others have used it to help manage specific, predictable, expenses in the year - such as by using it to pay for new school uniforms for their children in the Autumn.
“That month where you are maybe experiencing bigger bills, or appliances that had broken down. It just gave me that extra bit of leeway where I wasn't panicking about money, and when I pay it back, over the other months, you don't notice it as much."
Ongoing evaluation activity
As we move forwards, the evaluation will increasingly become focussed on the cost and benefits of the scheme, including by comparing payment performance against plans with a control group of residents to assess the scheme’s impact on overall arrears levels. However, to date, the signs are positive, with little indication of residents falling “off plan”. As at the end of November, residents were, on average, ahead of their plans by £340, and no resident has had to be suspended from the scheme due to payment problems since the start of the year.
Although the cost-of-living crisis is putting a severe strain on the finances of our target demographic, and we can expect some increase in payment difficulties as we progress through the Winter, the evaluation of rent payment performance in comparison to a control group should provide robust evidence about the impact of the scheme in what are now extremely challenging conditions.
In addition to rent payment performance, we will also be assessing whether the scheme has resulted in time savings for income officers and - because proposals provide housing associations with up-to-date information about their resident’s circumstances - whether it has facilitated the improved targeting of other forms of support.
Finally, as regards costs, we have built a digital platform hosted on Amazon AWS, which can now be scaled with ease. We have recently successfully onboarded MTVH as our second housing association partner and as the number of tenants using the scheme rises the cost per resident falls rapidly. If you are interested in trialling the scheme, please do get in touch.
 Vik,P., & Wallace, A. (2022) ‘Impact of the cost-of-living crisis on the UK affordable credit sector’, Community Finance Solutions, University of Salford downloaded from https://hub.salford.ac.uk/cfs/wp-content/uploads/sites/107/2022/09/COL-research-report-3.pdf