With the value of rent arrears owed to local authorities alone skyrocketing by more than 70 per cent over the past five years, the housing sector is facing a critical crossroad. For many tenants, the cost of living crisis has compounded the strain on their finances, leading to difficulties in meeting their rent obligations. At the same time, local authorities and housing providers are facing rising costs and must balance operational and service delivery with rising arrears.
This leaves the sector grappling with a conundrum – how do you tackle the growing problem of rental arrears while optimising income collection?
The arrears landscape
Drawing on data obtained through Freedom of Information requests, the findings from Access PaySuite’s Rental Arrears Index are stark. On average, local authorities providing social housing are each owed £3.1 million in arrears, an increase from £1.8 million in 2019.
This represents a 71 per cent increase in just five years, with a 14 per cent rise occurring in the past year alone. These figures highlight the urgent need for innovative solutions that simplify rent collection, support tenants and ensure financial sustainability for housing providers.
Local authorities have seen not only an increase in the value of arrears but also a surge in the number of tenants behind with their rent. Over the past five years, the number of tenants in arrears has risen by 17 per cent, with 41 per cent of social housing units now affected.
Furthermore, the average arrears per tenant have risen from £492 in 2019 to £710 in 2024, a 44 per cent increase. These trends emphasise the need for proactive measures that can both ease tenants’ burdens and streamline rent collection.
Leveraging technology for better outcomes
Smart mobile payment technologies offer a ‘customer first’ approach to rent collection. By providing tenants with flexible, accessible and secure payment options, these solutions empower tenants to stay on top of and manage their payments more easily while reducing the administrative workload for housing providers.
Features such as automated reminders, real-time account updates and seamless integration with housing management systems streamline the payment experience, making it more straightforward and less intimidating for tenants.
For local authorities and housing providers, the advantages of adopting such technologies extend beyond reducing arrears. Automation can alleviate the strain on staff, enabling them to dedicate more time to tenants’ more complex needs, while advanced security features such as tokenised payments enhance data protection and ensure compliance, offering peace of mind in an increasingly digital landscape.
Embracing digital transformation
With a strong focus on tenant satisfaction and operational efficiency, Karbon Homes has embraced digital transformation to tackle the challenges posed by rising arrears and an increasingly diverse tenant base.
Over the past 18 months, the housing provider has successfully implemented Access PaySuite’s innovative payment solutions, delivering impressive results that highlight the transformative power of technology on rent collections and improving outcomes for tenants.
Secure, accessible & user-friendly payment systems
Recognising the need for secure, accessible and user-friendly payment systems, Karbon Homes introduced a range of our digital solutions, tailored to the needs of its tenants. Among these are Call Secure+, Touch Tone IVR, Pay-by-Link and Open Banking, each designed to overcome specific payment barriers, offering tenants flexible and convenient ways to manage their rent.
For example, Call Secure+ allows tenants to safely share their card details securely during a call without disclosing sensitive information to agents, ensuring a secure and seamless transaction.
Touch Tone IVR has proven particularly effective in enhancing accessibility by providing an automated, 24/7 payment solution, allowing tenants to make payments at any time without needing to interact with an agent, significantly reducing their reliance on contact centres.
In parallel, the introduction of Open Banking has provided an alternative payment method that allows tenants to make payments direct from their bank accounts. This not only eliminates card fees but also provides a faster and more cost-effective payment process which is particularly helpful for tenants who prefer to make a payment at a time and a place that’s convenient to them.
Noticeable impact
The impact of these innovations has been profound. Over the past year, Karbon Homes has reduced its arrears by over £200,000, a remarkable achievement that highlights the effectiveness of its technology-driven approach.
Additionally, the adoption of these tools has led to a 75 per cent increase in monthly self-service payments, more streamlined rent collections and a much-reduced the volume of calls to Karbon Homes’ contact centre (approx. 900 fewer calls/month).
Tenant satisfaction has been boosted as well. In October 2024, 82 per cent of Karbon Homes’ tenants reported being satisfied with the service they receive, a testament to the organisation’s commitment to delivering a superior customer experience.
A key driver of this success is real-time payment integration, ensuring that payments are instantly reflected on tenants’ rent accounts. This level of transparency and efficiency has helped to build trust and confidence among tenants, further strengthening their relationship with Karbon Homes.
A forward-thinking approach
Karbon Homes’ forward-thinking approach has positioned it as a leader in digital transformation within social housing. By embracing advanced payment solutions, it has addressed the challenges of rental arrears while supporting its long-term growth and development.
The modular design of these technologies ensures scalability, allowing Karbon Homes to seamlessly onboard new tenants as its housing portfolio expands. This adaptability ensures that all tenants, whether new or existing, benefit from the same high standards of service.
Success stories such as these show that with the right tools and a commitment to digital transformation, housing providers can tackle even the most complex challenges with confidence and success, such as addressing arrears and improving tenant outcomes.
The future of payments
Tackling the long-term challenge of arrears isn’t easy but the solution lies in embracing approaches that prioritise accessibility, financial inclusion and ease of use. By offering a range of payment options, whether online, by phone or in-person, housing providers can meet tenants where they are and ensure that these methods are both cost-effective and secure.
By investing in smart technology, housing providers can not only reduce their arrears but also foster stronger and more trusting relationships with their tenants. While the housing sector faces immense pressure, the right methods and strategies can help turn the tide on rental arrears and pave the way for greater financial stability.
Leveraging innovative payment technologies can empower housing providers to enhance tenant satisfaction and focus on their core mission: delivering high-quality, affordable housing.
Rob Fleetwood is a public-sector payment specialist at Access PaySuite, part of the Access Group.
