You’re more likely to successfully get the keys to your car than you are to a new home.
Times are at their toughest for anyone needing housing. Reforms have fundamentally undermined housing associations' business models and introduced risk proportional to a new tenants' means.
Even Lord Freud, minister of welfare reform, is calling for a review of the government’s welfare reform flagship Universal Credit (UC) after pilots found 79 per cent of claimants were in arrears before their first payment. And as the full service rolls out, a new tenancy will trigger a move to UC in its own right. What with that, the tightening of benefit caps and, in England, imposed rent reductions, landlords are understandably starting to screen the suitability of new tenants for fear of irrecoverable debt, endless drains on support resources and ultimately the cost of eviction.
But maybe we’re looking at this all wrong. What if it’s a golden opportunity for those of us promoting financial capability?
Apart from when learning you’re pregnant, and the negative life events no-one wants to contemplate ahead of time like bereavement or divorce, moving house inevitably causes everyone to think MONEY!
It's usually exciting, not frightening. Let's jump on that and engage the unengageable. Let's do it in full, independent preparation for the trials that lie ahead just to prove individuals worthy of a tenancy. And just like with a driving test, let's not just teach them to pass, let's teach them how to be more than successful tenants but fully on top of their money management for the future.
The UK Financial Capability Strategy highlights the need to provide advice and support on managing money when circumstances change due to dramatic life events. Its interest is in helping those in whose lifestyles are in sudden upheaval. But it’s also an opportunity to engage people who, like most of us, don’t think hard enough about our money most of the time.
NEW TENANCY, NEW BENEFIT, NEW DEBT
By the end of next year (probably), a migration to Universal Credit will be triggered for all working age tenants on benefits moving into a new home. On top of their challenges to furnish their home, line up suppliers, pay for removals, etc, they will have the added burden of adapting to the online claims system, monthly payments in arrears and a likely seven week waiting period before they receive their money. The majority may well start their new lives in a new home in debt.
Landlords are increasingly moving towards screening new tenants for their ability to manage their finances. Some are providing training, to ensure any debts are in hand, a bank account is in place and tenants have the ability to balance a budget. In both cases, failing to demonstrate the skills or means to succeed could mean no access to social housing. This begs the question: Who will house the indebted, innumerate and financially excluded?
It’s a perfect storm for people struggling to access financial services or manage their money. Banks (wrongly) continue to turn thousands away for not having enough ID, (and if someone is just moving home, they'll have even less paperwork proving where they live), and yet a bank account is just about the best facility for dealing with direct payments and managing rent and bills. They cannot access affordable credit, so furnish their homes at Brighthouse, paying over the odds for goods on high interest terms and unnecessarily high on-costs for insurance and delivery. And they are highly unlikely to have savings to fall back on, to help with costs or cover the seven weeks waiting for UC to be paid.
A few years ago, Yorkshire Housing approached the Social Publishing Project to produce a New Tenants Guide. It has become one of our biggest sellers and includes a range of consumer tips like utilising Freecycle, welfare rights info and a checklist for moving home. But mixed in are all the financial capability staples like a budget planner, thrifty spending tips and a savings guide. Some landlords issue it when people join the waiting list, others once they've moved in.
Maybe the New Tenants Guide should take the form of something more like the Highway Code. It should be issued to anyone signing up to a housing waiting list before their money management skills are assessed so, like drivers, they at least know what will be expected of them, what skills they need and the implications of not proving themselves home-worthy. We already know, statistically speaking, the higher the level of need the lower the financial capability skills. It falls on all of us, then, to ensure new housing access processes don't compound exclusion.