Wales Co-operative Centre

Canolfan Cydweithredol Cymru

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Research shows that 1 in 5 tenants have turned to doorstep lenders in the last year – #povertyinwales

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As universal welfare reforms roll out across Britain, Wales Co-operative Centre Financial Inclusion Project Manager Jocelle Lovell discusses the changes.

A recent survey has highlighted that in Wales nearly two fifths of private and portfolio landlords were not prepared for upcoming changes in Welfare benefits and the subsequent effect it may have on their rental income.

Startlingly, a separate pilot conducted by the Wales Co-operative Centre and Caerphilly County Borough Council suggests that private sector tenants are just as poorly informed and prepared as their landlords.

Welfare reform will affect the way that all claimants, including those currently receiving housing benefits, receive their payments. Each household will receive the benefits they are entitled to in one single payment that will be monthly in arrears

Many tenants of both private and social landlords will still say that they don’t pay rent as they have never been in receipt of the money and have never had to make a physical payment. There are also many tenants who are digitally excluded, and have no means of accessing the online services that will help them manage better or do not have the skills to do so.

Budgeting is an issue for tenants who are currently used to receiving payments on a weekly or fortnightly basis. Many tenants existing within a cash economy may soon find themselves in difficulty.

People who are already in or living close to the poverty line often don’t want the temptation of having the rent money in their pocket.  Most people faced with the choice of paying rent or feeding or clothing their children will ensure their children’s immediate needs are met first.

The Welfare Reform and Universal Credit changes will be rolled out over the next few years. It is our belief that if more resources are put into pro active methods of engagement with ‘at risk’ tenants now it would be far more effective and offer better value for money to the public purse that dealing with crisis intervention at a later date. Woman in front of house

Following a piece of work carried out in partnership with Caerphilly County Borough Council, early findings suggest that four out of five tenants are still unaware of exactly how the reforms will affect them. At least half of the tenants surveyed to date had no access to on-line facilities.

Working in partnership with staff from the local authority we were able to explain the effects of the reforms to each tenant.  Wherever possible, tenants were advised on applying for additional funding and referrals were made to other advice and support agencies in the area, including foodbanks. Of the tenants visited over half had struggled to pay bills such as rent and utilities and one in five had turned to door step lenders in the past year. Each of the tenants faced different challenges – paying bills, paying rent, buying food, or buying clothing for their children, but most were already struggling with their finances.

We need a range of solutions to meet the needs of different people.  Nobody should be forced into using a product or service that isn’t appropriate for them.

One of these solutions could be a Credit Union Rent Account as it offers peace of mind to the tenant that their rent will be paid and also removes the temptation to use the rent money to make up short falls elsewhere. Of the tenants visited 80% wanted to explore the idea of a Credit Union Rent Account as they felt it was the best way to protect their tenancy.

The Wales Co-operative Centre’s Tackling Homelessness through Financial Inclusion project is working with local authorities and landlords across Wales to promote this simple model.

In light of the changes to Welfare Reform and the cuts to public sector funding, there has never been a more important time for public, private and the third sectors to work more collaboratively in supporting people and tackling poverty.


Written by Mark Smith

October 30, 2013 at 8:30 am

Centre supporting private sector landlords and tenants to consider financial inclusion

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Earlier this week, the Wales Co-operative Centre’s Tackling Homelessness through Financial Inclusion (THFI) project team joined housing professionals and landlord representatives at the Chartered Institute of Housing (CIH) PRS Summit.

Delegates gathered at the Future Inn, in Cardiff Bay, to consider the role of the private rented sector (PRS) in Wales, at a time when it is experiencing a period of substantial change.

Following an introduction by Welsh Government on the ‘Homes for Wales’ White Paper, that will underpin the first Housing Bill to be published later this year, the PRS is well and truly on the top of the agenda for local authorities, housing associations, private landlords and increasingly institutional investors.

woman in front of house

The conference focused on the financial challenges facing tenants in the Private Rented Sector

The THFI project fits into this by identifying that financially excluded tenants, living in PRS, are at a greater risk of becoming homeless.  In the context of forthcoming welfare reform and the move to Universal Credit, THFI is engaging with landlords and their tenants to promote the use of financial inclusion to mitigate the impact of these reforms.

In practice, THFI has been successfully promoting the role of credit unions through the payment of Local Housing Allowance, directly into a credit union rent account, on behalf of vulnerable tenants.  This leads to a longer, sustainable, tenancy, which is in the best interests of the tenant and the landlord.

THFI Project Manager, Jo Lovell, and Financial Inclusion Officer, Lucia Gillespie delivered a workshop, to a full house, as part of the PRS Summit, asking people to consider the best way to support tenants in the PRS.  A lively discussion identified that:

a)      The needs of PRS tenants are not fully met throughout Wales.

b)      A person-centred approach is needed and an understanding of the tenant’s history.

c)      Mapping of support and advice services will help landlords and tenants alike, to understand where they can turn to.

d)      Communication between landlords, tenants and local authorities is vital.

A person-centred approach has been the key to the success of a pilot project with Caerphilly Council, Smartmoney Credit Union and PRS landlords.  Here, the scheme has been used to provide financial services to the ‘unbanked’ and to ring-fence Housing Benefit to protect PRS tenants.

Working in partnership with the council tenants, visits have been carried out, leading to the collection of data, to help gain an improved understanding of tenants circumstances in order to signpost them to vital support.  Following 21 tenant visits, more than a third have signed up for a rent account or gone on to open main stream bank accounts.  The Council is so pleased with these results, that there are plans to roll out this work to many more tenants in the coming months.

Jo Lovell, THFI project manager said: “It is a myth that all tenants on benefits are bad tenants.  By working, proactively, and supporting the use of the rent account can help to both safeguard your rent and maintain a long and successful tenancy.”

Swansea partnership supports Credit Union Rent Account scheme

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It’s Co-operatives Fortnight and Co-operative Congress is only 48 hours away! It’s timely, therefore, to remember the role that credit unions play as community finance co-operatives. Our ‘Tackling Homelessness through Financial Inclusion’ project has been supporting a scheme that involves Swansea Council and the local credit union, offering customers a rent account, that will help people to manage their money in the face of challenges from Welfare Reform. Swansea Council has provided the following update…

The introduction of Universal Credit (UC) in October 2013 will mean that thousands of council tenants, who currently have their Housing Benefit paid directly into their Council Rent account, will have to manage paying their rent instead. Credit Unions have widely been promoted by the Government as a good way of supporting tenants through Welfare Reforms to manage their finances and ensure that their rent is paid. wallet DSC2089

Swansea Council has therefore joined up with Loans and Savings Abertawe (LASA) Credit Union to offer a scheme to support its tenants to pay their rent. The scheme also focuses on identifying and supporting tenants who may be facing financial difficulties as a result of Welfare Reform.

The scheme was initially developed to support tenants with the transition to direct rent payments under Universal Credit, however it was agreed that the scheme could also be used to support tenants affected by the introduction of the under-occupation rules which came into effect in April this year.

Since April, officers within the Rents Team have been working with new tenants at sign up to determine if this scheme is suitable for them. A special application pack has also been developed to explain the scheme and ensure that they understand how it will operate. This has included discussions with tenants who are affected by the under-occupations charge and who may be facing financial difficulties. The scheme has also been marketed in Open House, the newsletter for council tenants.

Whilst there has been some interest in the scheme to date, it is still early in terms of tenants adjusting to making the under-occupation shortfall payments. It is anticipated that as tenants assess their ability to manage the shortfall over the coming months, they may consider the CU rent account as an option. It is further anticipated that by growing the scheme slowly and working with the Credit Union to develop capacity, it will be ready to support those tenants, who in far greater numbers, will be affected by the roll out of Universal Credit.

Tomorrow (June 27th), Jocelle Lovell and Paul White of the Wales Co-operative Centre’s ‘Tackling Homelessness through Financial Inclusion’ (THFI) team will be running a fringe seminar at the Shelter Cymru conference ‘People & Homes 2013’ that is being held at the Swansea Marriott. For more details on their work, including the ‘THFI toolkit’ visit the Wales Co-operative Centre website.

Written by Mark Smith

June 26, 2013 at 9:33 am

Congress to open doors to co-operative housing success

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Co-operative Congress 2013 opens in Cardiff next week. One of the main themes that will be debated at the event is co-operative housing. The Wales Co-operative Centre is hosting a seminar on this topical issue, on Saturday 29th June. To give you a flavour of what to expect, we’ve spoken to Dave Palmer who manages the Co-operative Housing Project, here at the Centre.

Dave, in brief, how can co-operative housing projects help to increase the supply of affordable housing in Wales?

Developing and promoting new ways of providing land and funding for housing, such as community land trusts, mutual home ownership and co-operatives, sits alongside Welsh Government commitments to release public land for affordable housing, to help people find homes to suit their circumstances, to introduce flexible tenure arrangements, and to support social housing tenants to participate in the running of their homes and services. housing 1

Co-operatives could make a significant contribution to new, affordable, housing options that can help people’s needs at different stages of their lives, by consideration of establishing a new tenure relationship that has “commonality of interest at its heart”, heralding a desire to consider a co-operative housing tenure.

 Is this something that could prove particularly beneficial to first time buyers? 

There is strong evidence that there is an appetite for an increased supply of co-operative housing in Wales based on the responses of research participants, who responded overwhelmingly positively to the principles and housing models demonstrated. This is particularly the case for households who are currently priced out of the owner-occupied sector and whose needs are not so great that they are unable to, or choose not to access social housing. They may also find themselves somewhat reluctantly living in the Private Rented Sector (PRS). Therefore, the major area for agencies to focus on if co-operative housing is to meet housing needs, are these reluctant renters who want more security.

Since the credit crunch and the increasing difficulty such households face in accessing mortgages, this group is one which is growing year on year in the Welsh housing market, facing a ‘quadruple whammy  of increasing PRS rents, substantial mortgage deposit requirements, increasingly strict lending criteria and higher interest fees than existing mortgage customers

The research also showed that there exists demand for co-housing with no public subsidy required, but practical support assist in the development of schemes, which, when developed, will in turn free up properties for first time buyers.

The concept of co-operative housing is relatively new in Wales, so are there any success stories from other parts of the UK that show how it’s already working?

From the 1970s onwards, a number of small housing co-ops (often single shared houses) have been established using exclusively private sector funding such as ethical bank loans and “loanstock” arrangements.  Some of these are located in Wales, including the Golem housing co-operative in Swansea and Dol Llys Hall in Powys.

There has been a significant growth of Community Land Trusts (CLT), co-operative housing organisations based on local community memberships who own and steward land and other assets for community use. CLT membership will usually be open to people living in the homes built, but it will also be available to a wider community membership.  CLT examples include Lyvennet Community Trust in Cumbria, High Bickington Community Property Trust in North Devon, and East London CLT in London, to name a few of the 130 CLTs across the country.  West Rhyl Community Land Trust, supported by Denbighshire County Council, is the first example of a CLT in Wales.

Currently the only example of a Mutual Home Ownership society is the recently developed Lilac scheme in Leeds.  Also describing themselves as a “cohousing” scheme in that they are an intentional community with a communal house, Lilac’s members will each pay about 35% of their income for a lease of their homes, to cover the costs of Lilac’s group mortgage, management and maintenance costs and to buy equity in the project.  Lilac received funding and other support from the English Homes & Communities Agency, the Department of Energy & Climate Change and Leeds City Council, and has secured loan funding from ethical banks.

housing 2Cohousing organisations, based on American and Danish models, enable people to buy and sell homes in “intentional” communities built around communal facilities, in some cases, alongside other members who rent their homes, such as at the Threshold Centre in Dorset.  This approach, particularly popular for elderly people, but potentially relevant for all ages, has been adopted in 15 communities in the UK, with a further 40 currently exploring cohousing options.

The UK housing construction industry has been hit hard by the recession and other economic challenges of recent years. How much of a role can co-operative housing schemes play in boosting the industry?

Co-operative housing is a successful and attractive model of renting that can deliver what people want. Co-operative forms of home ownership could provide collective protection for an intermediate market from individual risk and market fluctuations, whilst capturing investment gains collectively.  At a time when extreme housing market vagaries have left many housing consumers insecure and unsure about the future, co-operative housing might be an alternative attractive option, not just to state provision of housing, but also to market provision.

Therefore, it could boost not only the smaller local builder, larger developer and the self-build elements across the whole of the industry, and address some of the training issues, as well as providing affordable, high quality homes and local communities.

The Wales Co-operative Centre and its partners are already working on potential co-operative housing developments. How far are we from the first co-operative housing tenants moving in, in Wales?

It is early days, but the pioneer projects that we are working on, are ready to deliver a range of rented, limited equity and market co-operative homes. The Wales Co-operative Centre and Welsh Government are keen to continue supporting and encouraging this positive start, by empowering the pioneers to deliver much needed homes.

The aim of the project is to have two ’Shovel Ready’ schemes, i.e. with Planning and Building Regs, ready to start on site by March 2014. We are ahead of this timescale with some partners.

What are the main things that need to happen between now and then?

It is vital that housing organisations, facilitating the development of a co-operative housing scheme invest time in a local awareness raising campaign. This will help to maximise consumer interest in membership and provide the opportunity to participate in a scheme, to as wide a population as possible.

Any promotional campaign run at a local level, by a housing organisation should consider very carefully how it ensures that it is effective in contacting harder-to-reach and minority groups, to ensure that co-operative housing schemes are inclusive.

That work is undertaken at both a national and local level to raise awareness of, and promote co-operative housing. The promotional/publicity material should target ‘reluctant private renters’ and should focus specifically on the:

  • affordability of co-operative housing
  • increased security offered by co-operative housing
  • benefits of living in an ‘intentional community’

That the Welsh Government and the housing sector consider what sort of mechanisms they could put in place to provide advice, support and assistance to co-housing groups in Wales, to assist them to move proposed developments forward. This support should not provide any form of subsidy for such groups, however the setting up of a national bridging loan mechanism, could be considered to help facilitate the developments, particularly for those who are ‘equity rich and cash poor’.

That the Welsh Government considers how it continues to support groups of co-operators and housing organisations, to continue to access expert financial and modelling advice beyond the conclusion of the Co-operative Housing Project based at the Wales Co-operative Centre.

To book a place on the Co-operative Housing seminar, at Co-operative Congress, please visit the official event website.

Written by Mark Smith

June 18, 2013 at 1:33 pm

Money problems do not have to lead to homelessness

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Katija Dew

Katija Dew

Project aims to safeguard rent payments for vulnerable tenants

On International Credit Union Day (Thursday 18th October), Katija Dew, Programme Director for Financial Inclusion at the Wales Co-operative Centre, and Welsh Government Financial Inclusion Champion for Wales, looks at the potential effect of Universal Credit on vulnerable tenants and how a new project could utilise credit unions to safeguard rent payments.

With just under a year to go before Universal Credit is introduced it is fitting to use International Credit Union Day to look at some of the effects that financial exclusion has on citizens in Wales.  It is an opportunity to look at how schemes advocating responsible financial products can help safeguard tenants and vulnerable people in our society.

Universal Credit is due to start rolling out in October 2013 and it will have a huge impact on those  claiming benefits. The new system will replace the majority of individual payments including tax credits, income support, jobseekers allowance, housing benefits,  and some sickness or disability benefits. The approach is intended to simplify an existing system that most people agree is extremely complicated and its planned application raises issues around inclusion and vulnerability.

The payment will be made on a monthly basis to one person, irrespective of the number of people within the household that claim together. That recipient is then responsible for ensuring that the money paid for that month is used for family expenditure such as rent, fuel and heating, food and clothing.

Whilst this approach appears logical for the majority of households, there are a number of issues that could mean that benefits are not used to their best effect, so effectively reducing household income even further. ‘Financially excluded’ tenants, who may not be able to open a bank account or who may fear bank charges and manage by using cash find themselves paying more for day to day living. Those who don’t know how to manage their money well, or lack the financial education to prioritise debt effectively sometimes opt to use their benefits to pay debts on a perceived need basis  – for instance paying off a short term loan as the company is literally on the doorstep. As an example of other difficulties people may face; those living in an abusive relationship or other dependency problems may find that the family does not see the money they are supposed to live on.

Beyond the change to the method of benefit payment, there are very significant changes to eligibility for benefits and the level at which they are paid. There are already an increasing number of households who find that their benefits will not cover their rent. This poses a real risk of homelessness and hardship. When Universal Credit is introduced most people who have their rent paid directly by benefits will have to manage the payments themselves. If the recipients have debts, problems with using bank accounts or don’t understand how to manage their money well, this means that the rent may not be paid.

At the Wales Co-operative Centre, we are working to support those most at risk of eviction and homelessness due to problems with managing their money.

Our Tackling Homelessness through Financial Inclusion (THFI) project seeks to support vulnerable tenants through the administration of their benefit through a ‘Credit Union Rent Account’. The project has been running across Wales since October 2011, and is funded by the Oak Foundation and Welsh Government. Its aim is to develop a credit union rent account model where none exists within a local authority, and to promote the scheme to private landlords and tenants to maximise take up.

The Credit Union Rent Account process is simple – the tenant joins a credit union and instructs the Local Authority to pay the benefit into a rent account. The benefit is ring-fenced and paid to the landlord (who pays a small administration fee to the Credit Union). This helps the tenant budget and by becoming a member of the Credit Union they get access to the other products a Credit Union can offer, such as low-cost loans and savings accounts. The tenant still retains control of their benefit. The landlord benefits from a degree of assurance that housing benefit is being used to pay rent.

Bristol Credit Union has provided a rent account scheme since 2008. Bristol Credit Union Chief Executive, James Berry comments, “Our members are fully in control of their account, and landlords like the fact that they are notified of any changes a member makes to the account, in advance to the change taking place. Tenants also particularly appreciate having rent ring-fenced in a jam-jar account as it means they have less of a worry about making sure the rent is paid.” Welsh Credit Unions are working hard to develop ideas further to suit their localised needs. For instance Neath Port Talbot Credit Union has provided a rent account model for over two years. By becoming a member of the Credit Union, over 76% of tenants on this scheme now have loans with Neath Port Talbot Credit Union where otherwise they may approached a high interest loan provider.

There are clear benefits to introducing vulnerable benefit claimants to a credit union now, prior to the introduction of Universal Credit. Credit unions are developing budgeting accounts, known as ‘jam jar’ accounts, to help support vulnerable people to budget for priority debt – ring-fencing priority payments such as rent. This will help vulnerable people, who will receive housing benefit within a larger single payment, to prioritise the rent going forward. Action now to support innovative models such as the credit union rent account will help mitigate against the impact of Welfare Benefit Reform, but this action is needed quickly so that people are prepared for the changes.

Vulnerable people need not be financially excluded in Wales. With co-operation and communication between accountable financial institutions, local government and other stakeholders  we can ensure that our vulnerable and at risk citizens have the means to access responsible financial services and have the security of a home and food for their families.

Written by Ieuan Nash

October 18, 2012 at 1:35 pm

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