What is the state of Public Sector rental arrears in 2024?

• How many social housing units are in rental arrears?
• What is the value of social housing rental arrears?
• Which regions have the highest level of arrears?
• How does this compare to housing associations?
• What can social housing providers do?
• Rental Arrears Index methodology

London was found to have the highest level of rental arrears of the local authorities that responded to our Freedom of Information request.

On average, local authorities in the capital are owed more than £10 million in rental payments over the last five years. This is more than double the average at the next highest region, with authorities in Yorkshire and the Humber owed just under £5 million.

The North East, West Midlands and Scotland are the other regions that have seen the highest levels of arrears since 2019.

Authorities in South East England and the East of England were owed the least, on average, with less than £1 million owed per authority in the region.

Commenting on the findings, Alex Common, Divisional Director, Product and Engineering, Access PaySuite, said:

“Social housing budgets have been squeezed significantly over recent years. On top of this, the cost of living crisis has caused real difficulties for many people to meet their living costs, whether they rent their property from their local authority, a housing association or a private landlord.

“For local authorities and housing associations, this creates a challenging balancing act between affordability for tenants, while meeting costs for their own essential expenditure requirements. Alongside rental arrears, local authorities are also spending significant amounts of time chasing overdue council tax payments, all of which is adding to their operating costs.

“Finding a long-term solution to the challenge of rising arrears is a complex challenge. However, in the meantime, there are important steps that local authorities can put in place to support their tenants and make rent collections as simple as possible.

“At Access PaySuite, we understand that housing associations' and local authorities' priorities are to deliver high quality services and drive better public sector outcomes for all their customers, citizens and communities. This includes providing accessibility, financial inclusion and a great customer experience as well as choice and flexibility in ways to pay, which marry affordability with cost effective payment collection, whether that's face to face, by phone or online.”

The Regulator of Social Housing reported an 8.4% rise in rent arrears owed to housing associations in March this year - hitting a record high of £800 million - the highest single year jump since before the COVID-19 pandemic.

Between 2015 and 2018, the total amount of unpaid rent remained relatively consistent between £500 and £600 million.

Since then it has increased steadily, to £629 million in 2019, £658 million in 2020, £689 in 2021 and £736 million in 2022, before reading £798 million in 2023.

The figure represents around 5.3% of housing association tenants who are unable to pay rent.

Our findings highlight the importance of simplifying housing payment processing software solutions.

While a long-term solution to reduce social housing rental arrears is a complex challenge, there are clear steps that local authorities and housing associations can take to tackle the challenge within their organisation.

We know that tenants increasingly want more convenience and flexibility from public sector payment solutions. A more flexible approach can empower tenants to choose their preferred payment method, whether that’s real-time online payments or Open Banking, via Direct Debit or over the phone, as well as in-person at Post Office, PayPoint or Payzone outlets.

Digitised public sector payment solutions have been shown to maximise collection rates and reduce costs thanks to more efficient processes within organisations.

Access PaySuite used the Freedom of Information Act to request details from local authorities about the number of social housing units, number of units in rental arrears and the overall value of those arrears at the end of the financial year for the years 2019 - 2024. Requests were made and responses received in June and July 2024. In total 82 local authorities provided the full set of data for analysis, representing more than a third of the total number of authorities which own social housing units.