Canada has linked household income to social housing rents since the 1970s and along the way, the country’s housing providers have negotiated many of the same problems that face the UK’s housing providers as they implement the government’s planned pay-to-stay programme.
Social housing providers in Canada are required to capture the same financial information as UK providers will for pay-to-stay. Under the Canadian Rent Geared to Income (RGI) scheme, housing providers obtain pay slips, income tax forms and benefits information from tenants in order to charge a social housing rent of around 30 per cent of household income.
To make the scheme work, the housing provider’s IT system needs to calculate not only the RGI but also create annual income check reminders and determine eligibility for the scheme. The system not only calculates social rents but also looks at any additional charges caused if tenants go beyond the income threshold. If tenants breach their income thresholds, their rents can be raised to ‘market levels’, which are calculated by Northgate Public Services’ housing platform.
In short, the system needs to be able to cope with greater complexity.
Over the last few years, Northgate has worked closely with Ottawa Community Housing to implement RGI.
Michael Wilson, director of operational effectiveness, Ottawa Community Housing, said, “Raising the rent to ‘market levels’ can happen with a change in income or a change in household composition. Typically, this could occur to ‘empty nesters’ who no longer qualify for the size of home they previously had, or when people gain higher-paid employment.
“While we give them a grace period, if they don’t move and the grace period expires, the rental charge goes to the market level regardless of income.”
It’s necessary to check household incomes on an annual basis to ensure that tenants are paying the correct rents. The IT platform generates the reminder notices and also helps create the calendar entry for tenant contact; it’s potentially a multi-stage process.
First, the Northgate platform automatically generates a letter letting tenants know it’s time for their annual review and requests financial and household information. If necessary, this escalates into telephone calls, followed by Ottawa Community’s staff actually visiting the property to get the necessary information.
Ottawa Community starts the process five months in advance because, as Wilson said, “To not have the information from tenants results in them becoming ineligible and losing their subsidy. In challenging situations, it often needs a hands-on approach to go and talk directly with tenants or help them to find the required information.”
In Canada, supplying financial information is mandatory; this is a key part of the scheme’s success. In practice, tenants’ rents can be raised to several times what they were before if the information isn’t supplied, creating a strong incentive to supply the information.
A key benefit of implementing RGI (and pay-to-stay) is the far greater understanding that housing providers gain about their tenants’ financial and living arrangements. It opens up a much greater opportunity for dialogue and opportunities to help tenants ensure they are getting the right benefits than would otherwise be possible.
In preparation for pay-to-stay, we are taking what we have learned from our work in Canada (and others, such as Ireland and Australia, where there are similar programmes) and used that to inform our software solutions and also to offer a pay-to-stay service for UK housing providers.
Trevor Hampton is head of housing at Northgate Public Services.