I have been getting several telephone calls a week recently asking me about Big Issue Invest’s Rental Exchange scheme. The calls are normally from staff working in the welfare reform, money advice or the arrears collection teams, but because I have not had many calls from IT managers, we thought it would be a good idea for me to write something for Housing Technology.
What is the Rental Exchange?
A few years ago, The Big Issue was looking at how it could introduce micro-loans into the UK. This idea has proved very successful in the developing world where people are given a small loan to buy a goat or a small patch of land to help lift them out of poverty. The Big Issue has a separate group that look at social investments called Big Issue Invest. It believed if we could, for example, help someone buy a van and gardening equipment, he or she could set up their own business.
However, when it looked at the UK market for loans, Big Issue Invest realised that the problem was not a lack of funds available to be lent to people, the problem was that often the people looking for a small loan didn’t have a good credit rating. In many cases, the poor credit rating was not because someone had taken out a loan and then not repaid it. The problem was that the person had never taken out a loan or credit agreement in the first place. They have what they call in the credit agencies a ‘thin file’ and that means that they find it hard to get credit.
Big Issue Invest did some more investigation and soon realised that one of the problems was that although those of us who have a mortgage have information about our monthly payments shared with credit checking agencies, people in social housing do not have that data shared. They also found that when they consulted people in rented accommodation, the tenants thought this was unfair and felt that they too should get credit for paying their rent every week or month.
I first became involved with the project in February 2013. I had read that Experian was one of the organisations that the DWP has appointed to manage its identity management for universal credit and that the authentication process was going to be based on the claimant’s ‘digital footprint’. I was not completely sure what a digital footprint was, but I was pretty sure that some of our tenants wouldn’t have one.
So I emailed Experian and asked if I could talk to someone about how we could help our tenants get a digital footprint. A short time before I sent my email, The Big Issue had just completed a tendering exercise to find a partner organisation to help it increase the credit ratings of people living in rented accommodation. My email was forwarded to Sarah Forster at Big Issue Invest and within a couple of weeks, she and a representative from Experian came to visit us.
Better credit ratings
They explained that they were launching a programme to improve the credit rating of a million tenants in social housing. Before deciding if we wanted to join, each landlord was given the option to provide a test file of data that would allow them to assess exactly the impact on their tenants if they joined the scheme. We spent a couple of days with a management information tool mapping the data from our housing system to the details required for the Experian file transfer and then sent the data off to them to be analysed.
Experian and Big Issue Invest presented the results of their analysis of our data. We learnt that 94 per cent of our tenants have no significant arrears on their rent and their credit scores would improve as a result of incorporating rental data.
We then discovered the impact on people on low incomes living in social housing of not sharing rental data with the credit checking agencies. For example, tenants had to pay £22/week to buy a sofa from a weekly payment store, whereas if they had a better credit score, they could get a similar sofa for £16/weeks from shops like DFS on four years’ interest-free credit. We learnt that car insurance can cost hundreds of pounds a year more if you do not have a digital footprint and that they pay more for utilities because they have a ‘thin file’.
We had concerns about security and data protection, but were put in contact with staff from the ICO who confirmed that it supports the Rental Exchange programme and that as a social landlord we did not have to get permission from every tenant before providing the data. We did have to inform our tenants that we were joining the scheme, but crucially we did not have to get their permission. After writing to all the tenants in our 10,500 properties, only 6 people objected and asked to be excluded from the scheme.
Capita is the provider of our housing system and it has really shown a strong sense of corporate social responsibility by providing us with a free module that will extract the data needed for the rental exchange, convert it to the correct format and send it automatically to Experian at the end of each month. We installed this new module in May 2014 and have been successfully providing files to Experian since then.
Universal credit is being rolled out, and tenants who get their benefits weekly and have successfully managed in a cash economy may find it hard to get a bank account or access affordable credit during the period from when they get their last weekly benefits payment until they get their first monthly payment from universal credit.
Without access to mainstream credit they may be forced to go to the pay-day loan companies and money lenders in order to put food on the table. This is not about making it easier for tenants to buy flat screen TVs; this is about helping people buy basic goods and services.
I would strongly urge you all to contact your housing systems provider and ask them how they intend to help you provide data to the Rental Exchange.
Chris Deery is head of ICT at Solihull Community Housing.