1 POLICY Subject: Debt Recovery Property and Estate Management (Factoring) Policy Committee: Repairs and Maintenance Page: Page 1 of 8 POLICY OUTLINE The Debt Recovery Property and Estate Management (Factoring) Policy describes how Grampian Housing Association aims to recover and control debt arising from the provision of property and estate management (factoring) services. Related Policies: Property and Estate Management (Factoring) Rent Management Housing Review Panel Rent Setting Estate Management Shared Ownership
2 Committee: Repairs and Maintenance Page: Page 2 of 8 POLICY OUTLINE Grampian Housing Association provides a range of property and estate management (factoring) services. However, it is important that the guiding principles of this provision are met (see Property and Estate Management (Factoring) Policy). As such it is important to recover funds from all those who are legitimately required to meet the costs for the services provided. Corporate and Strategic links This policy assists the Association to meet its Corporate and Strategic aims and priorities. In particular the following strategic aims apply: to improve and protect the financial and operational robustness of core [housing association] services whilst ensuring community and tenancy sustainment ; and to deliver locally and nationally a more diverse business model for Grampian that meets core housing need, addresses inequality, connects with all sectors of the economy Aims Grampian Housing Association aims to provide an effective and efficient property and estate management (factoring) service that provides value for money and is customer focused. As factor the Association is responsible for the general management and administration of a range of services, and owners are charged owners accordingly for the services they receive. Where owners are unable to pay, the Association will follow a structured process to firstly assist owners to meet their financial obligations but failing that, to take action necessary to recover the funds due. This may include recovery from other owners or legal action.
3 Committee: Repairs and Maintenance Page: Page 3 of 8 The Association adopts a firm but sensitive approach to arrears recovery. However, it is essential that debt is minimised to ensure maximum benefit to all. Where a homeowner refuses to pay due to service quality issues, they are required to advise us in a structured manner. Whilst investigations are ongoing, debt recovery action will be suspended. Where the investigations do not support the withholding of funds due, full recovery will be required. Where service delivery issues are upheld and warrant a reduction or removal of charge, this will be applied to all relevant homeowners within the scheme. The exception to the above is the requirement for homeowners to keep their building insured at all times. When a homeowner withholds funds they will be advised that their buildings insurance charge must be met. Failure to do so may invalidate their policy and homeowners will be advised of this by return. Objectives and principles Specifically the objectives of the policy are: To promote early intervention to prevent arrears from occurring. This includes comprehensive information for new customers on their obligations and ensuring a range of flexible and accessible options for payment are available. To ensure that all actions undertaken are recorded in a structured manner to enable staff to manage arrears cases appropriately. To initiate prompt and consistent debt recovery activity through internal procedures but where necessary take escalated action and enforcement. The principles underlying the policy are: To provide factored owners with clear and simple information on charges. To contact owners as soon as arrears occur encouraging payment. To take account of vulnerable owners ensuring that information and advice is available in relation to benefit entitlement and independent money advice. Arrears prevention A key factor in resolving arrears is early and continued contact with customers ensuring that: new and existing customers are aware of their obligations under the Deeds. the role of the factor. the charges due.
4 Committee: Repairs and Maintenance Page: Page 4 of 8 methods of payment and invoicing. insurance arrangements. common charges and reporting procedures. Charge setting and payment methods The Association, as factor, will make sure that charges have been set and apportioned in conjunction with the Deed of Conditions/Title Deeds (hereafter referred to as the Deeds ) and that services are delivered to the required standard. The Association will make sure that all charges are as accurate as possible and these will be levied on the first of every month for core factoring services. Detailed information will be provided for the following charges: any internal communal cleaning (for the coming year based on accurate costings for the mobile cleaning team). open space maintenance (for the coming year based on tendered service delivery). Stair lighting (for the previous year but any significant difference in usage is investigated). communal repairs (based on actual costs to the Association for the previous year). Bulk bin cleaning (for the coming year based on tendered service delivery) any other ad hoc works that are required e.g. removal of bodily fluids, removal of fly tipping (based on actual costs to the Association for the previous year). The Association s preferred method of payment is by Direct Debit however other methods are available: At Grampian Housing Association Offices (Aberdeen & Elgin) Post Allpay App Call Pay (one off payments can also be taken by phoning ) Standing Order Bank Giro Debit/Credit Card Debt Recovery Debt recovery will be dealt with in accordance with the Deeds and will follow a structured escalation process. This can be summarised as follows:
5 Committee: Repairs and Maintenance Page: Page 5 of 8 Early identification of debts and on-going issues via 2-weekly reporting. Early intervention and identification of issues preventing payment this will normally be by phone call or visit to the homeowner to discuss their circumstances fully. Where this is not possible contact will be by letter. Information and advice will be given and, if necessary, a repayment agreement reached. Where non-payment continues follow up action will be immediate. Regular monitoring will be made to ensure re-payment arrangements are adhered to/full payment made. The Association will recognise that some homeowners may prefer to make payments to their factoring charge throughout a month when they are paid. If this arrangement has been put in place, and full payment received before the month end, then no charge will be made. However, where there is no such arrangement in place, and when a homeowner fails to make a payment reasonably due (and no repayment agreement has been reached), a reminder letter will be sent at the month end or a visit arranged. A charge of (renewed annually) will be made for this. This charge will be placed on the homeowner s account and recovered in the normal way. Where non-payment continues for a further month (despite continued contact with the homeowner(s)) a further visit or reminder letter will be sent at the second month end. Again a charge of (renewed annually) will be made for this. This charge will be placed on the homeowner s account and recovered in the normal way. Charges made by the Association for letters and visits to a homeowner whilst trying to recover a factoring debt will not exceed (reviewed annually). Where a solicitor s letter is sent, a charge of (reviewed annually) will be recovered from the homeowner. Owners will be warned in advance of this course of action. At no time will the Association apply compound interest. Where the above debt recovery methods are unsuccessful the Association will consider action to recover, in full, the debts accrued by a homeowner and all costs incurred by the Association. The Deeds will determine whether or not action can be taken against other homeowners in a scheme. If they can then this should be route that the Association follows. If not, legal action will be taken where appropriate.
6 Committee: Repairs and Maintenance Page: Page 6 of 8 Recovery of outstanding debts from other homeowners Where the Deeds allow the factor to recover outstanding debts from other owners this will be pursued at the annual review. Prior to this, the Association will write to the homeowner with the outstanding debt advising them of the course of action to be followed and give them the opportunity to repay the debt in full. This will be at least 28 days before any recourse is sought from the other homeowners. If the homeowner fails to meet their full obligations the Association will recover all funds due (except any charges for debt letters) and expenses incurred, from other homeowners. During this time, the principles of the Data Protection Act 1998 will be adhered to and no personal/identifying information will be disclosed. Recover of outstanding debts using legal action Where a homeowner fails to make sufficient payments to cover the services provided, the Association will consider various methods of legal action including but not restricted to: Small claims action. Arrestment of wages. Payment decree. The course of action followed will be dependent on the outstanding debt and the likelihood of success. Where legal action is instigated, the Association will endeavour to recover all legal costs involved in the recovery action. This will apply even when payment is received in full before the due court date. Major repairs/planned/cyclical maintenance The Association will provide a structured programme of works to raise awareness with homeowners that potential costs will need to be met. Where possible, the Association will administer a cyclical maintenance fund on behalf of owners. Any programmed major/planned/cyclical maintenance will be achieved using the cyclical maintenance fund. However, where major/planned/cyclical works are required and no fund exists, the Association will follow a structured process of consultation with owners. Where this is
7 Committee: Repairs and Maintenance Page: Page 7 of 8 successful and legally binding on all owners, the Association will ask for funds in advance. These will be accounted for separately and a detailed record kept of who has paid, the amount, the date etc. Tendered costs will be used to determine the level of funds required. However, at the end of the works a reconciliation process will take place. If necessary a full and final invoice will be provided to cover unexpected/additional works. Any refunds due to homeowners will be made as soon as practical following receipt of the final accounts from contractors. Where a homeowner fails to meet their required commitment, the Association will consider: Placing a notice of potential liability against the property. This will flag up to potential purchasers that there are sums outstanding which should prevent the owner selling unless they meet the balance of the debt. A notice of potential liability will be renewed every three years and costs approximately (reviewed regularly). Placing a standard security over the property this will prevent the owners from selling without paying the full amount of the debt and allows the Association to re-possess the property and recover what is due if the owner defaults in payment. A standard security can only be obtained by voluntary agreement with the owner. A standard security costs approximately (reviewed regularly). For debts of 1,000 and above, a notice of potential liability will be placed against the relevant property if no other recovery methods have been successful. The full costs of this will be recharged to the homeowner. Performance Monitoring The Housing Revenues Officers / Housing Officers (Elgin) are responsible for identifying all outstanding debts and ensuring that action is taken in accordance with the escalation policy and that accurate records are maintained. The Senior Revenues Officer / Senior Housing Officer (Elgin) are responsible for setting targets and auditing outstanding debt cases. The Housing Manager is responsible for ensuring that the income to the Association is maximised and that agreed procedures are adhered to. The Manager will make sure that appropriate reports are collated and submitted to the Housing Management Committee for consideration. These include performance relating to: The level of factoring debt Factoring debt as a percentage (%) of the annual debit Number of factoring accounts in debt
8 Committee: Repairs and Maintenance Page: Page 8 of 8 Any excepts to this policy will be implemented only after approval through the housing review panel. Equal Opportunities The Association will ensure that in implementing this policy it will not unfairly discriminate against any individual, household or group on the grounds of their race, age, disability, gender, religion and belief, sexual orientation or transgender. Consultation Customers will be consulted in relation to any increase in factoring charges annually to ensure that changes in service levels and costs are accounted for. Confidentiality All information given in relation to this policy will be treated as confidential and will not be discussed with third parities without permission. The Association will fully comply with the requirements of the Data Protection Act 1998 in this regard.