Payments Specialist, allpay Ltd recently surveyed more than 2000 people across the UK to gain an insight into current payment methods for several house-hold bills. Almost 300 people sampled were social renters (292) with housing provided via their local housing association or council. Here we share some of the trends and most thought-provoking findings of the survey compared with last years’ statistics.
Fewer social renters are now confident in paying their regular bills: 64.7% in 2019 compared with 65.1% in 2018. This fall in confidence reflects in the increase in social renters who described themselves as “not confident in managing money and I regularly can’t afford to pay household bills” 5.5% in 2019 compared with 4.6% in 2018.
If we compare the figures relating to private renters of a similar sample size (291) who perhaps sit higher on a socio-economic scale, the trend is reversed, indicating a growing gap between the available means of social and private renters. In 2019, 71.1% of private renters stated they were ‘confident’ in paying their regular bills, again higher than in 2018 (69.1%). A factor for consideration may be that many social renters are faced with the ongoing roll out of Universal Credit payments which has disrupted their paying schedules and available expenditure, thereby hampering their budgeting efforts and eroding confidence.
For the entire sample (2009 respondents) which included social and private renters and home owners (home owners accounting for the vast majority of the sample, 67.2%) there were some regional variations relating to ‘confidence’ in paying house-hold bills. Residents in Wales were the most confident in paying regular bills (82%) with Northern Ireland the least confident (73.9%). 81.3% of respondents from Scotland were confident in paying regular bills and those from the South East and South West 78% and 78.9% respectively.
For social renters this regional variation was different. Social renters in Scotland were the most confident (73.2%) with Central England the least confident (58%). Residents in Wales were still very confident at 72.2% with Northern Ireland having fairly low confidence again (60%). Northern England, South East & South West were 60.5%, 67.1% and 65.2% respectively.
Some councils are looking at phasing-out cash. However, the statistics relating to social renters demonstrate an ongoing reliance on cash with 11.07% preferring to pay rent by cash and 11.1% paying for their Council tax with cash. This remains a high percentage. To put these figures into context, the most popular payment type for rent is Direct Debit (35.97%) with a similar proportion (34.39%) preferring to pay by Debit Card and cash in third (11.07%). The statistics actually demonstrate an increase in social renters preferring to use cash for rental payments compared with last year’s survey: in 2018, 10.49% used cash.
Similarly, the preferred payment method for Council Tax is Direct Debit (43.5%) and second Debit Cards (31.68%) with cash the third most popular of the eight payment methods we surveyed. Respondents cited “Ease of Use, Security and Trust” as the most common reason when choosing their payment method.
The use of Debit Cards for rental payments has also increased in 2019 (debit card rent payments were 29.9% in 2018) and this could be due to residents’ confidence in manual payments – paying when they know funds are available - compared with automatic payments which are taken regardless. In addition, failed Debit Card payments don’t attract bank charges, so this may also point to a reason for their increased popularity.
Related perhaps to the increase in cash payments for rent, is also the increase in social renters which don’t have bank accounts. In 2019, 2.1% or six of the 292 people who responded stated they ‘don’t have a bank account’, higher than in 2018 (1.6%). We also know from another report – the UK Payment Report - that 1.3 million people in the UK don’t have a bank account and so for a comprehensive approach to financial inclusion, cash still needs to be recognised as an important option for many.
Social renters preferred payment frequency for regular house-hold bills is monthly, 57.8% in 2019 – with the highest proportion of favoured monthly payments being for Internet and Phone services followed by Council Tax. However, the variation between respondents also points to the need to employ flexibility on payment frequencies for social renters. This year, the majority preferred to pay rent on a weekly basis (22.1%) with 9.9% on a fortnightly basis and 7.6% four-weekly.
Collecting automated rental payments on any working day of the month does offer the opportunity for Housing Associations to improve the flexibility of rent collection for the benefit of residents. Collecting rental payments much closer to pay day, or the day Universal Credit is paid for example, can help service users with budgeting and means people are far less likely to fall into arrears and therefore their right to remain in their own homes is protected.
We also asked social renters about the features that could make paying household bills easier. A significant proportion (45%) stated text and email reminders would be helpful, highlighting the important role modern communication plays in today’s society. Budgeting tools (22.9%) and instalment plans (24.7%) may also point to a future role in technology to help tenants.
We have highlighted just a few of the key findings from the survey here. Overall, the findings point to the need to maintain flexibility on payment methods and frequencies to ensure financial inclusion and support social renters who are becoming increasingly ‘less confident’ in being able to pay their regular house-hold bills.