Write Off Policy

Document Author Victoria Curry, Income and Financial Inclusion Manager
Document Owner Kelly Webb, Director of Customers
Legal Advice N/A
Consultation Consultation has taken place with customers
Approved by Risk and Audit Committee November 2021
Review Date November 2024
Corporate Plan Aim Prosperity
Equality Analysis EQIA Completed – 26 September 2024
Key changes made Reasonable Adjustments Policy
Inclusive Access Strategy
Former Tenant Arrears Management Policy

  1. Introduction

    1. Rental income, which includes former tenant arrears recovery, is the primary source of revenue for One Manchester (OM). Rental income helps to fund and improve the range and quality of services provided to tenants and other customers. Maximisation of this income is therefore of fundamental importance to OM to enable the continued improvement and development of these services. The aim of this policy is to maximise former tenant arrear debt recovery, and to outline the approach OM takes to writing off balances on accounts held by current and former tenants.
    2. This policy does not generally apply to leasehold debt as such a liability will usually be enforceable via forfeiture of lease, legal procedure.

  2. POLICY PURPOSE

    1. This policy outlines the approach which OM will take to the write-off of irrecoverable debts and the grounds for write-off of debts. It also deals with the treatment of former tenant credit balances.

  3. Policy Scope

    1. This policy applies to debts, owed to OM, by any tenant and applies to both current and former accounts. It includes current tenant’s arrears, former tenant’s arrears (FTAs), leaseholders and re-chargeable repairs. Section 4 of this policy outlines the criteria to be applied when considering write off.
    2. OM have a bad debt provision to cover the writing-off of FTAs. Currently the provision is set at 100% of the outstanding debt; write-offs are made against the provision during the course of the year.

  4. Policy Statement

    1. 4.1 Debts from former tenants will only be considered for write off once our former tenant procedure has been exhausted.
    2. 4.2 Debts owed by current tenants will not normally be considered for write off unless there are reasons why we cannot collect an amount, for example (this is a non-exhaustive list).
      1. Bankruptcy
      2.  Individual Voluntary Arrangement
      3. Debt Relief Order
      4. In compliance with a court order
      5. Welfare benefits payment
    3. 4.3 Debts owed by former tenants may be written off in the following circumstances (this is a non-exhaustive list).
      1. Not economic to pursue (under £100).
      2. Unable to trace to a forwarding address after 12 months.
      3. All aspects of the former tenant procedure have been exhausted, without success.
      4. The former tenant is deceased and there is no estate, or the estate does not have sufficient funds to clear the debt.
      5. OM becomes aware that the former tenant is or is likely to be incapable of ever paying off the debt by reason of their medically diagnosed mental and/or physical health condition.
    4. All former debts, over £100, are noted on the Manchester Move Re-housing Review List.
    5. If a former tenant debt has been written-off, and the tenant concerned subsequently reapplies for housing and declares a previous tenancy, the debt will be fully reinstated – written on. Similarly, if OM becomes aware of any other circumstances change which would make a previously written off debt recoverable, the debt will be reinstated and pursued, again subject to statute of limitations.

  5. Process

    1. This policy should be read in conjunction with the detailed procedures and guidance of the Former Tenant Arrears Management Policy.

  6. Method and Approach

    1. Vigorous and early pursuit of former tenant debt provides the best chance of successful collection and is central to the procedures which support this policy. The former tenant
    2. Where the former tenant has not reached an agreement with OM to repay their debt and the debt is over £100, we reserve the right to pass the debt to a collection agency at any time to make further attempts to trace the debtor and recover the debt, subject to any relevant limitation period set out in legislation
    3. Settlement
      1. The costs of pursuing former tenant debt should be balanced against the likelihood of recovery and the level of debt involved, so that efficiency of collection is fully considered at all stages. 
      2. In order to maximise the collection of former tenant arrears (FTA), the following settlement initiatives can be used, OM colleagues who are responsible for arrears recovery will have the discretion to use any of the following settlement incentives: 
        1. For balances over £100, a 20% discount of the total amount of the FTA will be offered if the FTA is cleared via a lump sum payment.
        2. For balances over £100, a 10% discount of the total amount of the FTA will be offered if the FTA is cleared within 3 months
    4. Where a debt is not recoverable, or it would be inefficient to collect, it should be written off in accordance with the delegated authority schedule in OM’s Standing Orders and Financial Rules.

  7. Authority for Write Off 

    1. Write off requests will be processed, every quarter. Approval will be obtained to write off the arrears by leadership team prior to the former tenant accounts being ‘cleared’ and debts removed from them.
    2. The Write Off report will show a list of the former and/or current tenants account references, the date the tenancy ended, the current amount of debt outstanding and the reason for requesting the write off.

    3. Write off approval framework 

      Write off amount Approver Performance Monitoring
      For debts up to but not exceeding £1,000 (including aggregated debts or for one debtor) Team Leader Quarterly report to Audit and Risk Committee detailing the value of write offs which have been approved during the previous quarter.
      For debts greater than £1,000 but not exceeding £5,000 (including aggregated debts or for one debtor) Manager  
      For debts greater than £10,000 (including aggregated debts or for one debtor) Leadership Team (LT)  
    4. Any valid credit on a former tenant’s account will be refunded upon request of the tenant. This is subject to the clearance of any outstanding debts held with OM and, where applicable obtaining confirmation from the welfare benefits administering authorities, to confirm that they do not intend to recover any monies from OM in respect of overpayments.
    5. If a tenant with rent arrears is transferred to a new property on management grounds, for example, anti-social behaviour or domestic violence. Terms for repayment of the former tenancy arrears will be set out within an addendum as part of the new tenancy agreement. Stating the former tenant arrears owed, repayment amount, frequency and first payment date.

  8. Responsibility

    1. It is recognised that all colleagues have a role to play in safeguarding the income of the business and all colleagues are expected to support the delivery of a high performing debt recovery service as part of their role.
    2. Where applicable, OM colleagues will receive the appropriate training and support to effectively achieve the objectives of this policy.
    3. The Director of Customers is responsible for ensuring this policy complies with regulatory and legislative requirements.

  9. Monitoring, Review and Evaluation

    1. Audit and Risk Committee will oversee performance in respect of the Bad Debt Provision and a report will be provided on a quarterly basis on the level of write offs approved in the previous quarter.
    2. This policy will be updated as required with any changes in legislation or working practices and a full review will be completed every three years.

  10. Associated Policies and Documents

    1. Internal Documents:
      1. Tenancy Management Policy
      2. Income and Debt Recovery Policy
      3. Former Tenants Arrears Management Policy
      4. Safeguarding Adults Policy
      5. Allocations Policy
      6. Inclusive Access Strategy
      7. Reasonable Adjustment Policy
    2. External documents
      1. Housing Act 1985
      2. Housing Act 1996
      3. Welfare Reform Act 2012
      4. General Data Protection Regulations 2016
      5. Equality Act 2010
      6. Landlord and Tenant Act 1985