Housing ACT Debt Management policy

Purpose

This Policy provides guidance on how Housing ACT responds to tenancy-related debt. It aims to:

support ACT public housing tenants to proactively manage and respond to debt and prevent debt levels increasing
assist staff to fulfil their obligations in line with Housing ACT’s role as a model social landlord
enhance the financial sustainability of housing assistance programs by strengthening the effectiveness of debt recovery.

Legal framework

This Policy is consistent with the provisions of the:

Residential Tenancies Act 1997
Housing Assistance Public Rental Housing Assistance Program 2013
Financial Management Act 1996
Human Rights Act 2004

Policy objectives

The Debt Management Policy provides guidance to Housing ACT staff working alongside public housing tenants to proactively manage and respond to debt related to their current tenancy.

The objectives of this policy are to:

support ACT public housing tenants to fulfill their financial obligations and sustain their tenancies
foster a shared understanding among staff of Housing ACT’s approach to debt and the processes for managing it
assist staff to meet the relevant legislative and other requirements and to deliver services in a manner consistent with a model social landlord.

Policy principles

Housing ACT’s role as a social landlord shapes our approach to preventing and managing tenant debt.

At the same time, as a public sector agency, Housing ACT is required to ensure prudent management of public assets and funds. This means we will engage with tenants who owe money to support them to meet their tenancy obligations.

The following six principles and four commitments shape Housing ACT’s responses to tenant debt.

Principles

Proactive

We will adopt a proactive approach to debt with a focus on debt prevention and early intervention. We will seek to identify and support those tenants at greatest risk of falling into debt and when clients do owe us money, we will seek to engage with them to address the debt before it reaches crisis point.

Clear and consistent

We acknowledge that debt can be a symptom of complicated circumstances and often there is no simple fix. We will support tenants to understand their obligations by engaging with them clearly, consistently and in appropriate language. Our consistent approach will be underpinned by clear principles which in turn shape clear processes and systems that guide and set the parameters for staff decisions.

Person-centred

We will seek to understand the individual circumstances of tenants, offering tailored and differentiated responses within our consistent approach. We recognise that some tenants require more support to understand and respond to debt than others. We will assist these tenants to build their capacity by providing information and making referrals to relevant support services.

Transparent

We will publicly explain our processes for managing debt. We will explain to tenants how their debt has arisen and their options for repaying money owed or reviewing Housing ACT decisions where relevant.

Strengths-based

We will support tenants to recognise and build on their own strengths and challenges to identify solutions and appropriate supports. We will work with and support tenants to take responsibility for their own debt management.

Fair and respectful

We will always seek to reach a mutual agreement to recover money owed, taking legal action only when other attempts to engage and support tenants to manage debt have not been effective. We will only seek to terminate a tenancy as a last resort. We will treat tenants with respect and listen to them, explaining how they can dispute our decisions when they disagree with them.

Commitments

As a model social landlord, Housing ACT will not:

let debt escalate by not attempting to engage with tenants in a timely manner.
pursue money owed without seeking to engage with the tenants involved to understand their individual circumstances or giving them the opportunity to explain their situation.
enter into repayment agreements that are unrealistic.
ignore the unique and specific circumstances and needs of tenant households.

Scope

The Debt Management Policy applies to the following types of debt for Housing ACT public housing tenants related to their current tenancies:

Rental debt

This occurs when a tenant falls behind in their rent payments. Tenants with rental debt are responsible for repaying the money owed, by a lump sum payment or agreed instalments, in addition to their normal fortnightly rent payments. A failure to pay rent is a cause for eviction.

Sundry debt

This refers to debt that is not linked to rent payments, such as debt arising from tenant responsible maintenance (TRM) charges. TRM charges arise from property and maintenance work that is not related to fair wear and tear, domestic and family violence or criminal activity such as break-ins. Tenants with sundry debt are responsible for repaying the money owed, by a lump sum payment or agreed instalments.

Supplementary debt

This occurs when a debt is created by the backdating of a rental rebate. Tenants with supplementary debt are responsible for repaying the money owed, by a lump sum payment or agreed instalments.

The policy principles also apply to current Housing ACT tenants whose tenancies are not under the Public Housing Rental Assistance Program (PRHAP) including affordable rental tenants and residents of the Narrabundah Longstay Caravan Park and affordable rental tenants. However, the sections on processes for recovering debt and arrangements for repaying debt only apply to public housing tenants under the PRHAP.

Housing ACT’s Strategic Finance unit will make contact with people owing money to arrange repayments for some types of debt that are not related to a current tenancy. These include:

Vacated debt

This refers to a debt arising from a previous tenancy that has since been terminated.

Third party debt

This type of debt occurs when a person owes money to the Commissioner for Housing. Examples include part costs for repairing or replacing a common fence or damage caused to a Housing ACT property by a third party.

Rental Bond debt

Rental Bond Help is provided to eligible applicants in the private rental market. A Rental Bond debt occurs when a bond recipient fails to repay the bond loan amount within the agreed repayment terms and conditions.

This Policy does not apply to:

Tenant debt that is statute-barred

The Limitations Act 1985 provides that legal action to recover a debt cannot begin or continue after a stated limitation period has passed. This period begins when the debt is first accrued or when a customer last acknowledges a payment or makes a payment against a debt. For most tenancy debts, the limitation period is six years.

Tenant debt where the tenant is not a person

For example, a community organisation.

Processes for recovering debt

All debt is important and needs to be repaid but some debts have a higher priority than others. It is crucial, for example, that Housing ACT tenants prioritise paying their rent. Housing ACT prioritises current debts in the following order:

Rental debt
Sundry debt
Supplementary debt

Where tenants are paying via an agreement, Housing ACT will collect up to two types of debt related to a current tenancy at the same time. The repayments will be split in an 80%:20% ratio.

Make contact to discuss hardship or rental debt

Housing ACT strongly encourage tenants to contact their Housing Manager if they have concerns about their ability to pay their rent or have fallen behind in their rent payments. Housing Managers will always listen to a tenant’s individual circumstances and concerns. If a tenant has experienced financial abuse that has impacted their ability to pay rent, Housing ACT will work with the tenant to connect them with necessary support services and consider their debt on a case by case basis. They will discuss options for support services that can assist tenants with managing their finances and other needs. Housing ACT always prefers to work with tenants to prevent debt or address it before it grows and becomes unmanageable. If a tenant has any questions or concerns about their financial obligations, they should contact their Housing Manager.

If a tenant in debt does not make contact

If Housing ACT has not heard from a tenant who falls into debt or has not kept up to date with a repayment agreement, we will attempt to make contact with them. We will generally make first contact by phone, unless a tenant has advised Housing ACT of a different preferred form of contact. Housing ACT prioritises phone contact because we want to listen and understand each tenant’s situation before discussing repayment options and support services that may assist.

If we are unable to make contact by phone, we will send a letter outlining the amount that needs to be repaid and requesting that the tenant contact their Housing Manager by phone to discuss repayment options and any relevant supports. If we do not hear from you, we will continue to make contact via phone, SMS, email and/or a home visit. For tenants in new tenancies or with high patterns of debt, some attempts at engagement such as a home visit and a debt appointment, may be brought forward.

Legal notices and action

Housing ACT will only adopt legal measures when all other options have been exhausted. These options may include an offer of support from a Tenant Support and Community Connections Officer whose role includes helping clients whose tenancy is at risk by offering support and connecting them with other support services. When a tenant refuses to engage to address their debt or continually breaks repayment agreements, we will use the legal options available to us.

If, after repeated attempts, contact has not been made and action to repay the debt has not begun, Housing ACT will serve a Notice to Remedy unless there are significant extenuating circumstances. This is a serious legal notice that requires the tenant to repay the rent owed. Housing ACT will continue to seek engagement including through an appointment.

If left unaddressed, unpaid rent can ultimately lead to eviction. If the rent owed is not paid within one week of the Notice to Remedy being served and the tenant has not engaged, Housing ACT may serve a Notice to Vacate. When served, this Notice requires the tenant to move out of the property within two weeks. Once a Notice to Vacate is served, Housing ACT may apply to the ACT Civil and Administrative Tribunal (ACAT) for an order to terminate the tenancy if the tenant has not already vacated the property.

Non-rental debt

When a tenant has a new sundry debt related to Tenant Responsible Maintenance (TRM), they will receive an invoice outlining the charges. Their Housing Manager will also make contact by phone to discuss the circumstances and make repayment arrangements.

When a tenant has a supplementary debt, their Housing Manager will call them to discuss the situation and negotiate repayment. If a tenant has a rental debt and a supplementary debt linked to their current tenancy, Housing ACT will not seek repayment until one of the other debts is cleared. If the tenant does not respond to the phone call, the Housing Manager will send them a letter outlining the debt and asking the tenant to make contact to discuss repayment.

The legal processes for rental debt do not apply to sundry and supplementary debt. However, Housing ACT may follow other legal pathways to recover these non-rental debts if tenants do not work with us to address them.

Arrangements for repaying debt

Housing ACT will seek to recover debt in full if the tenant has the capacity to pay. If the tenant can demonstrate that the debt has occurred as a result of financial abuse, domestic and family violence, elder abuse or any other form of abuse, we will work with the tenant’s support services to connect them with necessary support services and consider an approach to their debt on a case by case basis. When a tenant cannot afford to repay the debt in full by a lump sum payment, Housing ACT will enter a repayment agreement to repay the debt by agreed instalments when the debt has been confirmed and the tenant has accepted responsibility. Housing ACT will encourage tenants who cannot repay the full debt amount to make a partial lump sum payment before entering into a repayment agreement.

Debt Agreements must reflect a tenant’s capacity to pay. Paying more than 30% of income towards housing costs is a widely accepted indicator of housing stress for households in the lowest 40% of incomes. Housing ACT is committed to avoiding housing stress among its tenants.

Recognising this, tenants receiving a rental rebate will be asked to contribute a maximum of 30% of their total assessable household income towards their combined rent and current debt repayments. Discussions around repayment instalment amounts will begin at this threshold. However, if a tenant can demonstrate that paying this amount will cause or contribute to financial hardship, we will accept lower instalments. Requests for repayment instalments below $15 a week should be supported by evidence of exceptional circumstances verified by a financial counselling service where possible and appropriate. These requests must be approved by a Team Leader and must have a scheduled review date. If a tenant’s rental rebate changes so that their existing combined rent and repayment amounts are more than 30% of their household’s assessable income, Housing ACT will negotiate a new agreement with them.

Tenants paying full market rent will be asked to pay instalments of 30% of market rent in addition to their regular rent payment. However, if those tenants can demonstrate that paying 30% of market rent means they would be paying more than 30% of their assessable income to Housing ACT or that this would cause financial hardship, we will accept lower instalments.

Housing ACT will encourage tenants to make debt repayments through Centrelink deductions, bank direct debits or BPAY. Tenants can make additional payments on an ad hoc or regular basis if they are able.

Complying and non-complying rental debt agreements

A Rental Debt Agreement with Housing ACT will be considered compliant if the amount required in the agreement schedule is paid into the account at any time before the end of the payment week. If a payment is not received in the week it was due, it will be accepted if the tenant provides payment receipt details showing the payment was made that week. If a tenant falls behind their repayment schedule due to a Housing ACT administrative error, the agreement will be considered compliant.

Tenants are strongly encouraged to make contact with Housing ACT if they have concerns about their ability to meet the repayment schedule under a Rental Debt Agreement. If a tenant misses a repayment and has not made contact, Housing ACT will contact the tenant to understand the reason for the missed payment before taking action such as cancelling the agreement.

If a tenant does not comply with a Rental Debt Agreement that begins after this policy comes into force, Housing ACT will cancel the agreement. When this happens, future agreements for the same debt will generally be made with a more senior staff member and a legal notice may be issued.

Housing ACT may authorise a two-week pause on a Rental Debt Agreement with a tenant, once in any 6-month period. In making this decision, the officer will consider the tenant’s payment history and the reason for their inability to make the repayment. The tenant must continue to pay rent during the pause. These agreement pauses will only be offered once every six months. Further or longer pauses must be authorised by an Assistant Director.

If the ACT Civil and Administrative Tribunal (ACAT) issues a tenant with a payment order, the tenant must make each and every repayment on time, regardless of any lump sum payments made. No pauses will be granted.

Allocations and transfers with debt

Past debt can prevent people from accessing Housing ACT’s services.

A person applying to rent a public housing property, or transfer between public housing properties, in the ACT will not be allocated a property if they owe money to Housing ACT, unless discretion is applied.

The matters considered when exercising this discretion include:

the amount of the debt
any reasons why the debt has not been repaid, including domestic and family violence
whether the person has signed an agreement to repay the existing debt
if an agreement has been signed:
- the length of time the agreement has been in place
- whether repayments towards the debt are being maintained in line with the agreement
evidence that the person has successfully maintained a tenancy elsewhere.
the person’s current situation.

When a tenant transfers between Housing ACT public housing properties, any credit from

Their preceding terminated rent account will be transferred to their new rent account.

Further information

For further information contact Housing ACT.