Drawing on insights from professionals and tenants, a new report written by Fair4All Finance and Campbell Tickell presents the case for increased shared working between housing associations and affordable lenders.
It says that there is significant opportunity for housing associations and community finance providers to establish and expand partnerships to improve the financial resilience of tenants, with clear benefits for all parties involved. The report looks at existing partnerships, identifying areas of good practice as well as opportunities for growth. And sets out guidance on how the two sectors can create well designed partnerships for the benefit of their tenants and customers.
Theodora Hadjimichael, Chief Executive of Responsible Finance, commented on the report launch:
“Partnerships between housing associations and community development finance institutions bring significant benefits for tenants, and their housing provider. The powerful tenant voices in this report show that borrowing is often needed to meet unexpected and emergency costs, but many face a poor choice of options – ‘sometimes resulting in borrowing from loan sharks at interest rates far higher than they had expected.’
“80% of tenants have no savings at all. This leaves them vulnerable to resorting to high-cost lenders or going without essential items when they face a cost they can’t cover – like replacing a broken washing machine. And a worrying number of social renters live without an essential appliance like a cooker or fridge, meaning they pay an annual poverty premium of £1000 or more just to complete basic household tasks.
“CDFIs provide flexible, affordable and fair finance and typically save their customers £250-£400 in interest per loan compared to a high-cost lender. Over half of their existing customers live in social housing, and CDFIs help them to meet high or unexpected one-off costs without triggering their financial situation to spiral out of control.
“Both the Government and the UK’s financial watchdog openly support the development of partnerships between housing associations and affordable credit providers. Existing partnerships between CDFIs and housing providers, such as Scotcash and ng Homes, and Fair For You and Barnet Homes, demonstrate multiple benefits. They have helped tenants move away from high-cost credit, save considerable sums, improve their wellbeing and health, and be better able to pay their rent and household bills.
“We look forward to more high-impact partnerships between housing providers and CDFIs so more tenants can access affordable credit to meet essential costs and weather income shocks. As the report finds, this can reduce costs for tenants and support their long-term health and wellbeing, and lead to more stable tenancies and lower rent arrears. The report describes significant benefits for the housing association sector in expanding the levels of partnership working with community finance providers. We agree.”
You can read the report here: https://www.campbelltickell.com/2021/11/09/fair4all-campbell-tickell-unlocking-tenant-financial-resilience/
If you are a housing association and would like to learn more about CDFIs and partnering with the sector, please get in touch with Eleanor at [email protected].