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Is it time you gave your tenants a ‘nudge’?

5 November 2015 • Melanie Dirom

Behavioural psychology probably isn’t the first thing housing management teams think of when tackling the perennial problems of rent arrears and anti-social behaviour, but ‘nudging’ could be the key to engaging with difficult tenants and reducing legal costs, writes Melanie Dirom, Partner and Head of Housing Management at Croftons Solicitors LLP.

The idea stems from the government’s Behavioural Insights Team – dubbed the “nudge unit” – that was set up by David Cameron in 2010 to help improve public services and save money. Their pioneering approach draws on behavioural insights and social psychology to drive changes in behaviour. In essence it’s about finding key psychological triggers that will engage and persuade, and it’s been used to great effect in a wide range of policy areas from tax avoidance and pensions to army recruitment and public health campaigns.

Know your audience

In most cases it’s nothing more than subtly changing language, or choosing appropriate communications methods based on knowledge of your audience. Successes include reducing council tax arrears by stressing in letters which services are under threat due to non-payment, and increasing interview attendance at Job Centres simply by personalising letters and wishing candidates good luck.

We regularly discuss with our clients in the housing sector how legal costs can be reduced, and we’re confident that applying nudging techniques in key areas, such as rent recovery and neighbour nuisance, could be a big opportunity for RPs to improve services, increase revenue and reduce costs.

Nipping problems in the bud early by communicating with tenants in the most effective and persuasive way will not only help RPs make savings on administrative costs. By preventing issues from escalating to a point where formal legal action is required, such as possession proceedings, they will make big savings on solicitor and counsel fees too.

Case in point

Many cases we’ve been involved in highlight how nudging could prove beneficial. In a recent rent recovery case that ended up in court the defence centred on Equality Act issues; the line being that the tenant’s depression affected engagement with the landlord. Better knowledge of the tenant’s situation, and a more appropriate and effective way of communicating, may well have prevented the case ever coming to court.

And there’s ground to be gained in applying nudging techniques in other areas where influencing tenant behaviour is central: being more energy efficient at home; improving household budgeting skills; and preparing for welfare reform are just three examples of where nudging could make a real difference – to landlords and tenants.

Take a strategic approach

Knowingly or not, many RPs’ housing management and communications teams will have been ‘nudging’ their tenants for years, but fewer will have taken a strategic, insight and data-driven approach to it. Customer insight and segmentation are areas social landlords have been putting increased resources into, and the more intelligently this data is used to target and tailor information in the most effective way, often on a tenant-by-tenant basis, can only help associations in their efforts to challenge and change behaviour.

At a time when demonstrating value for money, maximising income, and reducing costs are more important than ever, can your organisation afford not to nudge?


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