Increasing Service Charge Debt Collection

Issues and Impacts

Increasing Service Charge Debt Collection

Increasing Service Charge Debt Collection

Date – Autumn / Winter 2016

Client – Poplar HARCA

Industry – Local Authority

Problem – Most leaseholders are required to pay service charges to cover the costs of maintaining the property they live in. A sizeable number of leaseholders fail to make payments for the service charges on time. Poplar HARCA – a housing association in East London – sought to tackle the issue of missed and late service charge payments and commissioned The Behaviouralist to help them address this problem.

Solution – The Behaviouralist redesigned the debt collection letters sent out to leaseholders in arrears incorporating principles from behavioural science. The effectiveness of the new debt collection letters were compared to the letters previously sent out by Poplar HARCA using a randomised controlled trial design.

The Results

Results – The newly redesigned letters increased compliance rates by 5.6% and revenue by £132 per letter, yielding over £47,000 of additional revenue in total over an 85-day period.