Income and outgoings

Understanding what the tenant can afford is key to resolving rent arrears. An unaffordable repayment plan will fail and can put a tenant at risk of losing their home.

Create a budget

A balanced budget means the tenant knows their income and expenditure. This helps the tenant to establish an affordable weekly or monthly offer of repayment that will be sustainable long term.

Make sure all expenses are included. For irregular spending, such as school uniform, work out the annual cost and divide it by 12 to reach a monthly figure.

Money Advice Service provides an industry wide tool to create a standard financial statement (SFS). The SFS provides spending guidelines which are widely accepted by creditors. It is an effective tool to support you in creating a budget. It is only available to professionals.

The standard financial statement tool is designed for debt professionals. Your organisation will provide you with a login. If your organisation does not have access then the National Debtline advice tool can be used or you could make a referral to for specialist debt advice.

Read more about Money Advice Service's standard financial statement tool and spending guidelines.

You can also support the tenant to create their own budget using the National Debtline advice tool.

Discuss potential savings

Discuss any areas for potential savings with the tenant. If there is any expenditure that seems high, explore the reason for this with the tenant and record it within the budget. For example a person with dietary requirements might spend more on food.

Consider signposting

If you are unable to establish a balanced budget without a deficit or the tenant has multiple debts, then specialist debt advice on long term options could be required.

Read more about where to get debt advice at Shelter Legal.

Establish what the tenant can afford

Assess the budget to ensure all spending is accounted for and the budget is sustainable. The the tenant should be able to afford their rent as well as other essentials like council tax, food and utilities.

Check that the rent is affordable and the tenant understands income, spending, and repayment commitments.

If the tenant cannot afford the rent in the long run, then other housing options should be explored.