13:39 PM, 10th May 2012, About 12 years ago 48

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My article this time is more of an open question to which I would like your input. Background first.

I was listening to ‘In Business’ on Radio 4 the other day, a programme about something I had not heard of- the business concept of “Frugal Innovation”, currently much in favour with many huge corporations and even David Cameron.

The idea was first put forward in a book by the late C K Prahalad “The Fortune at the Bottom of the Pyramid”. He took his inspiration from the ingenuity and inventiveness of the Indian rural population in devising solutions to problems in their community when the average wage is 50p a day. Hardly enough to allow them to go around making prototypes and also not a normal market for corporations looking for people to sell to.

Frugal Innovation itself grew out of an Indian concept ‘Jugaad’ which is a Hindi word meaning “To fix-around”, originally used to describe the mad variety of vehicles you see on Indian streets. I’ve been to India twice and it’s my favourite place on earth. You see motorised push bikes adapted to carry bricks or old taxis with elongated chassis that somehow become charabancs. They take what they have around them and turn them into something else they need.

This mechanical flourish also extends to general thinking and innovation in a community strapped for cash. Just like the UK at the moment.

It’s as much a way of thinking as anything else. Flexible and improvisational. Unlike the big top-down corporations, Jugaad thinking can respond very quickly to immediate situations on the ground without having to hold endless meetings or test phases. If something doesn’t work, try something else.

My favourite Jugaad story to illustrate this point concerns the Chinese white goods manufacturer Haier. They made cheap washing machines for rural communities in China. One day an engineer got a call that a farmer’s waste pipe was constantly blocked. When he visited he found that the farmer was using his machine to wash the dirt off of his potatoes and the mud kept blocking the pipe.

Instead of moaning that the guy was an idiot and his warranty invalidated, the engineer asked around the community and found that all the farmers did the same thing, so he called head office who acknowledged that the customer’s needs weren’t the original intention and responded to that. They started putting wider waste pipes on the machines.

This led to the design of new machines that could not only wash clothes and potatoes but also peel potatoes too. Now before you think that is a quaint rural story, bear in mind that because of thinking like this Haier is now threatening to take over the American market of GE and Whirlpool. It’s bottom up stuff.

What has fired me up about Jugaad thinking is my increasing frustration with the government’s policies on housing. Obviously for us lot who work directly in it, by which I mean landlords, tenants, housing advisers etc, we can see the problems face-on and the solutions are often fairly obvious but government, all governments, not just the current lot, will only ever respond with solutions that fit in with their over-arching plan for the country, so politics gets in the way of real work.

Cameron is inspired by Jugaad and is most probably the drive behind the Localism concept, which I am actually in favour of, with overnment getting out of the way and letting real people sort things out.

Localism is to a certain extent laying the ground for more Jugaad thinking and as more councils go down the route of the Social Lettings Agency model we can all expect more improvised and responsive solutions and partnerships being found.

For example, last week I went to meet the manager of my local Credit Union about how we could partner up to find local solutions to housing problems in my borough. He suggested that we could encourage tenants we meet to join the Union, its only £1 and get their LHA paid into their account, which is then ring-fenced so they can’t touch it and a standing order is set up for the rent. These regular payments contribute to re-building credit ratings and take away a landlord’s fears of direct LHA payments, making, theoretically, LHA tenants a possible consideration.

I also had a meeting with a new team set up to run a 2 year pilot to offer hands-on support for people where the whole family is on benefits, not only helping them with financial intelligence but also in getting work.

For my part I am about to run tenant training courses to educate them about rights and responsibilities. This is being done in Harrow council and making tenants more attractive to their local landlords as a result. Off the back of this I have been meeting with a few independent letting agents that we can work with who have agreed to help us promote our tenant prospects in the knowledge that rent is sorted, the tenants trained in responsibilities and ramifications, and the backing of my team in giving free legal advice to landlords and the family team with hands on guidance and mediation.

Talk about frugal innovation. All this cost any of us was an hour of our time to connect up.

My question to you is, thinking freely and with no “Yeah but”s, what solutions would you propose to your most pressing or annoying problems as a landlord or agent? I mean not suggestions that would involve new government laws, it ain’t gonna happen.

Alternatively, are there any Jugaad or partnership solutions that you know of that work well?

The more things we gather together as an online community and then circulate amongst the wider housing community the better chance there is of pulling off some radical solutions.

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Devon Landlord

10:10 AM, 11th May 2012, About 12 years ago

When I read Ben's article the term 'jugaard' was a new one which seemed to encapsulate many of the thoughts and actions we have tried to achieve over the years. The notion of frugality is central to much of what we do as landlords and re-cycling and re-using is important if you are to achieve your profit objectives. But by that I do not  what to convey the impression that I do not want to do a good job, I want the thing to work and well and be satisfactory for my tenants. All this I see as being part of the 'jugaard' philosophy. The only caveat we must consider is that in India and many other places there does not exist the restrictive red tape that is strangling development today. I DO NOT mean that we should cut corners or ENDANGER our tenants in any way but we all feel that many rules and regulations are way over the top, but we have to conform to them or break the law. I am not advocationg this, just trying to overcome the profligacy of the 'throw away' society we live in.

I see the Jugaard philosophy working in different ways for us here in the UK and it can certainly involve a more dynamic working relationship with local authorities who are both strapped for cash and have an increasing housing shortfall to worry about. When I look around in my own community I see many building which are empty, such as old office blocks, electricity sub stations, shops and even factory sites which are ripe for redevelopment. I have often thought that many of these could easily be adapted to provide housing and even small workshops. This is the relevant Jagaard for me.

I was recently in discussion with several people from different local authorities who know that they must work more effectively with the PRS. People in the PRS have money (not all of us and perhaps not a lot) but if an opportunity presented itself, even one working in partnership with a council and even other landlords, where the security and profit opportunity was acceptable, then it might prove to be attractive to a joint development project. What we need is a reduction in the red tape that stifles growth at the moment and the Queen's Speech seemed to offer some hope in this regard. Many councils have and can procure small parcels of land and can consider joint building projects with landlords in the PRS, who then take on the management of the development upon completion. This might also stimulate the Government to treat landlording as a business, which might help us all especially in terms of raising capital to develop such projects.

So bring on Jagaard I say in all its many forms and may we too become as prospering a community as we one were.

Devon Landlord

11:29 AM, 11th May 2012, About 12 years ago

Ben this is the best proactive thinking I have read in a long time - i have just returned from South Africa after 10 glorious years out there and one of the most admiral qualities of the people there is that they "make a plan". It was this "jugaard" that kept me there, I got things done. I would imagine this "jugaard" was born from the same reasons as in India. The Western world is in a state of, "analysis paralysis". As an example Health and Safety is just over the top these days. I could rant all day...........

Bring on Jugaard!

Devon Landlord

11:33 AM, 11th May 2012, About 12 years ago

From Devon Landlord

Jugaard is the |Devon version of the Indian word jugaad, but it trips off the tongue more easily.

Ben Reeve-Lewis

13:34 PM, 11th May 2012, About 12 years ago

Absolutely with you on the red tape.It was one of the ironies that if you work in a council as I do and you want to get something done you have to not tell anyone you are doing it until its done and then let the manager’s, who would have squashed the idea if you had approached them from the start, take the credit for a great idea.
With the example I gave above of my recent meetings, there is no red-tape in the way, it was simply a matter of one enthusiastic individual arranging to meet with a bunch of other enthusiastic individuals and finding a ‘low cost fix around’ housing Jugaad in action.
The only red tape involved is that one of the organisations who are keen to share people with us have been told they aren’t allowed to put any personal data in emails, including names of tenants, even if we are both working on the same case. We have found a Jugaad fix around by agreeing to meet in an underground car park once a month, wearing dark glasses and discreetly swap briefcases haha.
And yes Gary, my suspicion is that poorer communities have had Jugaad solutions for quite some time but nobody paid any attention to them because they were invisible in terms of buying power until now. Also now that the UK is becoming one of those poorer countries it makes more sense for us.
A while back I went to a lecture at the St James church in Piccadilly on how creativity flourishes with limited resources and how too many resources will often stifle it. Did you know that predictive suspension was developed from the daft premise of designers wondering how you could make square wheels work on a car?
In that sense the housing crisis could actually be a weird and timely blessing, not for the poor sods suffering at the bottom of the heap but for the opportunities it gives people in our positions to do something really great, which is why I posed this question.
The irony of it being that this kind of people power is being gifted to us, not by the Workers Revolutionary Party but by the Tories. All the things I was enthused by when I was a member of Militant have now become a possibility thanks to the lads from Eton. Who’d a thought it?

18:31 PM, 11th May 2012, About 12 years ago

How about a really low tech method of guaranteeing that a LL would always receive LHA from the original point of the tenancy until a tenant is evicted.
A tenant would sign a legally binding document which would guarantee that LHA would always be paid to the LL even if domestic circumstances changed until a tenant was evicted.
So whether they paid LHA to the LL or not LHA would be passed onto the LL immediately the LL does not receive 1 months rent missed.
None of this wait for 2 months and then the LL has about 3 months before he gets the 3rd month LHA and also the tenant has deductions made from benefit for the 1st months rent not paid.
This would mean there would be no advantage for a tenant to spend the LHA on anything apart from rent.
Any recovery should always be from the tenant irrespective of whether LHA was paid direct to the LL or the tenant.
That would solve a big disincentive to LL to take on LHA claimants.
Chances of this happening

Ben Reeve-Lewis

8:09 AM, 12th May 2012, About 12 years ago

Paul, Paul, Paul, youve broken the only 2 rules I set, no 'Yeah buts' and solutions that dont rely on political change.

You miss the entire point of Jugaad, which is "What can we do to find a solution by using the resources around us at low or no cost by improvising and being creative?"

And the answer to your problem is already there, at no cost. Escrow accounts run by the credit union. LHA will happily pay into a credit union bank account where it can have a fence put around it so that the tenant cant touch it and a standing order set up to pay the landlord.

When you say 'Recovery should always be from the tenant'.....that is the existing law anyway, you can only recover from the tenant.

And there is no point getting a legally binding document saying the tenant will pay the full term, that is already part of the contractual relationship.

Credit Unions are marveloous things, citizen's banks which keeps local money firmly in the community. It costs £1 to join and accoutn holders even have proper cards and current accounts, plus access to a range of services including very low cost loans based on how much they have in their account, which helps keep loan sharks away from them. So everybody wins 

Mary Latham

17:24 PM, 12th May 2012, About 12 years ago

Ben this is your best piece to date - VERY well done.

I have been working with my local authorities and Credit Unions for months now and the target is to grid the entire Government area of the West Midlands with points at which this service can be used by tenants where ever they live. We are very close to this target with all my local authorities working with us to make it happen.

Credit Unions not only offer low cost banking services and loans to people they also encourage saving - even a £1 a week - to help people to get out of the pverty trap.  Their low cost loans enable people to avoid digging themselves deeper into debt and their payment cards enable them the dignity of using a payment method often unavailable to them if they cannot get a High Street bank to give them an account. I LOVE Credit Unions.  The staff that run them are so dedicated and patient, none judgmental and caring and this is what people need when they are in trouble - not suits and rules and waggin fingers.

From a landlord point of view the Credit Union not only offers the service that you have mentioned but they also will not stop or change payments without 28 days notice from the tenant.  At the point that they get that notice they will tell the landlord and this gives us warning that the tenant is either planning to leave without notice or is breaking his agreement to pay through the CU account.  It will help with abandonment because we will have the notification from the CU that the LHA payment is now going to a new recipiant.

In my opinion tenants who have poor financial skills should be encouraged to open a Credit Union account now and have all their benefits paid into to it and to put a direct payment in place for all their bills on a monthly basis - this will help them to prepare for Universal Credit and will reduce their debts it will also help them to find homes in the PRS as landlords become aware of the benefits of this type of money management.

There are some changes to the Credit Union rules and they are now able to extend the area from which they take customers - this can be helpful but its important to make sure that there are local payment points where they can sign up and where they dont have to make expensive journeys to discuss their accounts.  Many local authoriities are helping by offering a desk in a corner of a neighbourhood office or similar a few days a week.

There is one company that is offering a Credit Union service on-line and again this will help tenants and landlords at the point when they open an account and put a rent payment in place at the signing of the AST.

We have some polishing up to do but we have time and in the end we will have found a bottom up solution to a BIG problem just by working together and using what is already available to us.

If you find any other good bottom up ideas Ben I would love to hear them. Homestamp are planning to put some Tenant "training" (not a word I like) in place to help landlords to trust tenants with a poor record just as you are doing in London.  Who needs Govenment when there are people working together who really care.

Ben Reeve-Lewis

17:57 PM, 12th May 2012, About 12 years ago

Same with my credit union Mary, mainly staffed by volunteers, total chaos in the branch and not a suit in sight but the staff know ALL their customers on a first name basis. As a business model they also do phenomenally well. My lot have getting on for £3 million capital. They have a thing called a ‘Homesaver’ account where they can help pick up the shortfall in housing benefit cuts and stop people losing their homes.
 Our local housing associations have a deal with them where if a tenant starts running into arrears they flag up to the CU who contact the tenant and ask if they need help.
 They’re not bleeding-heart mugs either, if the tenant has driven themselves into the mire or can’t afford repayments on the basic interest they are on their own, the CU has their broader membership to consider at the end of the day.
 I love the idea that your CU require a 28 day clearance before cancelling a payment. This is banks being used as a monitoring facility for landlords. What high street bank would do that? Everyone working together.
 All credit unions work slightly differently but they are all pragmatic to the needs of the community – landlords are people too in their eyes, and there is nothing stopping a landlord going into their local CU for a chat about how it can work for everyone, cut a deal. You get to talk to real people like in the old branch manager days, not just computer says no, that all other banks operate.
 CUs are Jugaad in action. They can do more than just administrate money.

Ben Reeve-Lewis

18:38 PM, 12th May 2012, About 12 years ago

Oh and your last point about ideas.
I have noticed that most letting agents round my way won’t rent to LHA tenants as a general rule.
In my area we also have a load of new start up agents who have taken advantage of the burgeoning lettings market and the complete lack of licensing/regulation without the slightest clue how it works. Some are the bane of my working life, crooks and gangsters who couldn’t give stuff but there are quite a few others who we get complaints about but who are actually ok, they just lack education. You can tell it when you speak to them.
I am getting out to those who we know as rogue agents but who I reckon I can swing around with some hands-on help and advice. They aren’t wilfully crap, just winging it.
One lot who I had loads of complaints about a year or so ago, seem to raising their game a bit, even joining safe agent, so I am meeting them to see what they need from me and how we could work together., given our growing partnership with the CU and a few other agencies who previously didn’t talk to each other.
Foxtons, Haarts, obviously wont touch us with a barge pole but the small independents I reckon could benefit from a bit of hand-holding and in the process create a partnership.
None of this costs anyone, anything other than time and a few meetings.
I can then use friendly agents to not only improve and professionalise standards by having a first name relationship with them all but also get the agents to interface between councils and the PRS community. No regulation, just a friendly working relationship.

Mary Latham

18:38 PM, 12th May 2012, About 12 years ago

Ben have you come across Jam Jar accounts? These really are back to basics. They sit down with the client and discuss their overall living expenses and income they then set up "virtual jam jars" where the money is allocated to each need, including food and fun.  The client then knows how much money they have for each item and must budget to only spend within that limit. Many CU's will issue their clients with a plastic card loaded with their spending money for the month/fortnight and these work just like debit cards by not allowing them to overspend. So many people haven't the skills to do this alone and sadly schools do not see this as a priority even in poorer areas but these wonderful people take the time and trouble to educate their clients and help them to live within their means and to save for nice things like Christmas without the huge costs of a Christmas Club.  It must be very rewarding to see people move out of the poverty trap and into a more comfortable way of life.

A lot depends on the members of the board with CU's, most of them are members of the community who give their time freely to do this work but some are very set in their ways and take some coaxing to tweek their systems to offer the service that is needed.  This is where the local authority can help because they carry more weight than an NLA Rep and can put a strong case for protecting people from the consequences of rent arrears caused by overspending on other things.  A perfect meeting will have the Housing Benefit Manager, Credit Union Manager, Housing or Homelessness Officer or TRO, an informed landlord or landlords representative and a tenant who is a member of the CU.  One afternoon will end in a workable plan that the CU Manager can take to the Board and usually results in a good working arrangement for everyone.

I wonder if Government have a tiny pot of funds that they could use to help CU's get their systems updated because some of them are not in a position to do what is needed?

It would also be a good work experience scheme for people who want to get into financial services to work for CU's in pay points for a while having been trained in the main office. Most of the work is simple admin, opening accounts, varifying documents in line with Money Laundering leg. explaining how the accounts work.... I am going to talk to some colleges and see if I can kick that off now that I think of it. See we always learn and grow when we share good ideas.

The title of this blog is cute but I think that many people will fail to see the importance of the content - a pity.

Everyone wants to bring empty properties back into use but there are times when the owners have inherited them and haven't got the money to do the work.  I have done a lot of fund raising over the years and something I learned a long time ago is that people/shops/businesses will often give you goods where they won't give you money and I think that there could be some good community working around local businesses donating items to help to bring empty properties back into use - without TV cameras just because they care about their community and want to help. Obviously this would need some careful managment but I am sure that it can be done. Humm perhaps that should be next years Homestamp project?

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