Social Housing Speed Read – Housing Associations improve efficiency
13th June, 2016
Housemark has published a report, commissioned by the National Housing Federation, which confirms that Housing Associations have reduced overhead costs relative to turnover.
This will come as no surprise following the urgent response necessary as a result of government interventions in the housing sector (rent reduction, and welfare reforms) forcing restructuring, and the re-writing of business plans to account for year on year income reduction.
Background
As the sector is only too aware, the Government made it clear that it expected Housing Associations to improve their efficiency and responding to this challenge has been one of the prime concerns for Registered Providers over the past year.
On 1st October 2015 the Prime Minster stated; it is “vital we reform housing associations”, as social landlords “are part of the public sector that haven’t been through efficiencies, haven’t improved their performance and I think it’s about time that they did”.
The Statistics
Social Landlords have innovated, as plans have been re-written, businesses restructured and reshaped, costs removed, and services altered. New income streams have been sourced, joint ventures entered, mergers and takeovers taken place, and development paired back.
The salient points of the Housemark report are as follows:
- Back office overheads (e.g. IT, human resources and finance), have fallen from a median of 13.6% of turnover in 2008/09 to 11.8% in 2014/15;
- Repairs and maintenance costs have dropped by 11.1% from around £650 per property to below £600. The amount of time taken to complete repairs dropped marginally from 8.51 to 8.22 days;
- Housing management costs (per property), decreased by 0.6% at the median in real terms; and
- Energy efficiency has increased by 3.5 SAP (Standard Assessment Procedure) points at the median.
Speaking as the report was released, Gill Payne, Director of policy and external affairs for the NHF, said: “Nobody can deny that there is a housing crisis facing the country, which is why housing associations are working so hard to build new homes and invest in their existing housing stock.
“The findings in this report demonstrate the tireless work of housing associations to maximize their resources whilst continuing to provide good quality homes and services.
“This report shows the good work that has already been done by our members, and provides a benchmark for future progress.”
Implications
The Sector has gone through and continues to experience a great deal of pain for efficiencies to be achieved. Whilst efficiencies have been achieved to address the politically imposed income reduction, the achievements will not necessarily enable further investment in new housing, nor further investment in existing properties and regeneration schemes.
Regardless of your interpretation of the statistics of the report, continual efficiency improvements are key to any Registered Provider in the current political and financial climate.
We are in regular dialogue with clients, providing assistance with the legal and commercial aspects of improving efficiencies, with people, property, contracts, housing and income management.
Speak to us and let us share our experiences.
If you have any questions on the topic and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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