Value for money

at asra Housing Group Our self-assessment statement 2015

Value for money at Our self-assessment statement 2015

Contents

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01 Introduction 3 02 What value for money means to 5 us 03 What is our value for money assessment against customer 7 priorities for 2014/15? 04 Delivering value: developing, 11 selling and letting new homes 05 Delivering value: making best use 14 of assets 06 Delivering value: impact of our 19 services on communities 07 How well have we performed in 21 2015? 08 Overall assessment of value for 26 money

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Introduction The principle underlying our value for money strategy is that we should make the best use of the resources available to us to provide quality homes, continually improve services and invest in new homes. Asra is firmly committed to the principle of value for money. One of our values is to “see it from the customers’ perspective”. One of the questions which defines this is “would you spend your own money this way?” We ask all colleagues to use this simple test. Value for money is more than a regulatory requirement. Over the last five years we have made decisions and taken action that deliver value. We have narrowed the focus of the services that we provide, disposing of non-core but essential services to other providers that can integrate these services into their own core business. In April 2015, the Boards of Viridian Housing and Asra mutually agreed not to proceed with the proposed merger to form the combined VA Housing Group. This decision has influenced our report for 2014/15.

Opening of Abbey Mills extra care scheme by the Mayor of Leicester in 2015

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In May 2012 we transferred the Peepul Community Centre to a registered charity, and in January 2014 we transferred Highpoint combined care and conference centre to a specialist provider. This is not a one way street: we have grown our core business by accepting transfers of core social housing into our business. We have integrated the Family First business into Asra Housing. In 2012 we worked with Sanctuary Housing Group to transfer from them their subsidiary Asra Midlands that integrated into Asra Housing. Sanctuary is the largest provider of care and support in England and we transferred to them much of our care and support business. In early 2015 we swapped with Family Mosaic a small portfolio of properties in London. This enabled both organisations to consolidate more homes into core areas.

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Asra completed 322 new homes in the 2014/ 2015 financial year

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What value for money means to us Value for money helps us to set strategic objectives and to make rational decisions about how to use our resources. We exist not only to provide homes and services to existing and new customers but also meet the needs of the communities in which we work. Our decisions are informed by feedback from customers and also the needs of local authorities and national government.

Partnership working with the police in Leicester

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The election of a new Government in May 2015 signalled a shift in housing policy. Emphasis has moved away from supply of affordable rented homes to increasing the supply of home ownership housing products. One of the Government’s flagship housing policies is the extension of right to buy to housing association residents. The Government’s summer 2015 budget will have a profound effect on every housing association in England. We are no exception. The budget proposal to reduce rental income by 1% per year for four years, will result in a 16% reduction in our expected rental income. Our value for money objectives for 2015/16 will be heavily influenced by the Government’s triple track policy of welfare reform, rent reduction and extension of right to buy. Whilst national and local governments are very important stakeholders, our purpose is focussed to delivering housing and services to customers. Our measurement of how well we use our resources correlates to the priorities of our customers. These priorities were agreed with customer representatives and our Customer Services Committee. For 2014/15, the two main priorities against which value for money is being assessed are: (a) How well we maintain customers’ homes. This includes satisfaction with responsive repairs and also our programme to upgrade and maintain customers’ homes. (b)

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Highfields, in Leicester

How easy it is for customers’ to contact us, with particular focus on the performance of our contact centre.

Looking forward to 2015/16, we are engaging with customers to reflect on how well we have performed in meeting these objectives and to establish priorities for that year.

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What is our value for money assessment against customer priorities for 2014/15 Overall customer satisfaction with our services is reported as being on target at 85%. We have recently surveyed all of our customers, asking them for more detailed feedback on our services. Of those surveyed, 8.5% have responded. The survey gives more insight into the way that we deliver services and will help us to improve services in 2015/16.

Over 400 homes received new UPVC windows in the 2014/2015 financial year

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3.1 How well we maintain customers’ homes Overall customer satisfaction with repairs is 83% against our internal target of 85%. Repairs is a complex service covering day to day responsive repairs, refurbishment on re-letting of a property, planned and also major repairs. We spend about one third of our rental income on repairs and investment in new homes. During the year we brought together all of the managers and staff involved in repairs and maintenance into one team under the leadership of a Assistant Director of Asset Management. Maintenance is the main priority of our customers. Most of our maintenance is undertaken by external contractors. We have a small in-house provider Asra Property Services: that undertakes maintenance and void repairs in Northamptonshire, Home Counties and the West Midlands. Customers appreciate and value this service, highlighted by high customer satisfaction. We need to make sure that we make best use of this in-house service and we have commissioned a review of the competitiveness of the service. Keith Carter, from Faithorn Farrell Timms, said: “We are very experienced in helping organisations to make best use of their in-house contractors and we are confident that we can help Asra to build on the success of Asra Property Services.”

Asra Property Services’ Operatives at work

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During the year over 30,500 orders were placed with contractors for day to day repairs. The number of appointments kept is a key measure and the Midlands contractors performed better than in London. This is directly reflected in the regional variation of customer satisfaction with the day to day repair service: 97% of routine repairs and 99% of emergency repairs were completed within our agreed targets. Ms B, St Albans, said: “When tenants report repairs it would be good if this is followed through. On many occasions I have had to make a complaint for my repairs to be looked at. More consistency would be highly appreciated.”

International property consultants Savills will look at the competitiveness of all of our key maintenance contracts and have completed their initial review of the costs of day to day repairs. Greg Wheeler from Savills said “Our initial analysis of the main day to day repair contracts indicates that these represent good value for money to Asra.” During the year we have invested £9.6m in major capital works to customers’ homes, covering over 900 homes. Customer satisfaction with completed improvement works is over 99%. Lisa Culhane, Assistant Director of Asset Management, said:” My team is committed to delivering a co-ordinated, properly planned and cost effective service. We have a planned programme of works for the next three years.” Even though we have increased expenditure we still have a lot of work to do to improve our homes. This will take some time to achieve. The resources that we invest in our homes need to be consistent with our overall financial capacity and also our assessment of the long term viability of a property for affordable housing use. Ms J, Leicestershire, said: “I would like to be informed of any update of a new kitchen please. I was told before I moved into the property that a new kitchen was on the agenda. That was 2013 and I’m still asking. But nothing seems to be happening.” Mr & Mrs M, Mansfield, said: “We would like Asra to deliver new UPVC windows, our wooden ones are rotting and it’s cold in winter.”

Overall customer satisfaction with our contractors was 83% and with Asra Property Services was 87%

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3.2 How easy it is for customers to contact us We operate our own 24 hour, seven day a week contact centre that is accessed by all of our customers, which also provides an out of hours service for customers of some other Registered Providers. In 2014/15 we received over 200,000 calls. About 45% of calls are from customers requesting or enquiring about repairs, and of those over 95% were resolved by the contact centre without referring the request/ enquiry on to other teams. Feedback from customers indicates 98% satisfaction with the contact centre but they are less positive about how more complex issues are resolved by other teams. Ms P, from Leicester, said: “I have always found the customer contact centre’s staff to be most helpful, polite and professional whenever I needed to contact them.” Mr J, from Nottingham, said: “I have no complaint at all regards service and communication with asra only perhaps the length of time one has to wait to be connected if telephoning at times.” Based on inbound calls only, the average cost per call is £3.88. The contact centre also has 130,000 outbound calls, which reduces average cost to £2.14. Because of welfare reform there will be an increase in the number of calls being made by customers. We are investing in multi-channel media including chat online, FaceTime™, Twitter™ and Facebook™ to further improve efficiency and service provided to customers. We will also be investing in self-service for customers and we have already launched a customer app and on-line self service portal.

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On average our Customer Contact Centre received around 17,000 calls per month

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Delivering value : developing, selling and letting new homes Developing new homes is one of our strategic priorities, and helps to alleviate housing need in the communities in which we work, which is also adding value to our business. The vast majority of our schemes are a mixture of homes for rent and shared ownership/ outright sale. The sales that we make are an important contribution to the viability of providing affordable rented homes, and in the case of shared ownership, make home ownership an affordable option for first time buyers. We are continuing to complete homes under the HCA/ GLA 2015 to 2019 programme. As of the 31st of March 2014 we have contractual committments of nearly £100m to build over 700 new homes. In the year ended 31st March 2015 we completed 322 new homes against the target of 250 homes. The programme of new development cost £47.0m, will generate sales of £9.2m and has been supported by grant of £7.3m. In 2014/ 2015 the programme of new development will generate sales of £9.2 million

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Asra is mainly an urban housing provider and has prioritised regeneration as a core activity over many years. Here are three examples from 2014/2015. Abbey Mills, Belgrave, Leicester The historic Edwardian stockings factory found fame in its day for providing Captain Scott with his thermals during his ill-fated trip to the South Pole. It was left to decay for decades before Asra and Leicester City Council rescued it and have now overseen its £8 million redevelopment into 78 purpose built flats, for people over 55 and young people requiring support. Leicester City Mayor Sir Peter Soulsby said: “I’m delighted that Asra has had the vision to bring this historic building back into use, especially one which provides such wonderful homes. They have a brilliant track record in these schemes, particularly in the neighbouring Wolsey building.” Robin Hood Chase, St Ann’s, Nottingham The blocks of unattractive and many vacant shops and former health centre in the heart of Nottingham’s inner city area of St Ann’s had been run-down for some time before Asra working in partnership with Nottingham City Council created the 45 wheelchair friendly apartment scheme for people over 55 and those living with a disability. The completion of a supermarket and a new public square will add further value to the community. Leader of Nottingham City Council, Cllr Jon Collins, said: “We have wanted to see this site redeveloped for some time and, once finished, it will be a great community facility for the people of St Ann’s.” St Nicholas’ Church, Perivale, London A partnership was struck between the Church, Ealing Council and Asra to transform the site into a mixed affordable housing development, containing 27 units, with a new church, community space and vicarage at its centre. The two storey church has been awarded a Breeam Excellent environmental assessment rating, while the four-bedroom vicarage has been built to the highest Code 6 standard.

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One Woolwich Regeneration We are also investing in the regeneration of three Woolwich estates - collectively “One Woolwich”. The project is led by Lovell and will deliver over 1,600 new homes of which 525 will be affordable housing for Asra – two-thirds will be affordable rent and one-third for shared ownership. This will cost us £55m and achieve first tranche sales revenues of £11m. The overall regeneration scheme will cost around £270m inclusive of Asra’s investment, and Asra will work closely with Lovell and the Royal Borough of Greenwich to deliver a vibrant and sustainable community. The whole regeneration project now has full planning consent, and demolition is underway on Connaught, the first site to be redeveloped, where work on site will start early in the new year. Use of obsolete land assets As well as acquiring new land for development, we also identify land owned by Asra that may be used for re-development. An example of making best use of our own land is the redevelopment at Mayholme, in Nottingham - a site gifted to the Group that included a number of redundant buildings. Part of the site was sold to cross-subsidise investment in thirteen shared ownership homes which completed in March 2015. The investment was also supported by a grant from the HCA.

Pearce House, Brook Avenue, Wembley, London

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Delivering value : Making best use of assets We operate across a wide geographic area with the majority of our homes being in Leicestershire, Nottinghamshire, Northamptonshire and in Greater London. We have homes in other counties including Lincolnshire, Derbyshire and the West Midlands. We also have very many different types of properties including newly built houses, blocks of flats built as part of micro-regeneration schemes in London, traditionally built “street” homes and lowrise blocks of flats. Some of the properties were acquired as part of rationalisation of properties by other bodies, for example, the National Coal Board properties located in Nottinghamshire and South Derbyshire coalfield areas. Asra also offers properties to customers on many different types of tenure – with the majority being let at social or affordable rent. We also offer shared ownership which enables leaseholders to buy additional equity in their home when it suits their personal circumstances. We have a small proportion of our homes let at either an intermediate, key worker or market rent. We have done a lot of work to understand how the diverse range of properties, in a wide range locations and offered on a number of tenures, are best suited to the needs of our customers. We recognise that some properties may not meet the needs of customers in the long term, or the rents that we charge may not be competitive. In such cases we will review such portfolios and seek partners to swap with or sell to. Different types of home have varying long-term investment needs and a major review of Asra’s investment strategy is underway.

Asra homes in the Midlands

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Top 5 areas where asra has homes (approx): Leicestershire: 5,700 homes London: 3,700 homes Nottinghamshire: 2,600 homes Northamptonshire: 1,500 homes West Midlands: 500 homes

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This year we started a project to more fully understand the long term investment needed in all of our homes. We already had detailed data on 40% of our homes, and by September 2015 we will have detailed data on 80% of our homes, validated by external consultancy Faithorn Farrell Timms. By March 2016, we will have detailed data on 100% of our homes. Matt Meehan from Faithorn Farrell Timms, said: “We have worked with Asra for the past 5 years providing support for their stock condition data. This work represents a step forward for Asra in developing a more comprehensive understanding of its stock.” This is not just about costs. We also assess whether the homes meet the needs of current and future customers. Where stock is located outside of a core concentration of homes we are evaluating whether we are best placed to own and manage that stock. In the same way as we swapped stock this year with Family Mosaic, and after consultation with residents affected, we will work with other Registered Providers (housing associations) to swap stock where services can be more effectively delivered to customers.

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Some stock where there is low demand, uncompetitive rents or high long-term investment needed may be sold when a customer gives up their tenancy (subject to regulatory consent). We will use the proceeds to invest in other homes and to build new homes. £9.6 million was spent on home investment in 2014-2015

We started this project early in 2015 and by the end of the year expect to have a comprehensive understanding of each of our homes and the choices that we need to make. We have engaged leading international property consultants Savills to validate the data but of greater importance to help us to make the assessment. This work is being guided by our Board and we will engage with the Customer Panel on the options available to us. Cathy Osborn, from Savills, said: “Asra has developed a forward thinking approach to understand the characteristics and performance of its housing stock. We are pleased to be working together to develop innovative ideas to support their decisions.”

The complexity of our property portfolio means that we should expect different financial returns depending on location, property type and tenure. The work we are doing with Savills will give us a more comprehensive understanding of the returns that we are achieving and should expect from our Satisfaction with home investment was 99.6% complex property portfolio.

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in 2014/15 the headline returns were:-

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(a)

Estimated value is based on the value to Asra of an adjusted operating surplus less long term maintenance costs.

(b)

Rented housing includes 1,000 homes let at either an affordable or intermediate rent, with the remainder at social rent.

(c)

The rental yield of supported housing is higher because part of the rent is used to fund support costs. This results in a lower value and the resulting operating deficit.

(d)

Shared ownership rental yield is lower than rented products because the estimated value includes the possibility of future staircasing. This increases the value of the property and reduces the yield.

(e)

Market rent includes results of a Private Finance Initiative scheme for 226 NHS keyworkers. The operating deficit is as a result of the contractual terms of the PFI scheme and the allocation of overheads to this activity.

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Delivering value : Impact on our services on communities

Housing is a complex issue and heavily influenced by economics and the national political agenda. The Government is encouraging home ownership which aligns with the aspirations of very many people. We are here to help make home ownership affordable for those that cannot access property on the open market. Renting remains an important option for very many people. Figures published in the 2015 UK Housing Review by the Chartered Institute for Housing show 300,000 households have been affected by actual or potential homelessness in the past year. Our priority is to meet the needs of the community and also to work with local authorities and statutory bodies to help them meet their obligations. For example, we have a nomination agreement with Leicester City Council, covering about a quarter of our rented housing stock. Despite high housing demand, turnover is high in the Midlands. The lettings team managed more than 1,100 lettings in 2014/15. The team’s performance was helped greatly by the introduction of our Property Shop website, which features an in-house waiting list and two bidding cycles per week. We have set up specialist teams to help customers who are affected by the Government’s welfare reforms, and to support those struggling to pay their rent. This past year we have helped 1,100 people sustain their tenancies and have helped customers claim over £¼m of unclaimed benefits. Ms X was facing eviction after building up a large debt. She was suffering domestic violence and was unable to manage her finances. Our team helped her claim back £1,800 in benefits and worked with her to keep her tenancy. Average re-let times were reduced from 69 days to 42 days in 2014-2015

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Our Tenancy Sustainment Team helped claim £¼m in benefits back for customers last year

Asra operates in areas of high competition in the rented market, such as Mansfield and urban Nottinghamshire. We have adjusted our approach to re-lets to deliver high quality finishes. To ensure that we can compete we also offer added value to customers. For instance we run a furniture service branded “Furniture+”, which allows new tenants to rent furniture and white goods and for that rent to be eligible for housing benefit. This past year nearly 400 customers have benefited from this service. For waiting list applications who present with no possessions, this service saves public money by sustaining tenancies and reducing repeat homelessness. We run a number of other services which support customers, as well as the wider community. The Big Lottery funded Moneywise project, in Leicester, works to help social housing tenants manage their money and stay out of debt. Last year in excess of 600 people were supported with financial guidance and help. Asra has also launched Skills+ which aims to offer local people apprenticeships and traineeships. This is funded from external sources and is again an added value for Asra tenants.

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How well have we performed in 2015?

At the beginning of the year we set ourselves a number of targets that were linked to our corporate priorities. Although our strategic objectives are informed by customer feedback and central/ local government priorities, it is important that they are built on the platform of key operational performance. We have described these as the “three R’s” – Rent (collection), Relets and Repairs. Our performance in 2014/15 against key targets was:-

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Overall we are satisfied with our financial performance in the year. Both operating and total surplus exceeded budget. The operating margin is slightly lower than our budget, and operating cost higher. This is because of higher property depreciation charges and increased management costs associated with our proposed merger with Viridian Housing. The overall surplus has benefited from sales of assets, the most important contribution coming from the sale of our London office. The proceeds from this sale are being used to reinvest in our housing stock. One important aspect of value for money is how well we perform compared with other Registered Providers, and for some services, with public sector / private sector enterprises. We had anticipated that by 31st March 2015 we would have completed the merger with Viridian Housing to form the combined VA Housing Group. We would have reorganised services spanning a wider geographic area and using refreshed way of delivering services. These would be benchmarked against other similar providers. During the year our procurement team achieved savings of £½m which have been reinvested back into services. We have joined the Baker Tilly benchmarking club to compare overall performance and performance from key services against other selected providers. This will provide performance and value comparisons for 2015/16. This builds on some of our existing benchmarking work on back office costs.

Aman Dalvi, Group Chair, said: “We are conscious of the environmental impact of our work. The way that we deliver services, the materials that we use to build and repair our homes, the way that we design homes to improve energy efficiency all have an environmental cost. The Board is committed to reducing the environmental burden of our work.”

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For the year ended March 2015 we have compared overall performance against the HCA’s global accounts for all Registered Providers in England, and also four other Registered Providers:(a) (b) (c) (d)

Orbit Group – although significantly larger than Asra, operates in both the Midlands and the Southeast. Midland Heart – operating in the Midlands area. East Midlands Housing Group – operating in the East Midlands with similar numbers of homes in management. Viridian Housing – operating in both areas, but with greater numbers of homes in London.

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The following are the main points :-

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(a)

Total management costs have increased between 2014 and 2015 and this is partly due to increasing staff in preparing for the merger with Viridian Housing. A key target for 2016 is to reduce costs back towards 2014 levels, which was in line with the performance in the HCA Global Accounts. Management costs are higher than for Orbit, largely due to their size, but costs are reasonably in line with the other providers.

(b)

Maintenance costs are better than or in line with all other Registered Providers and with HCA global accounts.

(c)

Capitalised major repairs has increased compared with the previous year and are higher than most other providers and the global accounts. This reflects our decision to invest more money in major improvements to customers’ homes, in line with their own priorities.

(d)

Social housing operating margin has increased compared with the previous year’s despite a temporary increase in management costs. Our performance is favourable when compared with other Registered Providers and HCA Global Accounts.

Our turnover for 2014-2015 was £79.8 million

(e)

Overall operating margin has increased in the year and compares favourably with other Registered Providers. Our own performance is partly a result of the contribution from initial sale of equity in shared ownership homes.

(f)

Current rent arrears as shown in the accounts is lower than the previous year and our performance is in line with other registered providers. This area is monitored closely. Given the likely impact of welfare reform, this is an area where we focus a lot of our attention and there has been an improved performance recently. Former tenant arrears has increased against previous years, due to a concerted effort to collect debt rather treat it as unretrievable.

g)

Voids loss per home has improved in the year, and compares well with other Registered Providers. This is an area where we have made significant progress in the year where the number of empty properties has fallen below our own internal target and the time taken to re-let properties has also been reduced. Further improvements to void performance are planned.

Our overall assessment of comparative performance is that the actions that we have taken in the year have focussed on areas where our resources were not being well used: empty properties. For 2015/16 we know that our attention needs to focus on reducing management costs, particularly in light of the forthcoming reduction in rental income. We also need to maintain focus on rent collection particularly as more customers who receive welfare benefits move across to universal credit.

Gracie Fields House, Harrow Road, Wembley, London

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Overall assessment of value for money The Government’s summer 2015 budget will, like for all other Registered Providers, require us to consider our priorities and approach to value for money. Some of the work that we have already started will provide us with a platform to respond to this agenda. We know that we have work to do to reduce management costs and also to improve some of our services to respond to the priorities of our customers. The proposed merger with Viridian was our corporate priority in 2014/15. Our priority in 2015/16 is to address a changed Government agenda as a continuing independent business. In this context our performance in 2014/15 was good, but acknowledging that there is much more to do.

Our operating margin for 2014-2015 was 34%

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Copyright © 2015 Asra Housing Group Ltd, All rights reserved. Asra Housing Group is a trading name of Leicester Housing Association Limited a Community Benefit Society registered in England 20933R at 3 Bede Island Road, Leicester LE2 7EA and Asra Housing Association Limited a Community Benefit Society registered in England 24620R at 3 Bede Island Road, Leicester LE2 7EA. Registered providers with the Homes and Communities Agency.