Value for Money report 2015-16
Visram House in Park Royal, London
Introduction We are committed to making the most of the resources we have in order to provide homes to be proud of, as well as to create new affordable housing. This is the basis for our approach to value for money. We apply the highest standards of business scrutiny and make decisions based on our analysis, which we link to corporate objectives. This in turn helps us understand the implications of our analysis and delivers value for money for our customers. This past financial year has seen the successful conclusion to asra Housing Group’s 2013-16 Corporate Plan, which was built around the premise of delivering value for money for our customers. We have delivered this by improving our operating performance which in turn maximised our financial capacity and ensured our business objectives were met.
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Following the conclusion of the previous corporate plan; this past year has seen the creation of the 2016-19 Corporate Plan, which will focus on four key areas: • Serving customers well • Helping those squeezed out of the housing market • Managing our business well • Working in partnership To reinforce our focus on these four key areas, while seeking to achieve our new vision of ‘a reputation for delivering great homes and great services’ we will examine value for money performance for each one in this report.
Value for Money Report 2015-16 | 3
Main achievements 2015-16
Targets 2015-16
Chapter 1: Serving customers well
In July 2015 it was announced in the new Government’s summer budget that all housing associations would be required to reduce their rent by 1% a year for the next 4 years, from April 2016. This measure removes 14% of asra Housing Group’s income for that period. To achieve the necessary savings we transformed our operating model to one which is designed to offer more targeted landlord services. The new operating model will improve the service customers’ receive while requiring significantly less staffing. It went live in April 2016.
In order to deliver value for money we must demonstrate that we are using our resources effectively. For the past three years we have been guided by Corporate Objectives set by the Group Board, which enable us to benchmark our progress against other social housing providers.
New operating model
Service improvements
In order to deliver the added value that customers’ expect and deserve we must first understand what kind of service they want.
The customer survey also highlighted 10 key themes and 46 areas where improvement was needed to deliver value for money in the eyes of customers. A Customer Improvement Group now holds every team within asra Housing Group to account to ensure positive and lasting change is embedded.
The reshaping of resources through the new operating model has reduced our management costs by over 10% and led to 80 colleagues leaving the organisation, which means our overall operating surplus will be increased. This will allow us to continue our history of being a key affordable housing developer, as well as pursuing our commitment to reinvest in our existing homes. We have also continued to build much needed affordable housing in London, a city with a much publicised housing crisis. In total we developed 208 new affordable homes for a range of tenures including shared ownership, affordable rent, outright home ownership and social rent.
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We set ambitious targets for our internal priority of the 3 Rs – Rents, Relets and Repairs. By focusing on these three areas and getting them right we are able to manage our business well and in turn deliver high satisfaction, new homes and more reinvestment in homes. The financial year ending 2016 saw asra Housing Group achieve an overall satisfaction rating of 86%. By managing our business well and delivering an increasing operating surplus we have been able to invest in the priorities of our customers improving their homes, neighbourhoods and the communities they live in.
In 2015 we carried out the largest paper based satisfaction survey ever undertaken by the Group, which went to all 14,000 customers and achieved an almost 10% return rate. Our customers’ message was clear - they expect a service that resolves their enquiries during the first contact with asra Housing Group. This expectation has defined how we have re-organised our customer facing teams and we have set a target to resolve 95% all customer enquiries in this way. Our new Operating Model features specialist teams set up to deliver more targeted landlord services. We have also borrowed lessons from the retailing sector and other areas of commerce to achieve and sustain an 86% overall satisfaction rate with a view to this rising past 90%. This approach has been spearheaded by our focus on providing an immediate resolution to complaints, where possible.
As a result of customers’ feedback the way we deliver planned works has improved with a three year plan now in place to ensure we have a strategic approach to delivering reinvestment, which is informative to customers and helps manage expectations. Reinvestment for 2015-16 was £11.1m which led to 819 homes receiving new kitchens, UPVC windows, bathrooms and other cyclical works.
Digital transformation Key to our new operating model is our programme to transform the way we deliver services to customers. We are introducing full digital self-service, supported by live chat, video appointments and other sophisticated technologies. Our Digital Transformation Programme will provide a superior customer experience by giving the customer more choice about how they consume services. We believe by 2019 that 50% of our customers will switch to digital, which will in turn see a huge improvement in the customer data we hold, as self service users will be able to validate and update their personal details online. The intelligence that we gather from this will be used to enhance services for customers. Value for Money Report 2015-16 | 5
Mr A, who lives in a sheltered scheme for the over 55s in Birmingham, said:
We had new windows installed in our scheme and everyone is very happy. Before the windows were very drafty and in the winter it was cold as they let the heat out. We could also hear a lot of noise from the street which sometimes made it hard to sleep. The new windows in all of the flats have made it much quieter and warmer. They have improved the lives of everyone living here.
Another key area which customers highlighted in their feedback is repairs, which has led to tighter controls being introduced to ensure quality and that internal teams & contractors are held to account. In total 35,273 orders were placed with contractors for day to day repairs in 2015-16.
Ms I, from Leicester, via Facebook, said:
Thank you so much for the fast and efficient repairs! I can see big improvements in the service and also from the helpful lady I spoke to in the asra contact centre. Keep up the good work asra!
Estate services and how service charges are applied was another key area where customers requested improvements in order to achieve greater value. Over the past year we surveyed every customer who receives grounds maintenance asking them to feedback on the type of service they want. This feedback has shaped the new contracts which will begin later in 2016. We have reshaped the way we deliver estate services and our new operating model features specialist teams setup to deliver more targeted landlord services. The previous way of working saw Housing Officers take on a large number of responsibilities managing our estates and customers’ homes. This often led to them being spread too thinly and customers’ expectations not being met. Specialist teams have now been introduced and one of these is the Estate Services Team, which is focused on delivering a more targeted approach to handling estate management. We are also working to ensure increases in service charges are kept at affordable levels. By 2017 our expectation is that only essential services are recharged and that there is transparency over the charges that are made to the extent that they require little explanation.
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The final area customers’ requested greater value on was the way that asra Housing Group’s teams improve the ways they deal with anti-social behaviour. Through customer feedback we have improved the way we signpost customers to the right place to direct their enquiry through the introduction of a sophisticated workflow system in the Customer Each year asra Housing Group has scores of anti-social behaviour cases reported by customers. Through the interventions of the Housing Services teams, and through partnership working with local authorities, the majority of these are successfully resolved without having to go through the courts. However, some are so dangerous that court action is the only available option. One case saw a cannabis farm being grown in the attic of a customer’s home in Leicester. The high powered lighting equipment needed to cultivate the plants overheated which caused the attic to set ablaze. One person was taken to hospital with smoke inhalation while other customers living in the street were evacuated as fire fighters battled to extinguish the fire. The Housing Services teams worked with the police and other agencies to secure the eviction of the tenant and their partner faced criminal proceedings.
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Chapter 2: Helping those squeezed out of the housing market Building new affordable homes Key to delivering value on our resources is our ambitious programme to deliver at least 250 homes each year for the next 3 years. The programme of new developments to March 2018 will cost £100m; will generate £39m of surplus that will be used to subsidise future development; and is supported by grants of £9.5m. The majority of new homes we have built and will build are for shared ownership that will continue to be supported by Government subsidy, which asra Housing Group has been very successful in securing year on year.
This past year has also seen 208 homes completed. Of these 136 were for affordable rent and 72 were for shared ownership. One innovative way we secure land is by working in partnership with churches to rebuild their facilities while creating new affordable housing. In 2015 we completed the St Nicholas Church development, which saw the congregation receive a new church hall and vicarage that has been awarded a BREEAM Excellent environmental assessment rating. In return asra developed 7 houses and 10 apartments for shared ownership and affordable rent.
St Nicholas Church, Ealing
Rector of St Nicholas’ Church, in Perivale, London, Valerie Aitken, said:
Going right back to the beginning we would never have been able to develop without the partnership with asra Housing Group. We needed partners and asra needed the land to develop homes, so it was a good partnership in the first place. We now have seven houses and 10 flats as part of our community which will grow and do well with St Nicholas’ Church at the heart of it. We want people to feel that the church is here for the smaller and the wider community. The old church building was freezing cold in the winter and we had no toilet facilities. People had to go out of the church building and into the church hall if they needed to use the loo. The new building is a real pleasure. We have two walls made of glass, so people can look in and see what is happening and we can look out to the community. We are building a community in an area which is a multi-faith environment. We want to help people have great things in their lives and we have people of all faiths come into the church and they are part of our community. We have a great relationship with the local school and have held a concert with them. All of this has been made more possible with the partnership with asra.
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Value for Money Report 2015-16 | 9
Introducing Right to Buy
Chapter 3: Managing our business well
In 2015-16 a great deal of strategic planning has taken place to prepare to give customers the option to buy their homes through Right to Buy (RTB). Prior to it becoming part of the Housing Act we volunteered for the RTB deal offered to the Government by the National Housing Federation. Our focus is to offer customers a positive experience of climbing onto the housing ladder. We foresee that 9,500 customers will be eligible for RTB.
Managing our tenancies
Responding to rent cuts The Government’s rent cut of 1% per year for all housing associations over the next four years has provided a significant challenge for all housing providers. For asra Housing Group the reduction removes 14% of the income that had been available in the previous three years.
Strategic Stock Disposals
We have converted 136 social rented homes to affordable rent pitched at 60% of market rents in 2015-16, with the additional income being used to fund the building of more new homes. A further 205 relets have been converted to the affordable rent tenure for the provision of new rented homes in London and the Midlands. Our core aim is to provide sub-market rented homes for people who cannot afford to buy. We have also focused on sustaining tenancies, which in turn delivers more consistent resources, through a number of innovative initiatives. One example is furnished tenancies which were introduced in 2013 to help homeless people and others, with limited incomes and who often present without any possessions, sustain their tenancies. So far more than 1,000 furniture packs have been provided. We have also established our award winning online Property Shop which delivers value by using a commercial approach to improving relet performance by letting our homes directly through the website rather than solely relying on nominations from local authorities.
In some cases it will be in asra Housing Group’s interests to sell properties in challenging locations, so in these cases we will consider offering customers enhanced discounts. We understand from our stock valuation work that there is approximately 5% of our stock that falls into this category. They are not currently sustainable for asra Housing Group and as a result not sustainable for our customers. Through understanding our assets thoroughly we are able to make sound decisions on how to best use our assets for the benefit of our customers.
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The operating surplus as a percentage of turnover for asra Housing Group is 32% which is already high performing in financial terms. This meant significant staffing savings were necessary in 2015-16 in order to ensure the necessary saving to deliver homes, reinvestment in homes and improved landlord services. To this end we have reduced our management costs by over 10% through the reshaping of resources, which saw 80 colleagues leave the organisation.
• Achieving a 95% first time fix target for all enquiries at the first customer contact • Diverting 30% of all telephone call traffic to the new self service offering, which will be fully in place by March 2018 • Restructuring front line services so teams have clear and specific responsibilities to deliver increased accountability
To reduce the number of people working at asra Housing Group while delivering improved landlord services has meant that a new operating model was essential. The new model delivers value by:
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Corporate Plan 2016-19 Underpinning these big changes to our way of working is our new Corporate Plan which was drawn up by asra Housing Group’s Executive and Leadership teams in 2015-16. The plan is a roadmap to achieving our new vision ‘a reputation for delivering great homes and great services’. It is supported by a new Business Recipe, which contains 9 key principles for delivering success. This, as well as our purpose and values, will ensure value for money is delivered year on year through a strategic target driven approach. Our Business Recipe has been agreed as part of our focus on creating a ‘can do’ culture in which our people reach their potential and in return are passionate about delivering the best results for customers. We have also published a Respecting Difference Strategy, which sets out our approach to equality, diversity and inclusion. This commitment is highlighted by our workforce where 46% identify from a black, minority ethnic (BME), background.
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Value for Money Report 2015-16 | 13
Our Business Recipe
1
90% 3
95%
2
To continue to make a successful organisation we must get all of the ingredients right. This Corporate Plan focuses on 9 key areas which are our Business Recipe for delivering success.
1. We will strive to achieve customer satisfaction of 90% and maintain it at this level.
2. We aim to fix 95% of customer queries at the point they raise them. We will not pass customers from pillar to post and, at an individual level; we all take responsibility for ensuring that the customer gets served, whether the customer is external or internal. 4 3. When a customer complains it is our responsibility to solve the complaint straight away. If that is not possible, we give a definitive answer to the complainant within 5 days. 5 4. We stick to what we do best; affordable housing for rent, home ownership and mixed developments offering open market property for sale. We will not “diversify” our business outside of this. 6 11
12
5. We are a serious business, but we will retain a fun and family atmosphere. Respecting difference and tackling discrimination will always be a top priority for asra. The diversity of our workforce and providing culturally sensitive services to customers is paramount.
1
10
2
9
3 8
4 7
6
6. We concentrate on the 3Rs, i.e. Rents, Relets and Repairs. If we get these areas right then our business will be performing reasonably well and customers will be happy that we are looking after their homes.
5
8
7
9
34%
7. The product that we provide should not be sub-standard. When we let a home, we should ask ourselves if we would be happy for a member of our own family to live in it. If the answer is no then it isn’t good enough for our customers and we should consider improving it or selling it. Alternatively, if the relet costs of a home are more than 3-years rental income, we should sell the property and not relet. 8. We will aim for our operating margin, i.e. the difference between our income and expenditure before we have paid our mortgage, to be no less than 34%.
9. Before we spend asra’s money, we should ask ourselves, would we spend our own money this way? If the answer is no, we don’t do it. 14 | asra housing group
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Supporting our Customers To make the best use of our assets we must work with customers to ensure they are supported in paying their rent. In 2015-16 over 1,100 customers affected by welfare reform were supported by our Tenancy Sustainment Team. In total the team managed to claw back almost £750,000 in unclaimed benefits, much of which helped pay down rent arrears. Our Housing teams are also committed to providing extra value to customers. On one occasion a customer fell over and was moved into long term care by social services because she was unable to live independently. A Tenancy Services Officer visited the customer at the care home to ensure she was happy to give up her tenancy and to find out if she needed any extra support. The customer asked the officer if he could arrange for all of her belongings to be given to charity to raise money for her favourite good causes. The officer carried out her wishes and in the process went above and beyond to support his customer even after her tenancy had ended.
Cathy Osborn, from Savills, said:
asra realises the value of active asset management and as a result took the decision to develop an innovative solution to achieve this. Savills has worked closely with asra on its delivery and we are confident noting they are in a position to make informed and commercially driven decisions for the benefit of their customers which will increase their business plan capacity for growth. As well as expanding our knowledge of our assets we have also established greater controls to prioritise the safety of customers. Two areas of weakness that we have addressed are legionella and asbestos, which now both have an established surveying process and an action plan if risks are identified.
Repairs & home reinvestment A big focus has been on improving our repairs service, particularly with repairs being carried out quickly, efficiently and conveniently. We have formed stronger relationships with our partner contractors while also having our own in house repairs team called Asra Property Services. This approach has grown satisfaction from 68.7% in 2013 to 90.4% in 2015. To this end there is still some work to do but we are on the right track. In 2016-17 we will put a greater emphasis on working with our internal repairs teams and contractors to reduce our overall carbon footprint. Our contractors have made a commitment to achieving better environmental standards. Axis identified 70% of their CO2 emissions were from their fleet, so introduced the ‘Fleet Efficiency’ project. This involved upgrading their vehicles and also placing a focus on improving driver behaviour to deliver less fuel consumption. Fuel savings of £40,000 and CO2 savings of 74 tonnes were identified.
We have also committed to delivering increased investment in our existing homes, coupled with a customer focus to give better advance notice of when and what works will be carried out. This information is now publicly accessible on asra Housing Group’s website. Part of our reinvestment in homes has been to make them more energy efficient and in total asra Housing Group has replaced 375 boilers as part of our planned programme, which equates to up to £80,625 in heating and hot water bill savings per annum for our customers. Our work has also saved 352 tonnes of CO2 from being emitted into the atmosphere. We have upgraded 526 homes with UPVC double glazed windows – saving each household an average of £90 a year, whilst ensuring they are comfortable and warm during the colder months. We have also installed solar panels in about 300 properties and our head office in Leicester, which we still have some work to do
Managing our assets We have developed a commercial approach to the management and retention of our asset base as a result of the challenges of welfare reform, enforced rent reduction and minimal grant for the provision of new homes. Between 2013 and 2015 we started a project to more fully understand the long term investment needed in all of our homes and we now have detailed stock condition data on 98% of our housing stock. We have worked with Savills to build up a sophisticated picture of the investment needs of our homes - balanced against the income received and the cost of management. 16 | asra housing group
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Value for Money Report 2015-16 | 17
Chapter 4: Working in partnership in order to deliver the environmental return. In 2016-17 we will work to ensure our return on investment in green energy is realised. Our new three year plan and the operating model have greatly increased the efficiency of contractor visits with many jobs batched into one visit and the need for multiple visits reduced. This has in turn helped reduce our overall CO2 emissions and carbon footprint as a business. More than £40,000 was secured to help adapt customers’ homes in 2015-16. Following the instillation of level access showers at Jannat Housing, in Birmingham, customers wrote a letter, which said:
Thank you from all of us for your hard work, we are very happy with our new level access shower. You have exceeded our expectations. The tradesmen worked very hard and they were very nice and polite. They tried to resolve all of the issues to keep residents happy.
Another home investment example of value for money is how changes to the way we conduct procurement have secured savings that are the equivalent to installing 208 new bathrooms. This saving is as a direct result of the stock condition work asra Housing Group carried out. For many of our customers the stock condition surveys also identified the need for reinvestment, even if they didn’t know how to go about asking for it. This has helped to deliver a fairer process and in turn has supported customers who face health, financial and life challenges. Overall we made about £600,000 in procurement savings in 2015-16, the majority of which were delivered through cheaper planned maintenance contracts.
The added planned work came at no extra cost to asra Housing Group and has been calculated by comparing the costs from 2015-16 to 2014-15. It has been achieved by extending contracts to two years, rather than one, which reduced contractor pricing. We have also improved the information we provide to contractors following a large programme to collect information on the condition of homes. This provided contractors with the information they need to accurately price the works and thus minimised the risk to them and in turn decreasing the cost of the works. Lastly works were planned on a regional basis which cut contractors’ travel costs and delivered further savings.
Over the past year we have strengthened our partnership working with key local authorities and development contractors in order to continue our commitment to build new affordable homes for people in housing need. We also continue to work closely with our repairs and reinvestment contractors to deliver service improvements.
Partnerships to build new affordable homes Government policy is to help customers own their own home with a focus on shared ownership as the preferred sales model. As a consequence of this the majority of new homes delivered and planned, by asra Housing Group and our partners, will be for shared ownership. This has been a highly successful delivery mechanism for asra Housing Group in 2015-16. While helping people own their own home through shared ownership is a priority for asra Housing Group, this model is not suited to everyone, so providing good quality homes for rent will continue to be at the heart of our business model. It is also clear that the future demand for rented accommodation will remain high, so a continued business focus on providing rented accommodation will remain.
Some of our rented homes, however, do not meet our internal targets for ‘return on assets’ and as such we will look to offer enhanced discounts to customers in these locations, which will in turn help people who are ordinarily priced out of Right to Buy or shared ownership – own their own home. Through Right to Buy we will seek to free up grant funding and through our partnership working with local authorities we are committed to providing new affordable housing on a one for one replacement basis.
Value for Money Report 2015-16 | 19
Partnerships with repairs & reinvestment contractors One of asra Housing Group’s largest projects, in partnership with the Royal Borough of Greenwich and Lovell, is One Woolwich, in Woolwich, London. It will see the regeneration of 3 run down council housing estates which will be rebuilt to provide 1,600 new homes – 525 will be for affordable housing provided by asra Housing Group. Work has started to demolish the first of the old estates in 2015 to make way for the new housing. An innovative short-life tenancy scheme has also been set up by asra Housing Group to offer cheap housing in the estates that will be replaced in the later phases of the project. Short-life tenancies allow customers to pay reduced rents in order to save and buy their own home, while ensuring the estates are occupied and do not fall victim of vandalism and disrepair. In total two thirds of the new affordable housing at One Woolwich will be for affordable rent and one third for shared ownership. This will cost us £55 million and will achieve first tranche revenues of £11 million.
Partnership working with our contractors has also been a priority over the past year and, although there is still some work to do, we are making good progress. With regards to stock reinvestment; our three year plan has established a strategic approach which has brought in efficiency and increased value for money. Delivering repairs in London, through a contractor, remains a challenge because of the large urban area where we have homes. This is why we have started work on setting up a Direct Labour Organisation (DLO) there. We have learnt a lot from our existing internal repairs team for the Midlands and we will use this knowledge to replicate a similar high performing service to 1,231 homes in Northwest London. We hope that our customers will see improvements in the time taken to carry out a repair, the quality of each repair and the customer experience of each resolution.
5. How we performed The financial year ending April 2016 saw the completion of our 2013-16 Corporate Plan. Over this 3 year period the Group Board agreed a set of objectives and clear targets, which have now concluded. This table details our overall performance against targets, with all areas performing well but some narrowly missing our projections.
2013-16 Objective Customer satisfaction improved to Rents - net collection rate Empty homes reduced to Anti-social behaviour cases resolved within 60 days Routine Repairs completed on time Annual gas safety certificates in place New homes built - (target of 250 per year for 3 years) Underlying surplus1 Operating margin2
2016 Target 90% 101% 1.5% 80% 97% 100% 750 n/a 33%
Actual 86% 100% 0.73% 74% 97.85% 99.92% 813 £12.1m 32%
The underlying surplus is calculated after removing the following significant items from the surplus for the year: • Surplus on property sales; • Goodwill amortisation credit; • Operating costs – pension deficit; • Impairment charge; • Movement in fair value of financial instruments through profit and loss.
1
2
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Targets set under UK GAAP. Actuals are under FRS102 Value for Money Report 2015-16 | 21
The areas where targets have not been quite met will continue to be pursued over the new 3 year Corporate Plan with sustained 90% customer satisfaction still very much a business priority. 2014/15 asra Housing Group
2014/5 Orbit Housing
2014/15 Midland Heart
2014/15 East Midlands Housing
Management cost per social home (£)
£1,290
£612
£1,331
£931
£2,752
£1,034
Total maintenance costs per homes charge to I&E accounts (£)
£1,042
£1,290
£1,120
£721
£1,182
£1,240
Total capitalised major repairs per home (£)
£711
£356
£316
£482
£700
£705
Social housing lettings operating margin (%)
33%
39%
30%
37%
28%
31%
Operating margin (%)
34%
27%
28%
31%
26%
28%
Operating costs per home (£)
£3,773
£4,611
£4,169
£3,504
£5,705
£4,407
Former tenant rent arrears (%)
2.20%
1.30%
2.68%
2.33%
1.49%
2.03%
Current tenant rent arrears (%)
4.50%
3.00%
4.74%
3.70%
4.20%
4.66%
Total tenant rent arrears (%)
6.70%
4.30%
7.42%
6.03%
5.69%
6.68%
82
74
112
84
101
81
Rent void losses per social home (£)
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2014/15 2014/15 Viridian HCA Global Housing
Value for Money Report 2015-16 | 23
Benchmarking We work with independent sector auditors RSM to benchmark and validate our performance against other providers. This involves meeting with them regularly to talk about performance and business improvement. It is clear from the benchmarking analysis that our management cost per number of units are an area of underperformance and higher than the global average for the sector. This is because of our shared geography where we have about 4,000 homes in London and the South East, which are high value operating areas, combined with about 10,000 homes in the Midlands, which have dwindling asset security. However, our headquarters is in the Midlands, where operating costs are much lower than London. Insurance also makes up a significant proportion of our costs. To continue our journey to improve and because of the 1% rent cuts made by the Government our Group Board changed our
operating model in 2015-16. For 2016-17 this will deliver a 10% reduction in management costs, which will be realised in next year’s Value for Money Report. On the flip side our operating cost per unit and our overall surplus are better than the sector peer group average, which is partly due to the success of our shared ownership and development programmes. We have also improved at collecting rent with current tenant arrears and overall rent collection being strong performers in 2015-16. Despite these positive areas asra Housing Group must continue to improve in order to free up capital to reinvest in customers’ homes and to build new affordable housing. The work we have undertaken to reduce our costs and change our operating model ensures we will continue to grow and meet our commitments in these areas.
Increasing regulatory challenge In June 2016 the Homes and Communities Agency announced that its regulatory approach in respect of Value For Money will be changing. This entails an increasing focus on the unit operating costs incurred by each housing association. The HCA wishes to ensure that providers have a clear understanding of their cost base, in both absolute and relative terms, and are making informed decisions about cost allocation which align with their corporate objectives. More broadly, there is an expectation from government that the housing association sector can drive improved cost efficiency in a number of ways, and utilise the capacity generated to increase the volume of new homes they can build. In support of this announcement, the HCA released a summary analysis of unit operating costs across the sector. We were advised of our absolute and comparative results, based on published 2014/15 financial statements, as follows:
CPU = Cost per unit asra HA Leicester HA Sector upper quartile Sector median Sector lower quartile
Headline Management Management Maintenance social CPU CPU CPU housing CPU
Major repairs CPU
Other social housing costs CPU
£3,380 £3,240
£1,300 £1,110
£390 £380
£880 £960
£760 £670
£50 £110
£4,300
£1,270
£610
£1,180
£1,130
£410
£3,550
£950
£360
£980
£800
£200
£3,190
£700
£230
£810
£530
£80
Dark green = most efficient; light green = relatively efficient; amber = relatively inefficient; red = least efficient
These initial results show that for 2014/15, we were more efficient than the sector average for 7 of the 12 indicators (split across AHA and LHA), and less efficient than average for 5. Management costs is our area of highest relative cost. Since the period that these results relate to, we have begun work to implement a new operating model in response to the government’s rent reduction regime. This has removed £2.5m of cost from the business, predominantly from office based services and so this project will have a direct beneficial impact on our unit management costs going forward. 24 | asra housing group
Our Board continues to explore other options and opportunities to improve efficiency. We want to reach and then maintain a strong position relative to most other housing associations, and we fully understand the work the HCA intends to carry out in order to more thoroughly test this aspect of our service offering. This VFM Report summarises the work we have done in 2015/16, and the work we are doing now and in the future, to ensure that we are an efficient organisation which delivers value for money to all our customers and stakeholders. Value for Money Report 2015-16 | 25
Stock rationalisation Our Group Board is also looking at taking a strategic approach to stock rationalisation in order to consolidate our presence in the areas where we have most density. This will involve us acquiring or transferring homes to other providers in similar geographical areas who will be able to deliver a better service. We have identified three areas where we have about 200 under-performing properties, which other providers are better placed to manage. To guide this process we have developed a disposal rule providing a mechanism to rationalise stock that costs more to manage and maintain than the income generated. The rule stipulates that we will dispose of a void independent property if it has a negative net present value, or if the cost to bring it back into the rental market is more than three years of the future rent. Property Type
Overall assessment
For asra Housing Group this will deliver cost efficiencies, a better service to customers and will trigger grant funding in order to build new homes. We will also be looking to grow through merger and partnerships to create additional headroom for the development of new homes. Our stock rationalisation plans will also see us dispose of some assets that do not provide the quality of service that customers’ expect. One example of this is sheltered accommodation for the over 55s which has not been purpose built to cater for people living with a disability or additional needs. In some cases we will be able to dispose of poor quality sheltered housing in high value areas, which will enable us to free up grant funding and capital to replace it with purpose built extra-care schemes.
Number of Homes
Rental Income £'m
Estimated Value £'m
Rental Yield Return on assets %
Operating surplus
Operating margin
10,206
54.50
669.00
8%
17.704
32%
Supported Housing
455
0.87
8.00
11%
-0.409
-
Shared Ownership
600
2.24
43.00
5%
1.139
50%
1306
6.70
60.00
11%
3.501
52%
351
1.22
5.00
24%
0.042
3%
12,918
65.54
785.00
8%
21.977
33%
Rented Housing
Sheltered Market rent
Rented Accommodation
Number of Homes
Rental Income £'m
Estimated Value £'m
Rental Yield Return on assets %
Leicester
3381
18.42
214.00
9%
London
3493
24.41
337.00
7%
Nottingham
2001
4.89
63.00
8%
Northants
1113
5.20
48.00
11%
218
1.58
7.00
23%
10,206
54.50
669.00
8%
West Midlands
26 | asra housing group
In 2014-15 we strengthened our approach to value for money which preceded the HCA’s tougher new approach. Our framework stipulated that value for money is a process of ensuring that we make rational decisions, and make best use of the resources that are available to us in order to achieve our strategic objectives. Our strategic objectives were informed by feedback from customers and others, and also demonstrate the social impact or value created by our resources. For us value for money is an ongoing process and not an objective, which means ‘improving value for money’ has no end point and there is an ongoing process of improvement. Over the past year we have reassessed our 2014-15 value for money assessment and are satisfied that it more than meets the new level of scrutiny. Our approach to value for money in 2015-16 has undergone the same level of robust scrutiny.
asra Housing Group has taken decisive action to restructure the business in order to continue to deliver value for money and improved services for customers. The 1% rent cuts have, by necessity, made our development plans more modest but we will still be punching above our weight in terms of delivering significant numbers of new affordable homes. We have completed a lot of future thinking work with the delivery of the new three year Corporate Plan - providing a strategic blueprint for how we will continue to operate as a successful independent housing provider. Our emphasis on providing an enhanced customer experience through improved digital channels and self service also illustrate our commitment to delivering improved landlord services.
The challenges that faced the housing sector following the new Government’s summer budget and subsequent 1% rent cuts for all social housing tenants over 4 years were unprecedented.
Value for Money Report 2015-16 | 27
asra Housing Group 3 Bede Island Road Leicester LE2 7EA 0116 257 6716 www.asra.org.uk
Newlife Apartments, Northampton 28 | asra housing group
