Value for Money Self Assessment - Year Ended 31 December 2015

1

Introduction

1.1

Family Housing Association is a small Registered Social Landlord based on the Wirral Peninsula. All of our housing stock is situated within 5 miles of our office. We employ seven full time Staff and own 375 properties.

1.2

This Value for Money Self Assessment provides a detailed analysis of our strategy, our performance and our achievements during 2015.

1.3

It includes a summary of our overall approach to give our stakeholders an understanding of our strategy to continuously improve Value for Money and our performance during the year.

1.4

This self-assessment is intended to meet the requirements of the Regulatory Framework in a manner that is proportionate to a small Housing Association with 375 homes.

2

Value for Money Strategy

2.1

Aims and Objectives When we consider our performance in terms of Value for Money we consider it in conjunction with our Aims and Objectives. Our Aims & Objectives are set out in our Business Plan. Our Business Plan is reviewed annually. In summary, the relevant aims and objectives in the Business Plan are; • Help those on low incomes in Housing Need. • Maintain properties to a good standard. • Ensure prudent financial practices. • Provide a caring and courteous service. • Provide a good standard of housing that offers VFM for tenants. • Plan and control the business to maintain our financial strength. • Deliver a quality service through professional, well-motivated Staff. • Deliver an ongoing Asset Management Programme. • Explore opportunities for growth. • Achieve an operating surplus to enable effective re-investment.

2.2

Our Value for Money strategy is intended to ensure that we: • Deliver high quality services to our stakeholders. • Work to reduce costs without reducing quality. • Focus on outcomes for the Association and our stakeholders when considering investment decisions. • Understand the right balance between cost and quality when delivering our Business Plan objectives. • Meet the expectations of the Social Housing Regulator by providing a high standard of service to tenants, ensuring long term viability, effectively managing risk and achieving long term growth.

3

Processes to Support our Value for Money Strategy

3.1

Resident Involvement Our Board also has two tenant representatives to ensure tenants views are heard. In addition, the Association has a Customer Panel that is involved in all aspects of our work including reviewing our approach to achieving Value for Money and our Business Plan. They review our performance and policies and provide feedback to the Board.

3.2

Performance Monitoring - Monthly Our Board receives regular updates on performance relevant to Value for Money. Our monthly Board Meeting includes information on void expenditure, rent arrears performance, repairs expenditure, lettings performance and gas safety compliance.

3.3

Performance Monitoring - Six Monthly Our Board and Customer Panel receive an in depth report on performance every six months. This report includes information on the previous three years performance to allow the Board and Customer Panel to assess our performance. The report includes information on; • Rent Arrears performance. • Re-let performance. • Levels of Anti-Social behaviour including cases resolved. • Repair Customer Satisfaction Questionnaire results. • Repair Customer Satisfaction Questionnaire response rate. • New Tenant Satisfaction Questionnaire results. • Repairs performance against targets. • Results of independent surveyor inspections of 10% of repairs for VFM and quality of workmanship. • Amount spent on repairs per property per week. • The number of outstanding repairs. • Repairs expenditure by category. • Repairs expenditure by contractor. • Total repairs expenditure over the last 3 years. • Gas servicing performance. • Electrical testing performance.

3.4

Keeping Tenants Informed We produce an Annual Report to Tenants that contains all the information on our performance that is included in the Key Performance Information detailed above, as well as covering our performance against our Service Standards. In 2015 it included six pages of information regarding Value for Money and showed our performance benchmarked against other local small Housing Associations.

3.5

Value for Money Service Standards We have developed Value for Money Service Standards in conjunction with our Customer Panel. We took a holistic approach to developing the Standards considering cost, quality, social and economic factors. Three key areas were identified where we, as a small Association, should focus our efforts; • Repairs & Maintenance. • Procurement of Goods and Services. • Investment of Assets. A range of targets were agreed, performance against which is reported to the Board and Customer Panel every six months.

3.6

Benchmarking Our Performance We are member of the Community Housing Associations North West Benchmarking Club. Each member of the Club shares performance and VFM information with Acuity (part of HouseMark, National Housing Federation) who compile statistics and graphs to allow us to analyse our performance compared to our peers.

4

Understanding the Performance of Association Assets & Liabilities

4.1

Cash Assets At the end of 2015 we had cash reserves of £761,323. This is an increase of £30,407 compared to the end of 2014. Our policy is to re-invest our reserves in our homes or in new homes rather than allowing significant cash reserves to build up, although we are currently using some of the excess cash reserves to overpay our loans. With limited amount of cash reserves available to invest during the year the return on this was limited to 0.25%.

4.2

Summary of Debt We had a total mortgage debt of £1,246,469 at the end of 2015. A review of our borrowing and investment rates is carried out annually. At the end of 2015 we had three main debts. Two of the debts have redemption penalties that made them uneconomical to re-finance during the year. The remaining debt is being overpaid to reduce the term of the debt and deliver savings in interest. £2,000,000 £1,500,000 £1,000,000 £500,000 £2011

2012

2013

2014

2015

4.3

Property Assets During the year we have re-assessed the Open Market Value of our housing stock to better understand the value of the Association. This has led to an increase in the total estimated Open Market Value of our stock to £29,498,000. We have also reviewed the value of our stock based on the estimated Existing Use Value (Social Housing). The total estimated EUV-SH of our housing stock is £16,155,615. We have had a comprehensive Asset Management Strategy in place since 2004. All of our homes are inspected every five years and the condition of property components is recorded. All of our homes have been fully compliant with the Decent Homes Standard since 2009. Our Asset Management Programme is fully integrated with our Component Accounting System to help us get the maximum possible lifespan for each of our property components to minimise the amount of value written off when components such as kitchens and bathrooms are replaced. External contractors carry out all of our Planned Maintenance through competitive tendering of the contracts. New contractors are asked to tender each year to ensure we receive the best possible value for money through the programme. We carried out a survey of the condition of the roofs in Port Sunlight during 2013 as we were concerned about the increasing maintenance costs. The listed status of the properties and the complexity of the roofs was leading to regular expensive maintenance. A programme was established to fully overhaul all the roofs in Port Sunlight. This programme commenced during 2014 and was completed during 2015 at a total cost of £411,000 including fees.

4.4

Financial Performance of Property Assets During 2015 we implemented a project to fully understand the financial performance of our housing stock. Each property was included in a ‘Performance Group’ of similar properties in similar localities. There were 23 Performance Groups in total. For each group we have calculated the rental income received, as well as response repairs expenditure during the year. In addition, management costs, cyclical maintenance, void costs and service charge costs were taken into consideration. We have also calculated the average planned maintenance expenditure for each group since 2003. By comparing the income generated by each group with the expenditure, we were able to calculate the rate of return they were generating based upon their estimated current value (Existing Use Valuation – Social Housing). Our worst performing housing stock during 2015 is based in Harrowby Road in Birkenhead where high tenancy turnover of 38% combined with a high response repair cost of £1,159 per property has resulted in poor overall performance. In the year, these properties generated a rate of return on value of 1.46%. Our best performing property in 2015 is Homebank House. This flat needed no repairs in the year and generated a rate of return on value of 8.57%.

5.

Value for Money Performance During 2015

5.1

Return on Public Investment The total amount of public money invested in Family Housing Association to date is £8,709,004. This means the Association, based on the current open market value of its housing stock in 2015 and allowing for outstanding debt, has generated an additional £19,542,000 worth of housing assets from this public investment. If we consider the surplus generated by our Housing Stock during the last year, allowing for average planned maintenance expenditure since 2003, this is equivalent to a return on the public money invested in the Association of 7.34% during 2015.

5.2

Savings in Housing Benefit The Association provides homes at low rents to many tenants that claim Housing Benefit that would otherwise be renting in the private sector. As our rents are significantly lower than the equivalent local housing allowance, the Association saved the taxpayer an estimated £230,740 in Housing Benefit during 2015, compared to those tenants receiving the Local Housing Allowance in the private rented sector.

5.3

Tenant Satisfaction Survey During 2015 the Association carried out a Customer Satisfaction Survey based on the STAR survey. The results were encouraging and showed that the Association continues to be a top quartile performer in many categories. This year the survey was carried out by Association Staff and the whole process overseen by an independent auditor to ensure that our tenants could remain anonymous and the survey data was processed and reported accurately. This approach saved over £3,700 when compared to the cost of outsourcing the survey previously.

5.4

Debt Reduction Savings During 2015 we have continued overpaying the loan we took out with Royal Bank of Scotland in order to develop 8 homes in Tranmere. Originally the loan was for £600,000 over 10 years. Overpaying the loan has reduced the term by 3 years and is estimated to deliver savings of £18,684 in interest payments.

5.5

Operating Costs Our Operating Costs include the amount spent on routine repairs, management costs, planned maintenance, major repairs, services, housing depreciation (the actual cost of the property for the year). Our Operating Costs during 2015 was £1,171,442. When Government Grant is taken into account this reduced to £1,075,463 which represents £55.15 per property per week. Operating Costs increased again this year due higher planned maintenance costs, plus an increase in management costs. The graph below shows our Operating Cost over the last three years compared to others similar Associations locally and against the north west average in the benchmarking club (NW Avg) and the national average for small Associations benchmarked by Acuity. 90 80 70 60 50 40 30 20 10 0 2013 2014 2015 Family Housing*

NW Avg Nat AVG Crosby Eldonian WMHA Comparable Small Associations 2014/15

* FHA figures include housing property depreciation less amortisation and exclude pension deficit payments

5.6

Management Costs Our Management Costs includes office running costs, employees, legal and professional fees, consultants, card payment services, depreciation on the office buildings and its equipment and insurance on our housing stock. Our Management Cost during 2015 was £372,522 which represents £19.10 per property per week. The graph below shows our Management Cost over the last three years benchmarked against other small associations. 25

20

15

10

5

0 2013

2014 2015 Family Housing **

NW Avg Nat AVG Crosby Eldonian WMHA Comparable Small Associations 2014/15

** FHA figures exclude pension deficit payments

5.7

Response Repairs Our tenants report their repairs to our office where the majority know the Staff on a first name basis. We provide a friendly, professional service and tailor our service to our tenants’ individual needs. Repairs are carried out by small local contractors. The various work types are subject to competitive quotes at regular intervals to ensure contractors are providing Value for Money. Customer Satisfaction with individual contractors is monitored. In addition, a qualified Surveyor inspects 10% of repairs and during 2015 reported that 95% were of good quality and 92% offered good Value for Money. The cost of providing our Responsive Repairs Service during 2015 was £236,786 which represents £12.14 per property per week. This cost includes all repairs reported by our tenants or discovered during inspections. The graph below shows cost of repairs per property per week benchmarked against other small housing Associations. 20 15 10 5 0 2013 2014 2015 Family Housing

NW Avg Nat AVG Crosby Eldonian WMHA Comparable Small Associations 2014/15

To understand Value for Money, the cost of the repairs service must be considered along with Customer Satisfaction with the service. The percentage of customers satisfied with our repairs service is benchmarked below with other small associations. 100 95 90 85 80 75 70 2013 2014 2015 Family Housing

NW Avg Nat AVG Crosby Eldonian People F Comparable Small Associations 2014/15

5.8

Property Demand Demand for our properties remains strong. We have no properties that we have been unable to let, despite the fact that we own properties in areas with significant social and economic problems. We help to create demand for hard to let homes by maintaining the properties at a high standard of repair and decoration and providing a high quality service. The number of days taken to re-let homes in 2015 was 27 days but it took 59 days to re-let our hard to let properties. Tenants of ours in poorer localities are often unwilling to move to another landlord and prefer to remain with us and wait for an opportunity to transfer to another of our homes in a better area.

5.9

Planned Maintenance Our Planned Maintenance Programme during 2015 included £250,000 to complete the project to overhaul the roofs in Port Sunlight. We spent £432,160 on the planned maintenance programme, £348,247 of this was capitalised as part of property improvements and the remaining £83,913 on general repairs and cyclical painting. We capitalised an additional £194,223 on property improvements which included boilers, bathroom adaptations, insulation, UPVC doors and fees. We carried out improvements to 28 kitchens, 39 bathrooms and painted the exteriors of 66 properties. Our programme to replace our wooden soffits and fascias with UPVC is in its 4th year with 12 properties improved. In addition we upgraded 30 central heating boilers with modern energy efficient condensing boilers. We continue to offer choice as part of the programme where tenants can influence kitchen design, choose the colour of flooring, worktops and kitchen units. The cost of our planned maintenance work is benchmarked below with other small Associations. This cost is expected to reduce in 2016 as the overhaul of the roofs in Port Sunlight (except for two properties which will be at a later date) is now complete. 25 20 15 10 5 0 2013 2014 2015 Family Housing

NW Avg Nat AVG Crosby Eldonian WMHA Comparable Small Associations 2014/15

5.10

VFM Standards Performance Our Value for Money Standard was developed with our Customer Panel and all Tenants were consulted prior to its introduction. The Panel felt that our work to achieve Value for Money must have regard to cost, quality, customer satisfaction, timeliness and the impact on the local economy and communities. The Panel felt strongly that we should utilise local contractors and suppliers where possible and this is reflected in the Standard agreed and the targets set.

Independent Inspection of Repairs are of a good standard and offer VFM Customer Satisfaction with Repairs Use local contractors for carrying our Repairs Use local suppliers for goods and services 5.11

Target

Performance

90%

95%

90%

98%

70% Wirral 90% NW 70% Wirral 80% NW

94% Wirral 97% NW 72% Wirral 96% NW

Target Met

☺ ☺ ☺ ☺

Environmental Returns The work that we do during the year can have beneficial impact on the environment, either through a reduction in carbon emissions or through positive social benefits. During 2015 we replaced 30 boilers with A rated condensing boilers that is expected to save our tenants in excess of £4,125 in reduced fuel bills and reduce annual carbon emissions by over 38 tonnes. We also invested £22,890 in improving the insulation of solid brick walls. In addition, our Policy to invest time and resources letting properties in hard to let areas such as our 8 homes in Harrowby Road in Birkenhead has social and economic benefits for that locality. A number of landlords have chosen to dispose of houses in this area but in our view this only accelerates the decline and has a negative social impact. Wirral Borough Council’s selective licensing scheme of private landlords is now being implemented in the area and should lead to an improvement in the standard of private rented accommodation in that locality.

5.12

Procurement for Housing We have been a member of Procurement of Housing (PfH) for many years. PfH is a procurement consortium for housing association to purchase goods and services. It now has over 850 members and has achieved savings of over £55 million in the last year alone. It enables small Associations to achieve the economies of scale normally only accessible to the large Associations. Whilst we remain open to collaborative working with other local Associations, we feel Procurement for Housing offers the best opportunity to make savings. During 2015 we have used PfH suppliers to get exceptionally competitive rates for stationary, photocopier maintenance, electrical equipment and consumables. Through PfH, we secured a contract with Vent-Axia to purchase extractor fans at a discount of 64% over RRP, saving £2,054 during the year. We have also started negotiations to use PfH suppliers to supply our contractors with materials to generate additional savings.

5.13

Money Matters Project During 2015 we continued to work on a project with Wirral Citizens Advice Bureau to provide Money Management Advice to our tenants. By helping our tenants develop better money management skills we are helping prepare them for Universal Credit and improve their quality of life whilst reducing the chances of them experiencing rent arrears. This project provides a social return on investment as it helps to sustain communities.

5.14

Aids and Adaptations Carrying out work to enable people to remain in their homes when they suffer from a disability provides social and economic benefits for our tenants and the Association. For the Association, the costs involved in re-letting properties is considerable and this can be avoided by carrying out adaptations. Any unnecessary delay puts the tenant at risk and could also lead to them giving up their tenancy. In accordance with our caring ethos, our strategy is to carry out the majority of adaptations at our own expense and to deliver them with minimal delay. Minor adaptations are normally delivered within a few days and more significant works such as stairlifts in under a month. We only resort to Disabled Facilities Grant funding when the works are expected to cost many thousands of pounds. During 2015 the cost of aids and adaptations work was £18,350. This investment has prevented potentially very significant costs within the NHS and social care agencies through prevention of falls and accidents and their resulting treatment and rehabilitation costs.

5.15

Information Technology We employ staff with strong IT skills and this has enabled us to develop our own bespoke Housing Management Software that meets the requirements of the business. We also build and maintain all of our own computer hardware. The savings this has delivered are estimated to be in excess of £4,000 every year.

5.16

Social Value Generating Financial Savings We encourage our Staff to take time to talk to our tenants to get to know them and build better relationships. All of our members of Staff are accessible and any of our tenants can call the office and can speak to any member of Staff, including our Management Team. Our small size gives us a distinct advantage over large Associations in respect of our relationship with our tenants. We know our tenants and our tenants know us. Most of our tenants know us on a first name basis and feel they can talk to us about the issues that affect them. We believe that the strong relationship we enjoy with our tenants helps us to minimise rent arrears, reduce evictions and minimise property turnover and the associated costs. The graphs on the following pages show our performance benchmarked against other small associations that helps to demonstrate our success with this strategy.

5.16.1 Rent Arrears (excluding HB owed, as a percentage of rent roll) 5 4 3 2 1 0 2013 2014 2015 Family Housing

NW Avg Nat AVG Crosby Eldonian WMHA Comparable Small Associations 2014/15

5.16.2 Evictions for Rent Arrears (as a percentage of tenancies) 1 0.8 0.6 0.4 0.2 0 2013 2014 2015 Family Housing

NW Avg Nat AVG Crosby People F WMHA Comparable Small Associations 2014/15

5.16.3 Satisfaction with landlord services (STAR Survey 2015)

Repairs & Maintenace Recommend to Friend Listens & Acts Deals w ith Enquiries Keeps Informed Treats Fairly New Tenant Support Landlord Service NW Avg Landlord Service Nat Avg Landlord Service 70

75

80

85 % of tenants satisfied

90

95

100

6.

Value for Money Projects for 2016

6.1

Reduce Debt Our total debt stood at £1,246,469 at the end of 2015. During 2015 we spent £280,872 on mortgage payments to service our debts, £78,512 of this was in respect of interest. Money spent on loan interest could be far better utilised if it was available to fund new homes. The change in Government Policy to reduce rents over the next four years and to introduce the Right to Buy to Housing Association tenants has made low debt levels much more desirable as it reduces the risk of breaching loan covenants, having inadequate security and inadequate funds to maintain and develop homes. During 2016 we are on schedule to completely clear our Royal Bank of Scotland mortgage and will consider the savings that could be generated by overpaying our loans with Nationwide. The money saved on interest payments will enable us to acquire more homes in the medium to long term. Our target is to save around £80,000 of interest over the remaining term of the Nationwide loans.

6.2

Investing in our Homes We will invest in our homes to ensure they continue to meet the Decent Homes Standard. We will look to insulate the external walls of properties with solid brick walls if we discover they are affected by dampness or condensation. We will also continue to replace older boilers with ‘A’ rated condensing boilers to reduce carbon emissions and our tenants’ fuel bills. We have budgeted £60,000 to improve boilers during 2016, plus £15,000 for insulation.

6.3

Telecoms Originally planned for completion during 2015, this project will continue into 2016. We have commenced negotiations to reduce our telecommunications costs with the view to making savings on call charges and line rental. This has proved to be complicated as our current contract includes the hosting of our website and domain name ownership. Our target is to reduce our telecoms expenditure by 10%. Our telecoms cost during 2015 was £12,972 for the office and the phone lines to older persons accommodation.

6.4

Expand use of Procurement for Housing We already utilise PfH for our stationary and photocopier consumables, maintenance and extractor fans. During 2016 we will be looking to take further advantage of the savings via this procurement consortium. We will continue negotiations with the aim to supply more of our day-to-day maintenance items through the PfH framework for installation by our contractors.

6.5

Energy Performance Certificates The majority of the Associations Energy Performance Certificates are due to expire during 2017. This will have the impact of all void properties from next year needing a new EPC at an estimated ongoing cost of £2,100 per annum. During 2016 we will aim to train a member of Staff to enable us to produce EPCs in house to provide on-going savings.

6.6

Anti-Social Behaviour The social and economic impact of Anti-Social Behaviour is significant. To help communities provide information to us and remain anonymous, we will develop our website to allow members of the public to provide information regarding anti-social behaviour on-line.