How to begin the process of keeping your housing stock in order
At the heart of every housing association and registered provider, there are two core things. Tenants, and the housing stock. Without either of them, the organisation no matter of its size, or financial prowess, simply would not work. It is therefore essential that you get them both right, starting with your housing stock. So how can you do this?
Understanding your housing stock
Above everything else, you need to fully understand your stock, before you can even think about managing your portfolio effectively. Knowing the age, geography and composition (e.g. if your stock is made up by houses, flats, sheltered schemes etc.) of your stock is key. But what is similarly as in important, is knowing the condition of your stock.
Legally, you have the responsibility to make sure that any property you own, meets the Decent Homes Standard. In order for any home to pass, it needs to meet four main criteria; repair, modern facilities and services, thermal comfort and the statutory minimum fitness standard for housing.
Homes England, recommend that to identify if you are meeting the Decent Homes Standard, you should conduct surveys/validation to a percentage of your stock on a regular basis.
If you are finding that your properties are not passing, you need to make sure that you have an appropriate programme in place to resolve this. For more information see our stock condition surveying service.
Understanding your housing stocks financial performance
Once you have a true understanding of your stock, it is time for you to look towards its financial performance. There are two indicators that can monitor this:
- The open market value of the property;
- The net present value (NPV) of the property.
Understanding the open market valuation for your properties will enable you and your organisation to analyse the opportunity cost associated with holding each asset; and to identify, for instance, whether or not a decision should be taken to sell potentially high value assets, in order to invest in additional social housing units.
The NPV will identify the types of properties in your portfolios that you should be investing or divesting in, based on its financial rate of return (e.g. rental fees). Typically this is calculated over ten and 30 year terms, using an agreed discount rate to account for corporate overhead costs and debt interest.
Understanding your housing stocks non-financial performance
It is similarly important to understand the non-financial performance characteristics of your stock, as this can help you and your organisation determine future decisions on investment, based on the perceived potential for the area of the property. Such things for consideration include; tenant demand and antisocial behaviour.
Understanding the long-term strategic objectives/vision of your objectives
Ultimately, all stock management decisions need to be taken in the context of the purpose of your organisation. By this we mean:
- What your organisation wants to achieve?
- How do any investment/divestment decisions align with this?
Understanding this is important, because each organisation and its approach will be different. For instance, a business whose aim is to solely maximise its financial returns will manage/organise its stock in a very different way, from one whose mission is more socially focused. Therefore, you need to make sure that you know, with ultimate clarity, exactly what it is your organisation wants, as this will determine the starting direction and focus for you to begin managing your stock effectively.
If you are struggling at any stage of the process or need advice on how you can manage your stock effectively – we can help.
How we can help…
At Pennington Choices, we work closely with providers, to ensure that tenants and their lives are not put at risk. Our diverse and experienced consultancy team, is built-up with technical experts that work across fire safety, gas safety, electrical safety, asbestos management and water hygiene, to put in place practical solutions to any shortfalls that they may come across.
We also have highly experienced management and financial consultants with extensive delivery experience in both social housing and construction sectors, who understand first-hand, the complexity and challenges our clients face.
We keep things simple…
The breadth of our experience across the housing sector, means that we know what to look for, and work with you to create an active asset management strategy, so that you can better understand the performance of your stock in line with the current regulatory expectations.Back to blog