Social Housing Finances in the Spotlight

The government is consulting on a rent cap of 3 – 7% for social housing residents to help address the cost of living crisis.

While it’s obvious that many people will need financial help to stay afloat this winter and beyond there are potentially dramatic consequences for social housing providers. It’s estimated that a rent cap could deprive them of up to £1.3bn of real terms revenue compared to the existing CPI+1% formula.

The government argues that with inflation topping 10%, the existing formula wouldn’t be sustainable for residents already hit by higher energy costs. This is perfectly fair and sensible – and no housing provider would want to see rent arrears rise.

Another reasonable question is whether CPI is the right cost benchmark for assessing rent rises and caps. It clearly reflects residents’ ability to pay but CPI isn’t necessarily a direct measure of housing providers’ costs.

Rising Costs

In fact, it’s worse. Providers are reporting above-inflation increases for repair and maintenance costs owing to labour and material shortages. There are also added costs of compliance for meeting safety and decent homes standards.

Providers also need to budget for upgrading properties to reach EPC Band C by 2030 and net zero carbon by 2050. The total cost of this is estimated at £104bn.

If the funds could be found, accelerating retrofit programmes would make a massive long-term difference to the cost of living for millions of people. It would also help improve the nation’s energy security.

Time for TAM?

Whether or not the government steps in with additional financial support, many social housing providers will be reassessing how they manage property services. Eliminating waste, inefficiencies and duplication matters more than ever.

Total Asset Management (TAM) is a pro-active system that integrates the traditionally fragmented service areas of stock condition data, repairs, maintenance, voids and compliance. It’s supported by modern information technology that provides greater transparency over how money is being spent.

Using a TAM approach after taking responsibility for asset improvement and maintenance for one local authority saved over £1.5m in the first 18 months of the contract. The works schedule for year one was delivered within 9 months and in year two the works programme was expanded by 30%.

To find out more about how we deliver more for less in social housing asset management, contact Nick Davidge [email protected].