The pressure is on housing associations to have up to date registers of their assets but they need to go even further than that …
In my last blog, I talked about the recent conference that we hosted with the Northern Housing Consortium on asset management and a few people (well a couple), have asked why there is such an interest in the assets of associations. So here are my thoughts on why there is interest and why it matters.
First, it’s because the housing regulator has now taken a big interest in assets and also liabilities. This follows the near collapse of Cosmopolitan Housing Association, when it became clear that there was a risk that some associations might not actually know how many homes they owned and which were pledged as security and which weren’t, or couldn’t be. That’s not a great place to be so the regulator has ratcheted up its expectations on associations to make sure they have up to date assets registers.
It became clear that there was a risk that some associations might not actually know how many homes they owned and which were pledged as security
Secondly, having an up to date register is one thing but do associations actually know the value of that stock and are they making decisions about its best use? Is it worth keeping stock in areas of major decline or in areas where there is significant value but also significant cost.
We’ve moved beyond a discussion about whether the focus of asset management expenditure is on responsive or planned repairs to one that thinks about what is the best return that can be extracted from the stock. It’s a more commercial approach, or actually a more business like approach.
The third reason is that government has taken an interest in a sector asset value that tops £135bn and how those assets are actually being used. What is the return policy makers ask?
So associations are spending a fair bit of time working through what return they actually do get. And at this point it gets just that bit more complicated, because it’s not so simple just to say that the thermal efficiency or inefficiency of a home; or the cost in use of a property; or the fact that its loan-to-value is minimal, warrants it being sold or reconfigured or more heavily invested in. The importance of an estate to the regeneration of an area or the retaining of larger homes for families, in an area of short housing supply might be a more important part of the decision making.
The questions demand answers and there is an increased sense of urgency to get them. If asset management were once the Cinderella service within associations, it certainly isn’t now.
Steve Douglas is a partner at Altair