How to … keep your management costs low

It costs £700 a year on average to manage each registered social landlord home. But it doesn't have to be that way. London & Quadrant Housing Trust recently revealed that it spends less than two thirds of that: £430 a home (HT 19 March, page 8).

"In the past six or seven years, we have cut management costs by about a quarter in real terms," says Mike Donaldson, group director of corporate strategy and communication. It is the result, he says, of years of effort to reduce costs including streamlining IT systems, specialisation of staff and using the trust's size (it has 20,000 homes) to get better deals.

L&Q got a lot of its ideas from the private sector, Donaldson admits. Banks and insurers, for example, have centralised service centres. L&Q followed this pattern by replacing its 11 offices with three "telephone-based service centres". These house all the back-office staff and relay tenants' requests to three local offices with staff who specialise in rent or repairs.

Use your muscle
Another lesson from the private sector is that size matters. "The size of the association makes a hell of a difference," admits Donaldson. Larger organisations can get good deals on energy supply, insurance, construction and fittings. If you're small, join a buying club with other associations to get similar discounts.

Some of these savings can be passed on to residents. L&Q gets buildings insurance for £14 per property and insurance for up to £10,000 of each tenant's possessions for £70 per property. If tenants were to find their own deals, these could cost hundreds of pounds a year.

Form partnerships
Develop long-term partnerships with contractors rather than using one-off, smaller contracts, says Donaldson: "In a lot of contracts, companies build in a 'comfort cost' because they might not trust the other party." But by working closely with the same partner, you should come to trust each other – and by guaranteeing them regular work, you will get a better deal.

Get IT right
Excellent computer systems will help everything work smoothly. L&Q is developing a system to transfer information without using paper. Finance director David Montague explains: "We looked at maintenance and realised that an invoice passed through 15 hands before it was paid. Common sense says that can't be right."

Several stages were combined and the number of people dealing with invoices was reduced. The system also notes whether people have checked and responded to their emails and can email them when they have voicemail messages.

By guaranteeing regular work to contractors, you will get a better deal

The program cost about £1m but Donaldson says it will reduce the need for investment. "At some point, all our telephony systems will need to be replaced. We take 1.2 million calls a year and you need sophisticated software to deal with much more than that. So when we replace it, we can integrate it with our new IT system and reduce capital costs in the long term."

Logging repairs on a computerised system should speed up the process too. Rather than faxing or handing orders to contractors, L&Q's system feeds repair requests to contractors almost immediately.

Donaldson says: "This has led to higher satisfaction among tenants, and we do repairs faster, turn voids round quicker and have one of the lowest rent arrears rates in London."

Allow tenants to help
When it started looking, L&Q found some of its other activities were inefficient. For example, each time a tenant asked for repairs, a surveyor was dispatched to confirm whether a repair was needed.

Montague says: "They were coming back and saying 'yes, work needs to be done'. We thought, why not just trust the residents?

"We concluded that of course there needed to be some independent checks, but they should be on a sample basis."

Be nice to your staff
If you're making major changes, you need to ensure your staff are enthusiastic. Montague says: "The key to getting your management costs low is getting the right people in place."