Suits you, sir?

Westminster was the first social landlord to outsource its housing management, eight years ago. Few have followed suit, put off by complex agreements and residents' fears that handing such a core function to an outside company amounts to privatisation.

But outsourcing is changing. Councils and associations are increasingly using outside suppliers as interim managers, where they come in to transform a failing service on a short-term basis – rather than the old-style deals where the service and sometimes the staff moved to a private company or registered social landlord for a five- or seven-year contract. "Increasingly, we're seeing things that aren't conventional tenders," says Alastair McIntosh, chief executive of the Housing Quality Network.

The scope of the new arrangements also varies widely. Housing management contracts can encompass all the front-line services to tenants in a specific area – including rent collection, tenancy management, antisocial behaviour, and sometimes repairs and major capital works, advice, homelessness and allocations – or they may just focus on one particular area that needs to improve.

So it may be time to look again at outsourcing, especially if …

... you need help sorting out a persistent problem
For Burnley & Padiham Community Housing, the problem was empty properties inherited in a transfer from Burnley council in March 2000. "It was the number one performance indicator," says chief executive Tim Pinder, who called in outsourcing company Pinnacle PSG to turn around the service.

In September 2003, Pinnacle supplied a full-time manager to head a unified voids service until the end of March and give staff the skills to maintain the service from then on. "There were far too many people involved in the process – repairs staff, property shop staff, neighbourhood offices," says Pinder. "Pinnacle's manager could see the whole picture and where the gaps were."

Pinder says Pinnacle "absolutely smashed" the target – to reduce 440 voids to 350 – and the current total is 302.

As well as a monthly fee, there was an incentive in the contract. If Pinnacle beat a target in void reduction, it would pocket the difference in rent collection; if it failed, it would pay Burnley & Padiham the difference. "We couldn't lose," says Pinder.

... you've got a big job and no one to do it
Chester-le-Street council's housing management service had twice been rated poor and was under government intervention. When council members and the independent housing advisory board requested by the government approved an action plan for the service last summer, they knew they would not be able to pull it off with existing resources. Interim chief executive Bernadette Marjoram says: "Capacity within the authority was a big problem. We needed external support."

It is now in contract negotiations, also with Pinnacle, and hopes the firm will be on site later this month. The list of projects covers the whole service, including repairs and maintenance, rent collection, homelessness and allocations. Pinnacle will diagnose problems in each area and provide training and support to overcome them. The contract is expected to last 12 months and the council has set aside £100,000 from the housing revenue account. Marjoram says: "At the end, Pinnacle will walk away and the authority will be able to sustain the service."

... you want to make sure your existing service is value for money
Enlisting an outside company to provide some of your service can provide a useful comparison with your in-house service.

In 1997, Hackney council outsourced housing management in two of its seven neighbourhoods to Paddington Churches Housing Association and Pinnacle.

When it did a best value review in 2002, it found the in-house service wanting. "We spent a lot of time and money on the in-house service and there were improvements but they weren't sustained," says councillor Jamie Carswell, cabinet member for housing. In contrast, the two areas where the service was outsourced were performing far better.

Void turnaround times, for example, were under 22 days (the London average is 41). The council redrew the boundaries of its seven neighbourhoods to create five zones and opted to bring in outside suppliers to take on the rest of the service. The decision was made equally on price and quality, and half the members of the selection panel were tenants.

This month, seven-year contracts worth £4.5m begin in the remaining three zones. Private company Mouchel Parkman will take on rent collections, antisocial behaviour and tenancy management in two, and Paddington Churches will extend its existing service to another one.

... you want a locally focused service
Johanna Holmes, director at consultant Hacas Chapman Hendy, says outsourcing might be appealing to RSLs whose stock is spread over a wide area. "It's more difficult to achieve high standards of service over 60 local authority areas," she says. "Pockets of dispersed stock could get a better service from a local landlord."

Outsourcing appealed to Westminster for the same reason. "We wanted there to be local management on estates," says Nigel Brooke, chief executive of CityWest Homes, the arm's-length management organisation Westminster set up in 2002. "Using a provider at a local level gives it a real focus that a bigger organisation can't have when you've got 1000 staff."

Now there are 1300 staff working on the estates, but only 180 in the ALMO and 25 working on strategy in the council. A typical housing management outsourcing contract might cover 5000 homes, but Westminster has estate-based agreements for about 1500 homes each with six companies and RSLs. The smallest, with Threshold Housing and Support, covers only 200 homes. In 2001, it graduated to more complex "single source contracts" that package all the front-line services on an estate – including repairs, street cleaning and capital works – to be carried out by one provider. In total, the council spends £100m a year on its estates, £62m of which is on major works.

"One of the benefits of our approach is that it gives us stability. If one provider goes down we can easily work with others," says Brooke.

... you want some help with your homelessness service
Councils leasing properties from the private sector to use as temporary accommodation might also turn to an outsourcing provider to manage them, as the London Borough of Haringey has done. In its race to meet the ODPM's 1 April deadline for moving all families with children out of bed and breakfasts, the council has leased 200 homes on three-year contracts and brought in Circle 33 to run them. The RSL manages the relationships with private landlords, collects rent and carries out repairs. "A lot of councils do it themselves, but outsourcing the management is increasingly common," says Kathrynne Bickers, head of Circle 33 Homes.

When not to do it But outsourcing isn't a good idea if you can't show that there are overwhelming benefits for tenants. Under procurement law, councils have to show they have the support of the service's customers, and the Housing Corporation expects RSLs to do the same. Hacas' Johanna Holmes says: "Even if you're not actively balloting tenants, unless there is a really convincing case, you're on a hiding to nothing because tenants won't agree," she says. "All the evidence shows they take the view, better the devil you know."

Jamie Carswell at Hackney council agrees. "It's about where you need a service improvement. It's not a dogmatic response," he says. "Changes for change's sake make for a bad thing."