News & Media
Mark Astbury – Partner at Ridge & Partners LLP, speaking with The National Housing Forum.
I joined Ridge and Partners in 2002 from the commercial sector at the height of the housing stock options appraisal process. At that time, housing providers were heavily involved in the procurement of sample stock surveys, the preparation of 30-year cost plans and the completion of various financial models. The primary driver for investment was the Decent Homes Standard.
Having come from a commercial background, there were striking similarities between that sector and social housing in terms of the questions to be considered prior to such substantial investment, such as:
- What assets do we own/manage?
- Why are these assets important to the business?
- How much is required to manage these assets?
- When is investment required over the next 30 years?
- Who is responsible for planning and undertaking these investment works?
- What is the return or improvement in performance as a result of this investment?
At that time in the social housing sector, some of these questions were answered, albeit in part, and others were not considered at all, notably question six. This was reflective of an asset maintenance approach rather than a more holistic asset management perspective. Decent Homes and the associated investment saw money spent on elemental renewals and other improvement works, but often without regard to how this was actually going to improve asset performance. Whereas a commercial organisation would want to know its return on investment before committing expenditure, in social housing we were sometimes missing that vital step and instances of spending on poor performers were commonplace.
More recent developments, notably the Budget in July 2015, brought asset management into sharp focus. Steps were needed to accommodate an unexpected reduction in rental income for the next four years. As a result, we have been undertaking more cost and business plan reviews and utilising our models to ensure that investment is being properly directed to improve assets, because we must ensure we operate as sustainable businesses.
“In undertaking the assessment of asset performance we have always been and are still reliant on robust housing stock data.”
Despite sample surveys being undertaken and strategies being compiled stating the adoption of a best practice to undertaking at least 20% stock surveys per annum, a lack of quality data in the sector is still commonplace today. Poor quality data used in any performance model only results in flawed assessments and clearly is not the basis of effective asset management. Data requirements have evolved and this needs careful consideration in terms of the survey form design and information that can be held within an asset management database. Previously many clients had surveys undertaken that collated data on components (date of installation, age, remaining life, cost, etc.), but now having moved away from a DecentHomes-focused environment, we need information that informs a more holistic asset management approach. Also, in the past, many categories of business plans were “provisional” and in many cases works were not carried out, leading to inaccurate data. Successful investment requires accurate data on issues such as structural repairs, improvements, estate works, complex M&E and related assets.
In summary, we are moving as a sector from asset maintenance to embracing more effective asset management, however the underlying data requirements are still critical and asset improvement can only be determined with reference to robust information. We are assisting many clients with achieving this goal and in better understanding asset performance and investment priorities.