Energising asset management in the social housing sector
Author: Luke Smith Date: 25/05/2016
The social housing sector is diverse in both the number of providers that operate within it and the range of activities each one undertakes. In total, there are around 1,500 Registered Providers managing approximately 2.7 million units, worth in excess of £375 billion. It is a highly influential sector that drives innovation and quality standards across the housing market.
However, one only has to glance through the regulators Sector Risk Profile to appreciate the increasing demands being placed upon Registered Providers, their existing assets and their new build development programmes.
The need to cut social rents by 1% per annum to 2020, combined with Welfare Reform (Universal Credit, benefit cap changes, Pay to Stay, under occupancy), reduced local authority funding for supported living, Right to Buy, and pressures to simultaneously increase new supply are just some of the challenges the sector faces.
Whilst we at the National Energy Foundation are known for supporting Registered Providers in understanding the energy performance and improvement potential of their portfolios, and also helping to enhance the quality and performance of new build, we acknowledge that energy efficiency is only part of the picture. The crucial question therefore is how can energy efficiency investment possibly be kept on the agenda when there are so many other business-critical pressures?
We are currently working alongside a number of prominent Registered Providers to explore new ways of answering this question. The obvious solution is to ensure that such investment is underpinned by a clear business case. This requires a Registered Provider to think more holistically about its portfolio, understanding which assets are performing well, which no longer align with organisational objectives and which might truly benefit from investment. With appropriate investment, certain assets could, for example, benefit from:
- Reduced tenant turnover and complaints.
- Lower risk of arrears.
- Reduced maintenance requirements.
- Extended service life.
It’s all about being far more strategic, and investing in the right properties for the right reasons.
This approach shifts the driver for low-carbon retrofit from a nice-to-have programme, to becoming a fully-integrated investment decision that makes sound commercial sense. And, whilst acting in a financially sustainable way is of course critical, Registered Providers are also social not-for-profit businesses that exist to meet the housing needs of those who cannot provide for themselves in the open market.
If wider social and environmental return on investment can therefore be factored in at the same time, the argument can, of course, become even more compelling.
Our work has shown that enabling the connection between energy efficiency and sound commercial decision-making relies on data. However, asset, resident and housing management data is rarely brought together to fully inform investment decision-making and, if it is, there tends to be a culture of siloed thinking. For instance, financial, social and environmental issues are all too often looked at individually by different departments, and rarely considered as a whole.
To overcome this compartmentalised thinking, we at the National Energy Foundation are currently working with the Joseph Rowntree Housing Trust (JRHT) and others to develop and implement an integrated approach to asset information management. The iAIM project draws upon our expertise of working with data and data analysis models to review current approaches to asset information management in the social housing sector, and identify the role that PAS 1192-3 and other asset management standards can play in helping to drive innovation.
A final report will be published this summer, but having already taken a step back, appreciated the organisational objectives of JRHT and their true asset information needs, we have identified a broad opportunity for optimising asset information management practices. Subsequently, determining the best ways in which to collect, store and process data has helped to craft a holistic approach (iAIM) that enables us to determine much more readily the overall performance, any investment and divestment opportunities, and any risks associated with assets. We recently attended the annual SHAP (Social Housing Action Partnership) conference and gave a presentation about the iAIM project and the functionality of the BETA stock performance appraisal tool that’s under development.
Linked to the data theme, the National Energy Foundation is also working in partnership with National Energy Services where we are offering a ‘Data Health Check’. The purpose of this is to help Registered Providers to review and improve the quality and completeness of their housing stock data. Following a ‘Data Health Check’, we can work with you to better understand the performance of energy, the wider asset and the neighbourhood.
Understanding the use of energy in buildings remains our specialism, but assisting Registered Providers to establish a robust data position has always worked hand-in-hand. We recognise the stiff challenges faced by Registered Providers but we also see great benefits from helping our clients make best use of their assets, and we are optimistic about being able to demonstrate even greater value through promoting a more integrated approach to asset information management.