Strategic Asset Management to Deliver Modern Living
Asset Management Strategy 2015 – 2018
Contents
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1. Context
p3
2. Background
p4
3. Current situation
p4
4. Drivers for change
p8
NCC’s strategic objectives
p8
YHN’s business strategy and YHN Board’s local priorities
p10
The investment plan approved in September 2012
p10
Demographic, political and environmental factors
p11
Environmental Sustainability
p11
5. Priorities
p13
6. Sustainability of assets under HRA self-financing
p16
7. Asset Management methods
p18
Current Stock
p18
New Developments
p18
8. Equality and Diversity
p19
9. Monitoring and review
p19
Appendix One: Investment Programme
p20
Appendix Two: Your Homes Newcastle Environmental Sustainability Policy Statement
p26
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Context
This strategy outlines our medium and longterm approach to maintaining and improving Newcastle City Council’s (NCC) Housing Revenue Account (HRA) assets. It shows how our management of assets supports NCC’s strategic priorities and the YHN Business Strategy. The rent we collect allows us to deliver services to customers, carry out repairs and maintenance and cover management costs. Since the HRA “self-financing” settlement in April 2012, the rent collected from tenants is also used to invest in the housing stock to ensure it is sustainable, desirable and continues to generate money in the future. At a valuation of £740m, the HRA’s dwellings and other buildings are key assets for NCC. Successful planning for their future is vital for the sustainability of the HRA. Although the overall level of investment will be largely determined by the financial strategy for the HRA, this strategy directs how investment funds will be spent. It will show how we will maintain and invest in NCC’s housing stock over the period 2015-18. It will state the investment priorities and the principles of decision-making that will enable us to maximise the quality, sustainability and value of HRA assets.
YHN review Following the review of the management of Council-owned housing in Newcastle, financial oversight of the HRA is now supported from within NCC. The NCC Finance team now have a holistic view of all of the resources available to the City. The HRA currently invests around £50m each year maintaining the quality of existing housing stock and undertaking new developments. It is a key financial lever to help deliver the strategic aims of the City. YHN also manages spend of around £20m carrying out routine repairs to properties.
This Asset Management Strategy is intended to be the key document that communicates our priorities to our stakeholders, but also as a working document for YHN officers to carry out the day to day work of delivering the HRA investment programme. By approving this strategy, Cabinet will be approving the principles by which YHN staff will develop and deliver investments.
NCC’s role NCC finance will now be responsible for preparing the overall budget for the HRA, including setting the level of annual investment to be approved by Cabinet. NCC will set the total level of investment and approve the annual programme under priority headings. The performance of the HRA capital programme will be monitored through reports to IDG (Investment Development Group) and Cabinet. Key changes to the capital programme (as defined by NCC) will be reported via IDG to Cabinet. New schemes and increases to the programme with financial implications above limits set by NCC will be approved by members via IDG and Cabinet.
YHN’s role YHN staff will continue to be responsible for managing and delivering the HRA capital programme within the bounds and direction set by Cabinet. Cabinet will have assurance that the HRA investment programme is being managed to deliver the City’s priorities, meet the needs of tenants and maintain financial sustainability. Associated YHN documents are: • YHN Business Strategy • YHN Finance Strategy • Environmental Sustainability Policy Statement • YHN Procurement Strategy 3
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Background
YHN was set up as an Arm’s Length Management Organisation (ALMO) in 2004 to manage council properties, improve housing to the government’s Decent Homes Standard, and provide a range of support services for NCC. Under the terms of our management agreement, we are required to manage, maintain, renew or replace NCC assets specified in the agreement, and any assets we need to acquire and use to provide services required. Our current management agreement runs until 2016 and any changes to the agreement after 2016 will be reflected in updates of the Asset Management Strategy and accompanying action plan. In 2009 NCC and YHN set up Leazes Homes Ltd to provide high quality, affordable accommodation to people in need.
Leazes Homes is now an independent charity and is registered with the Tenant Services Authority as a provider of social housing. YHN provides housing management services to Leazes Homes, but this does not include responsibility for investment decisions. Leazes Homes assets are therefore outside of the scope of this strategy. The Byker Community Trust (BCT) was established in July 2012. Around 2,000 NCC properties in Byker were transferred to the Trust and these properties are managed through a management agreement with YHN. YHN does not set the asset management strategy for BCT.
Current situation Since 2004 we have: • delivered a £590 million investment programme to bring nearly all stock up to the Decent Homes standard; • developed a sustainability analysis process to drive forward investment, and more recently introduced a Net Present Value (NPV) process to assess the long term profitability of our assets and aid future investment decisions; • worked in conjunction with Leazes Homes and NCC to address demand by building or acquiring 361 properties in Newcastle. • spent around £26.4 million per year on repairs and maintenance to NCC housing stock • delivered a range of environmental sustainability improvements, including cavity wall insulation,
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loft insulation, external wall insulation to ‘hard-to-treat’ properties, solar photovoltaic, solar thermal systems, heat meters and installed biomass boilers • maintained high levels of customer satisfaction. Our survey of tenants and residents carried out in 2014 identified overall satisfaction of 87.5% and satisfaction with the overall quality of their home as 82.3%. Our previous Asset Management Strategy (200912) drove the completion of the Modern Homes Programme. Upon completion of the Programme, YHN Board and NCC approved a four year investment plan for stock that has been the basis of this strategy, along with other drivers for change.
The following HRA assets fall within the scope of this strategy. • 26,239 units of rented housing stock, and surrounding areas. • 4,066 non-housing assets (including garages, community flats, community buildings, HRA shops and other HRA land). YHN also manages 1,516 leasehold properties that have been sold under the Right to Buy. We are responsible for the structure and exterior of these properties, which includes any necessary repairs and maintenance, major works and improvements. All leaseholders are charged an annual service charge which covers their share of the cost of providing services to the block where their property is located. This could include lift maintenance, concierge, door entry system maintenance or communal lighting depending on what is provided to the block. All leaseholders also pay a buildings insurance premium and a management fee to cover the cost of running the leasehold service. This is a flat fee that covers the cost of running the leasehold service. 4
Rented housing stock 2014 Houses and bungalows
57
3,970
964
265
9,373
3,955
75
592 1 bedroom house
1 bedroom bungalow
2 bedroom bungalow
2 bedroom house
3 bedroom house
4+ bedroom house
3+ bedroom bungalow
Flats and maisonettes
Total stock
60
3,792
5,590
Bedsit
1 bedroom
2 bedroom
25,474
736 3+ bedroom
Sheltered housing stock 2014 Houses and bungalows
1
102 1 bedroom bungalow
6
16
2 bedroom house
2 bedroom bungalow
3,955
3+ bedroom house
Flats and maisonettes
235 Bedsit
3,955
3,955
3,955
359
39
7
1 bedroom
2 bedroom
3+ bedroom
Total stock
765
Non-housing assets
Total stock
3,955 3,838
14
4
22
Garages
Community flats
Community houses
Community buildings
188 HRA shops
4,066
Figures correct as at 1st October 2014.
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CASTLE 514 Properties 1.96%
WOOLSINGTON 1626 Properties 6.20%
F 1 6
WESTERHOPE 285 Properties 1.09%
KENT 1772 P 6.75%
NEWBURN 1071 Properties 4.08% DENTON 1257 Properties 4.79%
BLAKELAW 1495 Properties 5.70%
FENHAM 1139 Properties 4.34% LEMINGTON 874 Properties 3.33%
± © Crown copyright. All rights reserved. Newcastle City Council, 100019569, 2014.
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BENWELL and SCOTSWOOD 1514 Properties 5.77%
HRA HOUSING STOCK MANAGED BY YHN KEY Ward Benwell & Scotswood Blakelaw Byker Castle Dene Denton East Gosforth Elswick Fawdon Fenham Kenton Lemington Newburn North Heaton North Jesmond Ouseburn Parklands South Heaton South Jesmond Walker Walkergate West Gosforth Westerhope Westgate Wingrove Woolsington Total
PARKLANDS 138 Properties 0.53%
FAWDON 1692 Properties 6.45%
TON Properties %
WEST GOSFORTH 168 Properties 0.64%
EAST GOSFORTH 332 Properties 1.27%
SOUTH JESMOND 191 Properties 0.73%
WESTGATE 1499 Properties 5.71%
1514 1495 1273 514 138 1257 332 1862 1692 1139 1772 874 1071 439 33 1421 138 759 191 3513 1080 168 285 1499 154 1626 26239
% of Stock 5.77% 5.70% 4.85% 1.96% 0.53% 4.79% 1.27% 7.10% 6.45% 4.34% 6.75% 3.33% 4.08% 1.67% 0.13% 5.42% 0.53% 2.89% 0.73% 13.39% 4.12% 0.64% 1.09% 5.71% 0.59% 6.20% 100.00%
DENE 138 Properties 0.53%
NORTH JESMOND 33 Properties 0.13%
WINGROVE 154 Properties 0.59%
HRA Stock in Ward
OUSEBURN 1421 Properties 5.42%
NORTH HEATON 439 Properties 1.67%
SOUTH HEATON 759 Properties 2.89%
BYKER 1273 Properties 4.85%
WALKERGATE 1080 Properties 4.12%
WALKER 3513 Properties 13.39%
ELSWICK 1862 Properties 7.10% JJ YHN - GIS Arcmap/Ward Information/ All Wards - Oct 2014 - 13/10/2014
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Drivers for change
The strategy sets out the principles of our current plans for NCC’s housing stock and guides our decisions on future investments. Much has changed since our last Asset Management Strategy in 2009 and this updated version reflects the following influences: • NCC’s strategic objectives; • YHN’s business strategy and local priorities; • The investment plan approved in September 2012; and • Demographic, political and environmental factors. The priorities arising from these considerations are identified in Section 5. These need to be tested against sustainable investment under the HRA self-financing regime.
NCC’s strategic objectives Two of NCC’s priorities for the city are: • Decent neighbourhoods; and • Tackling inequalities. NCC’s indicators for achieving decent neighbourhoods are directly supported by this strategy:
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• Everyone feels they live in a clean, safe, friendly neighbourhood with the chance to live a healthy lifestyle and the support that meets their needs. • Everyone is able to have a choice of a home that is warm, dry and meets their needs. • Everyone feels responsible for the area where they live and for looking after their environment. NCC has taken a report to Cabinet on 24 September 2014 on their Housing Delivery Programme and Land and Asset Plan. This report identifies the following priorities: • Development of specialist housing for older people and those with care and support needs • Continuation of investment in empty property to return it to residential use • Replacement of existing stock with more sustainable housing and to diversify the local neighbourhood • Investment in affordable housing to promote mixed tenure communities
The delivery of various programmes within YHN’s Asset Management Strategy will improve the quality and accessibility of the city’s rented offer. The city requires a diverse housing offer to retain and attract new households and to meet the changing needs of the population demographic. In particular this means high quality rented housing that will assist older residents and those with care and support needs to remain as independent as possible for as long as they choose. YHN has the financial capacity to continue to offer rented housing where service and rent charges are more affordable than some other housing providers and certainly a good deal lower than market rents in the private sector. In particular, this strategy must complement NCC’s own Strategic Capital and Asset Management Plan. This Plan includes the Local Development Framework, the Newcastle Gateshead Economic Masterplan and the NCC Regeneration Strategy which identifies housingled regeneration priorities.
‘A green and sustainable Newcastle’ is also a key area for NCC. We can directly influence this by improving the environmental performance of the HRA housing stock. At a minimum our role extends to increasing energy and water efficiency of stock, educating tenants and staff to encourage behavioural changes, and ensuring the methods and construction materials used by our contractors are environmentally sustainable and maintaining and improving the ecological capacity of housing and non-housing assets. We recognise that improving environmental performance is essential from both a moral and legal perspective and we will work hard to maximise the impact of our planned investment while also identifying and securing external funding that may become available to support progress in this area. Financial efficiencies are an equally important consideration in our current operating environment. Therefore, by identifying the potential benefits to the health and social needs of the city’s residents, we can develop a strategy which meets those needs and achieves NCC’s efficiency targets.
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YHN’s business strategy and YHN Board’s local priorities Our 2013-16, Business Strategy is built on our statement of purpose to ‘enable positive living for people in our homes and neighbourhoods’. The link between investing in housing and improving lifestyles is clear: proper maintenance and investment in the assets as well as their external environment directly impacts on the daily lives of our customers. The corporate objectives that underpin our statement of purpose are also supported by this strategy: Make the money deliver: a strategic approach to investment ensures assets retain value, product lifespans are maximised and rental income is secured.
£
Create homes and neighbourhoods we all can be proud of: maintaining homes beyond the minimum standard provides homes that customers value, while extending investment to communal areas benefits the neighbourhood and can contribute to a sense of pride in the community. Work together to realise a brighter future: partnership working and community consultation is key to the long term management of HRA assets. In April 2014, as part of the preparation for this new strategy, YHN Board discussed issues and solutions that they thought should be incorporated into the action plan. Some of the issues were: • Remodelling & new build with modern space standards, lifetime homes to appeal to existing and new residents • Have a strategic plan in place to invest in sustainable areas and stock • Access to internet and improved digital inclusion • Improving space standards • Improving communal areas • Ensure the appropriate level of stock • Fit for purpose stock both now and for the future 10
Overall, the Board felt that our action plan should focus on quality rather than quantity in terms of protecting and improving assets. In July 2014, consultation was also carried out with the Tenants Investment Forum within the Tenants Federation. The issues they identified mirrored those raised by YHN’s Board.
The investment plan approved in September 2012 Following the completion of the previous Asset Management Strategy in 2012, which focused on modern homes, the following themes were identified by YHN Board: • Maintain our properties to the obligatory standard as a minimum • Create a high quality environment on estates and in blocks • Regenerate stock to ensure it adds value to our portfolio and is fit for and contributes to modern living • Build new homes to meet the needs of the city These themes continue to be a focus for our Investment Programme. Some actions within these themes have already been completed for example all our stock now has double glazed windows. Any actions which are still ongoing are included within the Investment Programme.
Demographic, political and environmental factors Meeting customer requirements: Many tenant priorities for investment have been delivered by the Modern Homes Programme, some that were not requirements of the Decent Homes Standard are still outstanding. These areas, alongside priorities identified in more recent consultations, have guided the development of our current investment programme. Changing needs of the population: The demand for family homes has long been recognised and will continue to be a requirement of the local population. Additionally, demographic projections indicate that the demand for older people’s accommodation will continue to grow as people live longer. This will put demands on us not only in terms of the number of properties, but also the type of properties and services that we must offer to meet customers’ increasingly complex needs. There is also growing demand for homes that enable vulnerable groups to live independently within supported accommodation.
Environmental Sustainability Our Environmental Sustainability Policy Statement was adopted in August 2014 (see Appendix two). This statement sets our vision for achieving an excellent standard of environmental performance, as well as our commitment to place environmental sustainability at the heart of our decision making and achieve industry best practice. This means environmental sustainability will be an important consideration in everything we do. We have set out the priority areas that we will address in our environmental action plan. Within each priority area we have set short-term targets to improve performance and will review these biennially to ensure on-going relevance and to address emerging challenges. At a macro scale recent changes in regulation mean we must now start planning our future new build and retrofit schemes to ensure our properties remain marketable. For example, we know new housing will need to be built to Zero Carbon standards from 2016.
Welfare Reform: The government’s reforms to the benefits system began to come into effect in April 2013 and included stricter Housing Benefit criteria (such as under-occupation penalties) and direct payments to recipients. We have undertaken a lot of work to prepare for these changes and the impact they will have on our customers. The main issues we face are; reductions in the amount of rent collected, changes in demand for certain property types and an increase in turnover and number of voids. For example, the under-occupation charge has increased the demand for one-bedroom properties, and decreased demand for two bedroom flats particularly in less-desirable multistorey blocks. This strategy needs to anticipate potential changes in demand to enable us to plan investment appropriately.
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We also have a responsibility to assist with delivery of national carbon dioxide emission reduction targets and recognise that the performance of our stock must improve further. Current evidence suggests existing stock must meet Energy Performance Certificate (EPC) band B (with a minimum Standard Assessment Procedure (SAP) score of 86) to achieve this. We believe future legislation will drive this target, with minimum energy efficiency standards for private rented sector housing due to be finalised in 2015. On this basis we are planning for all stock to achieve minimum EPC ratings of:
Similarly it is now clear that Climate Change will present greater challenges to our tenants and our own service delivery.
• D by 2025 • C by 2030 • B by 2050
Fuel poverty is where a household struggles to pay energy bills. This is a situation that has become increasingly common in recent years, driven by high energy prices and stagnating incomes. Research (e.g. Marmot Review, NHS Sustainable Development Unit) has highlighted the serious health impacts of fuel poverty.
For example, extreme weather events such as heavy rainfall are short-term but very disruptive, damaging properties and causing distress to tenants. We must build adaptive capacity within our stock and services for these and similar situations to minimise the level of disruption so that we can continue to deliver high quality services. Fuel poverty:
To tackle fuel poverty we must improve the energy efficiency of the housing stock and educate tenants to help them take advantage of living in efficient homes. Research indicates that to ‘fuel poverty proof’ a property an EPC rating of B must be achieved, echoing the future targets carbon emissions. Our Environmental Sustainability Policy Statement and action plan will drive our work to tackle fuel poverty.
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Priorities
5
Following consultation the following priorities have been identified in addition to our statutory responsibilities and key drivers for change.: 1 Ensure our investments are sustainable
Why
Targets
Make the money deliver: a strategic approach to investment ensures assets retain value, product lifespans are maximised and rental income is secured.
• Complete annual NPV/sustainability analysis to identify unsustainable stock. • Implement investment appraisal framework by December 2014 to understand the financial sustainability of our investments.
2 Maintain decency & landlord obligations
Why
Targets
The starting point of the investment programme is to ensure we are meeting our statutory responsibilities such as gas servicing, fire safety, lift refurbishment and other health and safety issues to ensure our tenants remain safe. Also forming a main part of the programme is our commitment to maintain decency of our housing stock and fulfilling the obligations set out in our current management agreement with NCC.
• Carry out a quarterly review of our Investment Programme (appendix one) to ensure it meets our statutory responsibilities and fits the priorities within the AMS. • Deliver 3,500 life cycle improvements by 31/03/2016. • Carry out a annual review of KPI’s within the Repairs and Maintenance contract. • Review high cost repairs and maintenance and high frequency components on an annual basis to ensure spend to save programmes can be developed. • Review Health and Safety audits on an annual basis to identify a budget allocation in the investment programme to meet all statutory requirements. • Review tenant satisfaction with our Investment Programme on a quarterly basis to ensure our Contractors provide a service which meets the needs of our tenants.
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3 Meet future demand & demographics
Why
Targets
The demand for family homes has been long recognised and will continue to be a requirement of the local population. Additionally; demographic projections indicate that the demand for older people’s accommodation will continue to grow and it has been forecasted that there will be a growth in over 85’s of 31.8% between 2012 and 2021. This will put demands on us not only in terms of number of properties, but also the type of properties and services, that we offer.
• Implement process for measuring demand to support NPV/ sustainability analysis for future investment decisions by March 2015. • Identify strategic options to tackle low demand stock by March 2016.
4 Work in partnership & encourage employment
Why
Targets
The investment programme can provide opportunities for jobs/training with YHN and its partners, and through current apprentice-led schemes.
• Each major procurement to include training and employment requirements.
Partnership working and community consultation is key to the long term management of HRA assets.
• Develop a system to monitor training across all procurements by 31st March 2015.
YHN is working with North East Procurement who have specific training and apprenticeship targets for any projects which are delivered through the consortium.
5 Invest to improve our environmental sustainability performance
Why
Targets
We have an obligation to work towards national carbon emissions reduction targets, which translate to achieving Energy Performance Certificate (EPC) B by 2050 for all stock. To achieve this we will work towards the targets of:
• Complete a comprehensive feasibility study to identify technical and financial issues relevant to EPC targets by March 2016.
• All stock EPC D by 2025 • All stock EPC C by 2030 • All stock EPC B by 2050 We know that many HRA tenants are currently living in or at risk of fuel poverty. Levels of fuel poverty are likely to increase as energy bills continue to rise and other political factors have the impact of reducing income for many tenants. The condition can reduce the likelihood of our tenants falling into fuel poverty.
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• Develop an action plan to guide improvements to all stock in line with future EPC targets by March 2017. • Annually monitor and report SAP scores for all stock to support progress towards targets.
6 Build friendly & safe neighbourhoods
Why
Targets
Maintaining homes beyond the minimum standard provides homes customers value, while extending investment to communal areas benefits the neighbourhood and can contribute to a sense of pride in the community.
• Meet with the tenants panel twice yearly to ensure priorities are identified and approved for participatory budgeting. • Implement a process to prioritise tenant led aspirations for environmental and communal improvements by 31st March 2015.
We need to deliver projects which are a priority for our tenants. To do this we have established a Participatory Budget to enable our tenants to make decisions on which projects are delivered. 7 Invest to reduce repair costs and make good decisions on voids
Why
Targets
The investment decisions we take have the ability to reduce the need for on-going repairs and maintenance.
• Invest annual budget to ‘spend to save’ projects that will reduce on going R&M costs. • Review high cost repairs and maintenance and high frequency components on an annual basis to ensure spend to save programmes can be developed. • Develop a process for reviewing voids by 31st March 2015. • Explore opportunities for selling one off high value properties by 31st March 2015. • Monitor the 2015/16 actions identified in the end to end void process review.
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Sustainability of assets under HRA self-financing
In April 2012, the HRA subsidy system was abolished and we moved to self-financing. This brings greater freedoms to plan for the future, but also a greater responsibility to ensure our business plans are sustainable and make good financial sense. Under this new system, the rent we collect is used to pay for all the services provided to tenants, repairs and maintenance costs, re-investment in our assets and servicing the costs of the debt. The “affordable” level of debt allocated to the HRA in 2012 was calculated by analysing the Net Present Value (NPV) of all the council housing stock in Newcastle. The NPV is a calculation in “today’s money” of all the income and costs associated with owning and managing stock over a period of 30 years. The NPV of individual properties will be affected by: • • • • •
The rent charged; The expected repairs and maintenance costs; The expected level of rent arrears; The void rates; The management costs including any service charge costs and income;
Different properties will have different NPV values depending on the factors above. Properties with a higher NPV are the HRA’s more valuable assets; they will generate more money and allow the HRA to sustain higher levels of debt. Properties with low or negative NPV are low-value assets that do not add positively to the HRA’s business plans.
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We can improve the total NPV of our stock by: • replacing stock that is lost through demolitions and the Right to Buy with financially sustainable new developments; • regeneration of properties and their surrounding areas to ensure they are welcoming places to live, and so maintain tenant demand now and in the future; • updating our properties to a modern specification to reduce future repairs and maintenance costs; • formulating a policy for dealing with void properties that takes into consideration the demand for that property; • working more efficiently and improving rent collection performance. We can also explore the opportunity to sell properties that would achieve a high price on the open market, and use that money to provide an increased number of HRA dwellings through stock acquisitions or new build. The opportunities to invest in new build properties within the HRA is limited by access to grant funding and the Right to Buy policy, which greatly affect the sustainability of any potential development. Any such opportunities will not be analysed in isolation – NCC may wish to use another partner (such as Leazes Homes) to facilitate the build.
NPV analysis is the key measure to understand the financial sustainability of our investments, and we will ensure that all new major projects which provide new units are assessed using this method. By comparing the current NPV of a set of properties to the cost of development and the new NPV, we can ascertain whether the project has a positive or negative impact on the HRA’s finances.
NPV analysis - making decisions about our housing stock Improve
Maintain
NPV Values
Replace?
Schemes across the city The investment programme each year also needs to be set with reference to the Statutory Borrowing Limit set by DCLG. The level of debt the HRA can take on is limited by law, so the planned annual investment should not put this limit in jeopardy. It should be noted that although the HRA’s 30 year plan includes contingency for the impact of Welfare Reform, these budgets will be reviewed annually and are subject to change if external factors have a greater adverse impact than expected.
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Asset Management methods
Current Stock We have a vast amount of knowledge about our stock condition. The information is held in our live asset management system, APEX, which is regularly updated through stock condition surveys carried out by our in-house Technical Services function, capital investment completions, works completed when a property is void through repairs and maintenance. Three key elements of the investment programme are our statutory responsibilities such as gas servicing, asbestos, water hygiene, fire safety, lift refurbishment and other health and safety issues; our commitment to maintaining decency and fulfilling the obligations of our management agreement. In future we expect energy efficiency standards to become a regulated obligation. Also forming a main part of the programme is our commitment to maintain the decency of our housing stock and fulfil the obligations set out in our current management agreement with NCC. To ensure our stock meets the needs of 21st century living and responds to the changing environment we use stock-wide NPV and sustainability analysis to compare the performance and long term financial viability of the stock. Using these processes we can identify the high performing stock and the unsustainable stock. Decisions can then be made on the longer term viability of our assets i.e. whether we continue to invest, remodel, demolish or provide new build stock. The NPV analysis can be assessed by ward, area, estate or property types. Sustainability analysis focuses on information relating to demand, popularity, stability and turnover. This analysis is also ‘reality checked’ by area based staff whose local knowledge can confirm whether the analysis reflects their experience local of their estate. Due to the nature and timescale of large retroactive investment schemes like the Modern Homes Programme there will inevitably be large peaks 18
and troughs of lifecycle investment requirements in future years. In order to avoid these intensive periods of investment we have a duty to maintain a consistent level of lifecycle investments. We structure our procurements to ensure our contractors deliver quality outcomes and promote employment and skills in Newcastle.
New Developments Any assessment of a potential new development begins with consideration of the housing needs, demands and current offer of the local area. Where there are neighbourhoods with under supply of high demand properties we will take account of this. Additionally we work closely with the Fairer Housing Unit to meet the Council’s priorities in terms of housing for people with care and support needs. We believe that where possible there should be a local housing offer for older people and those with long term disabilities in each neighbourhood. When developing new stock, it is important that our investments represent good value for money and will add positively to the HRA’s financial position. By assessing our schemes, using NPV over 30 years, and striving for financial sustainability, we can use the positive cash flows we generate to invest in more schemes in the future. A virtuous circle is created where our investment potential continues to increase. With any investment proposal a group of officers from across the organisation, come together to identify the financial and non-financial outcomes of a development. Various factors such as unit size, unit number, build types and staff resources are discussed to find the solution that will best meet our strategic goals and add to the financial strength of the HRA. Despite a negative NPV, investment that meets the priorities in the strategy may still be approved in some circumstances if it can be shown that it meets the non-financial priorities in this strategy.
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Equality and Diversity As part of the development of this strategy, an equality analysis has been carried out. The purpose of this was to assess the impact of implementing the strategy on the nine characteristic groups protected through the Equality Act 2010. The Equality Analysis shows no potential for discrimination and all appropriate opportunities have been taken to advance equality and foster good relationships between groups.
Monitoring and review
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Through our well established, robust processes we will ensure that the asset management strategy action plan is delivered through: • Monitoring individual targets for which officers are responsible through staff appraisals and regular supervision meetings • Reporting progress against the action plan to YHN’s Management Team and Customer and Service Delivery Committee • Annual reports to YHN Board • Regular updates to NCC Investment Development Group • Annual Report to NCC’s Cabinet
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Appendix One: Investment Progr The investment programme below outlines our themes, actions, resources to deliver against and the priorities these themes link with. Our established Priority Investment Calculator (PIC) ranks and prioritises schemes even when they are quite different in nature and has been used to inform the allocation of resource in line with the priorities set out in this strategy. The scoring process the calculator uses ensures both strategic and technical issues are considered when gauging a relative priority and includes health and safety as a key factor. The PIC, alongside the principal that all neighbourhoods must see a benefit from the programme over the four year span, has been used to ensure investment is balanced across the city. Again, it should be noted that the plan is subject to change and is intended to be viewed as a fluid plan that can respond to changes in circumstance or unforeseen opportunities/requirements that arise. Ref Theme How we will do this
2015/16 Resource (£000)
Theme one – Maintain our properties to the obligatory standard as a minimum 1.1
Maintain Decent Homes Standard through lifecycle replacements and essential health and safety work
Lifecycle programme
21,592
1.2
Deliver standard housing investment to ensure stock is fit for purpose
Tenant Investment Priorities
100
Energy efficiency/fuel poverty measures
4,044
Health and Safety
374
Spend to save improvements
1,000
1.3 1.4
1.5
Reduce product lifecycle
Theme two – Create a high quality environment on estates and in blocks 2.1
Improve the areas outside of customers’ homes
Environmental works on estates
8,821
Communal works in blocks of flats
2,000
Participatory budgeting
1,500
2.2
2.3
20
Involve customers in improving the area local to them
ramme
Outcome
Which priorities this links to:
Statutory obligations will be met and the ‘Decent’ standard will be maintained Outstanding priorities from the Tenant Investment Survey will be delivered The city’s carbon footprint will be reduced and tenants are less likely to fall into fuel poverty To carry out one off health and safety priorities that are identified during the year
• Maintain decency and landlord obligations • Invest to reduce repair costs • Invest to improve our environmental sustainability performance
Standard of homes will be improved and money will be saved through reduced maintenance needs
Condition and appearance of estates will be improved and tenants will be proud of where they live Condition and appearance of communal areas in flats will be improved and tenants will be proud of where they live
• Friendly and safe neighbourhoods
Customer priorities will be met
Continued overleaf 21
Appendix One: Investment Progr Ref Theme How we will do this
2015/16 Resource (£000)
Theme three – Regenerate stock to ensure it adds value to our portfolio and is fit for and con 3.1
Regenerate housing, garages and community flats
3.2
3.3
Improve older people’s accommodation
General housing reprovision
7,000
Non-housing assets programme
800
Sheltered housing remodelling
8,745
Theme four – Build new homes to meet the needs of the city 4.1
New build
3,061
NOTE: Working in partnership, encouraging employment opportunities and tackling inequalities and reflecting diversities are cross cutting priorities across each of these themes.
Theme one - Maintain our properties to the obligatory standard as a minimum There are a number of statutory requirements that we must comply with. As described in 1.3.4 above, we have allocated resource to enable us to carry out essential health and safety work (such as asbestos treatment), disabled adaptations, upgrades to communal heating schemes and other essential works to communal areas (such as electrics and plumbing). Furthermore, once achieved, we are of course required to maintain the Decent Homes Standard, and we will do this through a planned programme of lifecycle replacements that will replace elements of a property when they reach their expected lifespan (for example, 30 years for a bathroom, 15 years for a boiler).
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Regardless of our statutory requirements, we want our stock to provide not only fit for purpose but desirable accommodation that meets the needs of a modern population and that our customers want to live in. While our Modern Homes Programme has substantially improved the structure and amenities of the city’s council housing, we recognise that there is a lot that remains to be done if our existing stock is to continue to meet current and future standards beyond the life of the programme. We will carry out works that are not essential but which we know are important to our customers.
ramme (continued) Outcome
Which priorities this links to:
ntributes to modern living We will have more general needs housing that is the right size and design for modern households Assets that do not add value to the portfolio do not drain resources and maintenance of other non-housing assets is planned
• Meet future demand and demographics • Invest to reduce repair costs • Friendly and safe neighbourhoods
We no longer have to offer bedsits and supply is spread across the city
We will contribute to addressing housing demand and increase the value of our stock portfolio
• Meet future demand and demographics • Invest to improve our environmental sustainability performance • Build friendly and safe neighbourhoods • Ensure our investments are sustainable
This will be delivered through a standard housing investment programme that will deal with outstanding priorities from the Tenants’ Investment Priorities Survey (such as soundproofing and double glazing) and will help to improve the energy efficiency of properties, which will not only support YHN’s wider environmental sustainability aims, but contribute to a reduction in fuel poverty. To ensure the long term sustainability of our properties is managed as economically and efficiently as possible, we will also undertake ‘spend to save’ improvements that deliver a positive return on investment through reduced maintenance costs.
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Theme two - Create a high quality environment on estates and in blocks Our customers have told us that the condition and appearance of the environment outside of their homes is very important to them and plays a major role in creating sustainable and cohesive communities where people want to live. We will continue to invest in both the hard and soft landscaping of estates and in the communal areas of flats in order to maintain the value of our assets and meet the needs of our customers. The importance of effective contract management of our building cleaning, grounds maintenance and street cleansing Service Level Agreement with the City Council will not be underestimated, but we will also invest in environmental
improvements, using our established Priority Investment Calculator to rank requests and undertaking surveys to proactively identify priorities across the city. The opinions and specific needs of our customers are vital, however, and we will ensure tenants are also given the opportunity to influence how the environment around their own homes can be improved through a participatory budget allocation.
Theme three - Regenerate stock to ensure it adds value to our portfolio and is fit for and contributes to modern living We want to provide homes that are fit for 21st century lifestyles and meet the needs and expectations of our local population. Although some of our general needs housing stock is of a very high standard, and all will soon be ‘Decent,’ we still have a significant number of properties that are not ideal for modern households and are unsustainable in the long term. Our portfolio of sheltered housing properties represents a particular problem in terms of suitability and desirability which, alongside the changing demographic profile of our population, requires investment. Similarly, we are responsible for some non-housing assets that negatively impact on the overall value of the asset base.
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We will address these factors using: • Housing reprovision: we will invest in general needs housing reprovision using the ‘Net Present Value’ of properties to identify priorities. We will also be prepared for the possibility that stock reconfiguration may be required to deal with the changing nature of demand caused by external factors such as Welfare Reform. • Sheltered housing remodelling: we manage 25 sheltered schemes, containing 982 individual homes, of which 316 are bedsits. The schemes were built between 1924 and 1985 and for a time the model was popular but now the space standards are generally considered to be far from ideal. We will invest in sheltered housing remodelling to achieve our ultimate aim of having no bedsits, which inevitably means we will have fewer but better properties for older people.
We will also investigate other options for modernising older people’s accommodation, including converting neighbouring schemes into larger flats, demolishing the worst performing schemes, identifying poor performing schemes on land with capital value and possibly converting some properties into general needs flats to help with the impacts of Welfare Reform. • Non-housing assets: there are some garages, community flats, community buildings and shops that are included within the Housing Revenue Account portfolio that we manage.
The maintenance of these assets has been delivered out of the Housing Revenue Account, which has diverted resource away from housing assets. Some of these assets are essential to service delivery and worth this expense; however we must ensure all assets add value to the portfolio. We will review our non-housing assets and ensure only sustainable and valuable assets are retained then plan the maintenance of these. We will also investigate the potential to generate income through the sale of freehold shops.
Theme four - Build new homes to meet the needs of the city Regardless of how much we would like to or are able to invest in existing stock, we know that building new homes is required to truly meet the needs of the city, both in housing and economic terms. We have been successful in introducing new homes into the city through a new build programme in conjunction with the City Council and Leazes Homes. Coupled with a small number of acquisitions, this has contributed to meeting some demand.
We will continue to support our partners to deliver new build schemes, but we will also undertake new build activities of our own, focussing on products for which there is a need but which are not always available in the market. This will be delivered using funding from the Homes and Communities Agency, Department of Health and the Housing Revenue Account. New properties will be built to Code for Sustainable Homes level 3 as a minimum, and employment and training targets and initiatives will be included into new build and stock acquisition projects.
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Appendix Two: Your Homes Newcastle Environmental Sustainability Policy Statement Your Homes Newcastle currently manages 26,239 rented and 1,516 leasehold properties on behalf of Newcastle City Council.
Vision We want to achieve an excellent standard of environmental performance, improving the quality of the homes we manage, products we procure and support we offer to customers. This will help us to continue delivering high quality services to all customers, while reducing the environmental impact of the work we do.
Commitment We will integrate environmental sustainability into the heart of our decision making processes. We will not only comply with all relevant local and national policy and legislation, but exceed minimum standards and achieve industry best practice.
Objectives We have established a programme to review and monitor our environmental performance. To guide future improvement we have identified and adopted the following objectives: • Understand and adapt to the impacts of climate change • Improve energy and water efficiency of dwellings and office accommodation • Improve environmental awareness and engagement amongst employees, customers and partners • Improve awareness of and increase the use of sustainable materials and processes. • Manage hazardous materials in compliance with regulation and seek less hazardous or non-hazardous alternatives • Reduce waste across the organisation, promoting reuse and recycling where waste is unavoidable • Tackle fly-tipping to improve the local environment and reduce pollution • Seek opportunities to enhance the biodiversity of housing stock and land to build long-term ecological capacity and resilience • Promote sustainable transport options for employees and partners • Undergo regular external assessment of our activity and achieve a Gold level award through the Sustainable Homes Index For Tomorrow by the end of 2016 The Environmental Sustainability Coordinator is responsible for implementing and developing this policy. Progress will be driven through a detailed action plan, setting specific time-bound actions for each objective. The policy and the action plan will be reviewed biennially.
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Your Homes Newcastle Limited. Registered in England and Wales. Registration number 5076256. Registered office: Newcastle Civic Centre, Barras Bridge, Newcastle upon Tyne, NE1 8PR. A company controlled by Newcastle City Council.