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Strategic asset management for long term gain

16th April 2014

Richard McCarthy looks at asset management...

Proactive and strategic asset management are relatively new concepts to the affordable housing sector. Despite the excellent work done to meet the Decent Homes standard and to regenerate very run-down Council estates, few have really stepped back to consider how to gain the best value from their stock and consider whether more planned disposals and the replacement of existing homes might make more sense in both the overall supply and the condition of affordable rented homes. That is why the HCA is right to emphasise the importance of asset management strategies, alongside future rent policies, as part of its approach to the 2015-18 NHAP.

However, simply disposing of properties above a certain value equally lacks sophistication and, if executed without careful thought, could result in the complete removal of all affordable housing from areas where there is a continuing need. Indeed, when taken to its extreme, this could signal a move away from sustainable communities to a more segregated society. Care must, therefore, be taken not to allow short term value gains to be pursued whilst ignoring the long term implications and costs.

This is not a call to the barricades. Far from it! It seems clear that in many areas housing associations, and some local authorities could potentially unlock considerable value through a combination of targeted sales, particularly of large properties converted to flats and the redevelopment of existing clusters of homes. If managed well this will allow the development of more new homes than were previously there, built to modern building standards and functioning more effectively and efficiently as a purpose built development of affordable homes.

One option worth investigating when considering a more proactive approach to asset management, is the appointment a strategic partner who can bring skills, resources, innovation and efficiency gains as well be incentivised to support local employment initiatives and create opportunities.

Work by BDO Stoy Hayward and reported in ‘Public Procurement’ recently showed direct correlation between procurement efficiencies and improved front line services across all sectors. The work identifies a number of benefits including economies of scale, reduced processing and administration costs, access to wide pool of specialist advisors with minimal delay in appointment, and innovation and value added services.

This approach requires mutual confidence and the ability to operate a strategic service to support operational needs, rather than the operational requirement being shoehorned into the strategic straitjacket. In addition, there has to be a commitment on both sides to a transparent performance regime, aligned objectives, strategic and commercial openness and access to specialist skills and support services.

Richard McCarthy is executive director, central government and housing, at Capita

This article first appeared in Inside Housing magazine

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