Asset Management Strategy

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1 L&H Homes Asset Management Strategy 2013/18 1

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3 Foreword This document sets out the L&H Homes Asset Management Strategy (AMS) with detailed targets and outcomes for the period of This is the first Asset Management Strategy for L&H Homes since our creation in The two former companies, Longhurst Homes and Havelok Homes had strategies in place that have had continued use albeit separately over the last 2-3 years. This is our first opportunity to bring together all of our assets, including our 3 key business areas into a comprehensive strategy document and take the opportunity to reflect on our progress and achievements since We have been very clear about our strategic objectives and what outcomes we expect in order to deliver benefits to our customers and our wider business strategy. The Asset Management Strategy is for the use of staff, residents, L&H Homes Board members and any other individuals or organisation interested in the asset management service provided by us. It has been developed by a number of colleagues, in conjunction with residents, stakeholders and with third party advice and guidance. We have listened and understood our customer priorities and are currently translating these into our standards of service and local offers. Our Resident Service Review Panel structure has enabled us to consult directly with the Your Home Group whose focus is Asset Management and the implementation of a new home standard for L&H Homes. We must strike the balance between meeting customer aspirations and business needs. Through careful planning and review of our investment programmes, we ensure compliance with our legal and regulatory obligations and wherever possible meet our customer aspirations within our financial business plan and capacity. Mike Hardy Managing Director L&H Homes 3

4 Contents Page Executive Summary 7 Section One Introduction 10 L&H Homes Vision, Aims and Key Objectives 10 Asset Management Strategy Aims 11 Principles of the Strategy 11 Strategic Context and Links to Corporate Strategies 11 Section Two Our Assets 13 Property Portfolio 13 Rented Stock Shared Ownership and Shared Equity Shared Ownership for the Elderly Leasehold Schemes for the Elderly (LSE) Right to Buy Managed and Staircased Shared Ownership Flats Managed Properties Other Assets 14 Growth Strategy 15 Section Three Our Approach to Asset Management 17 Asset Management Functions 17 Condition of Our Assets 17 Decent Homes 18 Financial Investment 18 4

5 L&H Homes Limited Strategy Delivery Plan Page Section Four Delivering our Objectives 20 Existing Commitment 22 Renewable Technologies 22 New Funding Opportunities 22 National Policy - Co2 emissions 23 Gas Safety 23 Housing Health and Safety Rating System 24 Fire Safety 24 Asbestos Management 24 Electrical Safety 25 The Control of Legionella 25 Construction (Design and Management) Regulations Equality Act Section Five Funding the Strategy 30 Section Six Strategy Delivery and Monitoring 32 Section Seven Annexes 34 Annex A - Stock owned and managed Annex B - Non Residential Assets Annex C - Maintenance Repair Definitions Annex D - Average SAP by EPC band. Annex E Funding (30 year plan) 5

6 6 L&H Homes Limited Asset Management Strategy

7 Executive Summary Our Asset Management Strategy (AMS) sets out a strategic framework, within which we will manage, maintain and invest into our assets. We aim to deliver capital investment, planned/cyclical repairs and responsive maintenance to all our homes in a structured and sustainable way. This strategy is based on: A comprehensive review of the existing asset management strategy Findings from our recent stock condition survey and validation programme Best practice, in particular the Managing Assets guidance produced by the National Housing Federation L&H Homes Vision for Service Excellence Existing and future performance requirements Existing and future legislative requirements Taking opportunities to improve our assets through government initiatives and incentives Making sensible predictions on future growth The strategy identifies our 10 key objectives required to develop and maintain an effective and sustainable asset management strategy: Objective 1 To ensure all of our homes are decent Develop and publish a Quality of Home Standard moving beyond Decent Homes which is subject to biennial review Establish a 5 year stock condition survey programme for all of our assets Implementation of the Sheltered Housing Review Objective 2 To deliver an efficient and effective responsive repairs and maintenance service which provides value for money. Continue to work with our two main contractors to develop a solution for a contractor interface and direct handling of customer calls / contact Ensure risk management is embedded and operating effectively within the contract Analyse responsive repairs data to support future investment programme and options appraisal Continually improve performance and reduce costs Objective 3 To ensure that the delivery of planned and responsive works is programmed in the most efficient and cost effective way. Integrate responsive repairs data and intelligence into the Asset Management Planning Programme Review existing and future planned programme requirements Objective 4 Increase the sustainability and energy efficiency of our homes Energy Efficiency Review our SAP performance following the launch of Promaster Energy Module and the revised ratings calculations Develop clear and transparent energy efficiency targets and objectives to ensure we achieve maximum benefit for L&H and our customers Increase awareness of energy efficiency measures and a promote a behaviour change programme amongst our employees and customers In partnership with tenancy services teams develop a strategy for identifying and working with customers in fuel poverty (where possible) Renewable Technologies Complete an impact analysis of the trialled air source heat pumps and agree further pilot projects Identify funding opportunities to incorporate solar/thermal panels into the boiler and heating replacement programmes Develop specifications in partnership with our development team for installations in new properties New Funding Opportunities Proactively source ECO funding to support Asset Management Investment Programme Ensure we have clear process / policies on the Green Deal and are able to respond to customer requests Communicate clearly to all of our customers using our newsletters, website and involvement structures. 7

8 8 National Policy Co2 emissions Ensure we capture all energy data required to calculate emissions for domestic dwellings Ensure the energy module is operating effectively within Promaster Ensure we are complying with regulations in respect of our public buildings. Objective 5 To be compliant in relation to health, safety and equality Fully utilise the Gas Servicing module within Promaster Review the controls assurance and audit processes for gas servicing and production of KPIs. Complete HHSRS assessment as part of the stock condition survey Identify short / medium term financial impacts of HHSRS Implementation of fire risk assessment module into Promaster Review operational procedures aligned for Fire Safety Ensure asbestos register is fully accessible and being utilised by all contractors and 3rd parties Devise a combined stock survey programme which ensures we are fully compliant with regulations for our domestic properties. Review asbestos operational procedures Devise a 5 year electrical testing programme reaching full compliance by Comprehensive review Control of Legionella, policy and practice Complete a review of our assets to ensure DDA compliance where appropriate Ensure the SHEF principles and equality analysis programme is fully understood and delivered within the property services team Objective 6 Improve our neighbourhoods, creating safer and cleaner environment Deliver our current service standards for estate management Objective 7 Exploit and extend the use of the Asset Management Software Review the training and skills requirements of users within the organisation Play an active role within the internal User Group to ensure the product is strategic priority for ICT Establish a Quality Assurance Audit for key processes within Promaster Procurement of an options appraisal tool Objective 8 Ensure current and future procurement approaches provide and achieving value for money Review the procurement strategy and policy for L&H Complete the CHIC value for money review Objective 9 Develop an options appraisal methodology which enables us to understand the performance of our assets and better inform our investment plans and disposal strategies Develop an options appraisal tool which can integrate with our existing ICT systems and processes Objective 10 Consult and engage residents fully in the development and implementation of the Asset Management Strategy Develop the monitoring role of the Your Home Group in the delivery of the AMS Publish the Quality of Home Standard Continue to monitor satisfaction levels with all aspects of asset management Review our communication methodologies Increase customer involvement in the procurement strategy and decision making process Improve customer involvement opportunities in relation to specifying and letting service contracts Comply with Section 20 consultation requirements in accordance with the Landlord and Tenants Act 1985 as amended by Section 151 of the Commonhold and Leasehold Reform Act 2002

9 Section One 9

10 1.1 Introduction 1.2 L&H Homes Vision, Aims and Key Objectives L&H Homes is a dynamic housing and care provider, owning and managing approximately 8,500 homes across East and West Midlands, East of England and Yorkshire and Humberside. Our primary focus is to achieve, sustain and build on Customer Service Excellence. This vision is underpinned by six corporate aims: We provide a range of social rented properties, intermediate housing, low cost home ownership, leasehold retirement living, specialist registered care and accommodation based and community support services. The diversity of our business is likely to extend to market rent and for sale properties and our strategy will reflect this. Our business diversity means we manage a vast range of assets in very different operating contexts. These complexities require a clear strategic approach to asset management but one which enables flexibility for our different business areas to deliver locally and achieve their business needs and objectives. Historically our strategy has focussed on the delivery of stock condition based investment programmes with less regard given to the wider asset management issues including environmental sustainability, social and economic factors. We recognise the need to adopt a strategic approach to asset management, one which plays a significant role in business planning by understanding the long term performance of our portfolio as a whole and of each individual asset. The strategy incorporates the principles of active asset management Growth and business development delivering excellent affordable homes, care and support and management services Organisational culture and development developing a shared culture, empowering colleagues and encouraging positive relationships Communication and access furthering innovative and effective ways to communicate with customers, providing relevant business information and improving service delivery and efficiency through technology Customer insight and involvement delivering services which meet customer needs and preferences, promoting resident involvement and using customer feedback to drive service improvements Delivering quality services that meet our published standards, support and enhance local communities and demonstrate value for money Governance and viability ensuring appropriate levels of scrutiny, assessing and monitoring success and maintaining financial viability This strategy sets out: How we work with our customers to deliver decent homes and sustainable investment up to How we deliver all capital investment, planned/ cyclical maintenance, repairs to empty properties and responsive repairs. A strategic framework from which informed decisions can be made about investment in and maintaining our housing assets. How we deliver value for money and improve the service we provide to residents. 10

11 1.3 Asset Management Strategy Aims In the development and delivery of our strategy we aim to achieve: Effective stock investment: a stock investment programme designed to keep all properties to the required standard and deliver carbon reduction Active asset management: identifying properties which have poor social, economic or environmental performance, because of low demand or high costs, and either improving them or replacing them with properties which are fit for purpose Supporting wider strategic objectives: being clear where and how asset management is supporting these objectives, such as reducing financial exclusion or supporting wider community investment rates for developing new homes, changes in accounting rules and the unknown impacts of welfare reform. Our strategic response to these challenges to adopt a holistic approach to asset management which incorporates and takes account of other key strategies including: Growth Value for Money Sustainability Financial Inclusion Procurement Equality and Diversity Welfare Reform Risk management The aligning of these strategies will be covered in more detail in under Section 4 The detailed objectives of the strategy are covered in Section Principles of the Strategy Our strategy is based on the following principles: Tackling homes in the worst condition first and ensuring all of our homes are decent Programming delivery of works in the most cost effective manner Our investment programmes are driven by our stock condition data and information The Asset management strategy aligns with the Business Plan Asset management includes all aspects of repairs and maintenance, growth and stock rationalisation 1.5 Strategic Context and Links to Corporate Strategies The backdrop for developing this strategy is challenging and likely to become increasingly so over the coming years. The sector is experiencing an unprecedented level of change with increased pressures on financial resources through tougher lending criteria from funders, reduced or nil grant 11

12 Longhurst & Havelok Homes Limited financial statements Section Two 12

13 2.1 Our Assets L&H Homes own and manage just over 8,500 homes across over 30 Local Authority areas across the Midlands and East regions. We provide a range of homes and tenures including social rented properties including sheltered housing, affordable and intermediate housing, LCHO ownership, supported housing and residential care homes. In addition to our residential assets we also have a range of non-residential assets including our offices, garages and communal facilities. Please refer to section Property Portfolio A summary of our asset profile including a breakdown of stock owned and managed and geographical spread can be found in Annex A Our Rented Stock The social rented sector of our stock makes up over 70% of our overall property portfolio and requires the largest proportion of investment. The properties are widespread across our geographic operation and are managed from our area offices in Boston, Grimsby, Lincoln and Nottingham. We have a number of Sheltered Housing schemes across operations for which we have full repairing responsibilities. Over the past 2 years we have been reviewing the long term viability of these schemes and have a Sheltered Housing Strategy in place which includes specific recommendations in terms of asset management and programmed investment. We have two specialist supported schemes, STEPS and HARPS which provide short term accommodation for homeless people and prison leavers and we own and manage two care home facilities in Lincolnshire: Ashley Court is a dedicated care facility for up to 15 adults with a physical disability. Each person has their own room. All rooms are situated on the ground floor enabling independent access to the community. Cranwell Court is currently undergoing a significant redevelopment programme and on completion will provide 27 residential beds, 17 enhanced care beds for long term residents with advanced dementia, 8 shared care and assessment (SCA) beds used for respite and emergency short term placements Intermediate rented properties currently represent a small proportion of our asset profile. L&H Homes are fully responsible for the repairs and maintenance of our intermediate rented properties. The small number of Rent to Homebuy properties should remain fairly static or reduce over time as the units are purchased through the shared ownership scheme or converted to alternative tenures. L&H Homes are responsible for the repairs and maintenance of these properties whilst they are occupied on a Rent to Homebuy basis. It is our intention to develop market rent accommodation for customers who do not qualify for subsidised housing but want the assurance of renting from an experienced and reputable landlord. These homes will be developed in accordance with the growth strategy Shared Ownership and Shared Equity Generally under the terms of the lease agreement L&H Homes do not have any repair and maintenance responsibilities for these properties except for a small number of Shared Ownership flats and houses located in North East Lincolnshire. If a Shared Ownership property falls into disrepair, L&H Homes as the freeholder are able to enforce terms in the lease to make sure the resident addresses these issues. Shared Equity properties are sold on a freehold basis and L&H Homes do not have any repair or maintenance responsibilities for properties sold under this scheme Shared Ownership for the Elderly L&H Homes are responsible for the general maintenance of the external parts and structure of the building in Shared Ownership for the Elderly schemes Leasehold Schemes for the Elderly (LSE) Under the terms of the lease for Leasehold Schemes for the Elderly properties, L&H Homes are generally responsible for the repair and 13

14 maintenance of the structure of the building as well as any communal areas, communal buildings and facilities on the scheme. On schemes where there is a presence of a resident Scheme Manager, L&H Homes are also responsible for the full maintenance of the accommodation provided. Subject to the terms of the Lease, L&H Homes are also responsible for undertaking within the domestic properties on these schemes, annual gas servicing and all repair responsibilities to the heating systems. There are, however, a small number of schemes where L&H Homes are only responsible for providing an annual gas safety check. To enable relevant works to be carried out, L&H Homes are obliged to work within the requirements of leasehold legislation, including the Commonhold and Leasehold Reform Act 2002 and the compliance of Section 20 consultation in respect of qualifying works and long term agreements Leaseholders (Right to Buy Managed and Staircased Shared Ownership Flats) Leaseholders are represented by those that have purchased flats under the Right to Buy scheme or where shared owners of flats have staircased to 100% ownership; in both instances the freehold title remains with L&H Homes. L&H Homes are responsible for the repairs and maintenance of the external parts, structure and communal parts of the building. These units often form part of mixed tenure developments and as the Landlord and Freeholder, we are obliged to adhere to the legislative requirements as defined within the Commonhold and Leasehold Reform Act 2002 when procuring contracts for major works and the recovery of costs from leaseholders Managed Properties The association manages 452 units of accommodation across a range of tenures on behalf of around 20 landlords which range from individual owners through to the management of homes on behalf of other larger registered providers. These include 122 units managed on behalf of Spirita in the Lincoln area. L&H are also the Trustees for an alms house charity, Jubilee Teetotal Homes and has full maintenance responsibilities for the 4 units belonging to the charity. Where management arrangements are in place, our maintenance responsibilities are limited to the undertaking of responsive repairs, the cost of which is recoverable from the owning landlord. We are not responsible for the planning or provision of major repairs, although through our management arrangements we may agree to take on some aspects of the work, with costs again being fully recoverable from the owning landlord. In addition around 60 units of both supported and general needs housing is either managed or leased to other providers. For properties that are managed on our behalf we retain full maintaining responsibilities. Almost all of these units are for more specialist housing provision, including a small registered care home managed by Sense and two hostels managed by Lincoln Women s Aid and Boston Women s Aid. The nature of these schemes means that in some cases we may have enhanced asset maintenance responsibilities due to health and safety regulations, in particular those relating to properties in multiple occupation, as well as due to the general design, layout and service provision at these schemes. 2.3 Other Assets Alongside domestic dwellings L&H have other assets requiring on-going management and maintenance including offices, communal facilities, external areas and items such as un-adopted roads and pumping the stations. See Annex B. The strategy recognises the need to better identify all non-domestic assets, understand the short, medium and long term investment requirements of these and to ensure appropriate management arrangements are in place to minimise the liability, for e.g. applications to transfer responsibility for sewerage pumping stations to Anglian Water. 14

15 Ashfield Bolsover L&H Homes Limited Asset Management Strategy 2.4 Growth Strategy Our growth strategy has delivered a substantial level of new provision over the last 3 years resulting in an additional 400 homes for rent across our business and an increase in managed stock through agreements with other registered providers. Our business plan anticipates we will provide a further 850 homes for rent and sale by The existing strategy will develop predominantly S106 sites in the Southern parts of our operation. As part of a stock rationalisation programme we disposed of our Hull assets in 2011, therefore reducing our geographical spread and creating receipts to enable the acquisition of stock in the Holbeach and Grantham area which increased our presence in this part of Lincolnshire. In December 2012 we acquired a further 159 rented properties in the West Norfolk area. Our future growth strategy focuses on increasing provision of social housing and opportunities to offer Market rent tenures on larger development schemes in the Peterborough area. East Riding of Yorkshire Hull Derbyshire Dales Chesterfield North East Derbyshire Amber Valley 35 Broxtowe Nottingham Derby South Derbyshire Erewash North West Leicestershire Rotherham Doncaster Mansfield Gedling Rushcliffe Charnwood Leicester Bassetlaw 202 Newark and Sherwood 17 Melton North Lincolnshire 433 Rutland West Lindsey 395 Lincoln 734 North Kesteven 227 South Kesteven 470 East Northamptonshire North East Lincolnshire 1462 Peterborough 169 East Lindsey Boston 492 South Holland 651 Huntingdonshire 594 Fenland 5 THE WASH East Cambridgeshire NORTH SEA King s Lynn and West Norfolk 250 Forest Heath Breckland North Norfolk 15

16 16 Section Three

17 3.1 Our Approach to Asset Management We recognise that managing assets effectively is crucial to delivering our social landlord role, our ability to achieve our wider business aims and maintain our cultural values. The strategy covers all properties owned and managed L&H Homes and for which we have any repairs and maintenance liabilities, including nondomestic asset. Alongside considering future investment needs and when these will arise, we will also consider alternative options such as demolition, disposal and change of use or stock rationalisation to improve the financial and social value of our assets. A fundamental part of this approach is to fully implement an Options Appraisal methodology which enables us to understand the social and financial performance of our properties and make informed decisions about their future. 3.2 Asset Management Functions The strategy sets out how a range of traditional asset management functions are defined and delivered including: Capital investment (major repairs) Responsive maintenance and empty homes works Planned repairs and cyclical contracts Service contracts Aids and adaptations Refer to Annex C for more details 3.3 Condition of Our Assets In January 2012 L&H Homes commissioned property surveyors, Savills to undertake a comprehensive stock condition survey of 50% of social rented housing stock (2700 homes). Savills achieved access to 84% of these homes and completed full internal and external surveys. The properties with no access were cloned with similar property types. The survey programme targeted all properties which did not have current survey data (pre-dating 2006). The remainder of the stock data was internally validated by our internal property surveyors. The primary purpose of the survey was to assess the existing standard of our stock and to identify the investment requirements for our properties over the next 5 and 30 year period. The survey enabled us to assess the condition of our stock against the decent homes standard criteria and to drive our future investment plans to ensure we are tackling homes which are in the poorest condition first. The key findings from this survey programme identified: Underinvestment in the DHS component replacement programmes resulting in 1.2million of over-due works Substantial levels of lifecycle extensions of many components owing to satisfactory or good condition High levels of kitchen replacements Underinvestment in our other heating i.e. storage heaters The survey programme alongside the internal validation exercise has provided us with a comprehensive picture of our assets future maintenance requirements. We have collected actual property survey data for 70% of our assets and it is essential this level and quality of data is maintained and refreshed in accordance with a 5 year rolling programme. 17

18 3.4 Decent Homes 3.5 Financial Investment Maintaining all of our homes to the decent homes standard remains a requirement within our regulators National Standards for the Home. We are encouraged by our regulator to use these criteria as a minimum standard. L&H Homes historically delivered planned maintenance programmes to meet the decent homes standard and since 2009 have reported low levels of homes failing to achieve this. Year Ending % Failing Number of DHS Properties 31st March % st March % 0 31st March % 59 This strategy aims to manage and prevent future non decency and where practically and financially viable to do so, exceed this standard by replacing components in a timely manner, irrespective of whether the home is deemed non decent. We have concluded from the recent survey and validation programme that 99% of our homes meet or exceed the decent homes standard. We are estimating that 30% of our homes are potentially non-decent and are likely to become non decent within the next 5 years. Investment of 5 million over the next 5 years is required to prevent homes becoming non-decent, a key deliverable of the strategy which is to ensure all homes are in a good state of repair and have reasonably modern facilities. Our total investment into Asset Management has risen over the last 3-4 years by nearly 1million. The anticipated spend on property investment and maintenance is in excess of 8million for 2012/13. * estimated outturn Yr end Yr end Yr end Mar 11 Mar 12 Mar 13* Responsive 2,330,687 2,064,366 1,950,000 Voids 1,472,574 1,376,451 1,420,000 Planned/ Cyclical 1,433,234 1,242,020 1,440,000 Major 2,804,572 3,071,020 3,700,000 Total R&M 8,041,067 7,744,857 8,510,000 The spend profile over recent years shows we are achieving a higher ratio of planned works versus responsive repairs in the region of 56:44%. Our regulators have historically sighted between 60:40 and 70:30 as best practice. An objective of this strategy is to ensure we maximise our planned programme where is it appropriate and achieves value for money. The strategy review has included redefining our budget cost heads to ensure works and programmes are appropriately allocated. The 2013/14 budget setting process has seen revisions in these cost heads and also further refinement of the responsive maintenance contract to clearly identify items such as scheme costs and office costs. Year Year 1 (13/14) 1,470,982* Year 2 (14/15)) 81,866 Year 3 (15/16) 1,211,796 Year 4 (16/17) 268,059 Year 5 (17/18) 1,909,755 *includes overdue works 18

19 Section Four 19

20 Delivering our Objectives The objectives covered within this section apply in principle to all of our assets as described in Section 2, although there may be variances in specific tasks as required by our different tenure groups. Objective 1 To ensure all of our homes are decent We are committed to meeting the Government s Decent Homes Standard and maintaining properties above this standard where financially viable to do so. The asset management data we hold provides us with a 5 year plan for non-decent homes and an overall component replacement programme. We will integrate these plans to ensure homes which are not meeting the decent homes standard have their work prioritised. Through the 5 year survey programme we anticipate there being significant numbers of components having their lifecycles extended owing to good condition. This assumption is supported by our recent external Savills survey and our internal validation process. Our investment programmes will be driven by our condition assessments using age and lifecycles as a trigger point and for guidance and financial planning. Robust planning is critical in preventing future non decency and where possible combining works in properties where multiple component failures exist. This exercise was undertaken for 2012/13 programme and will be replicated for the 5 year programme. Our engagement with customers has influenced the standard and variety of works we provide in our component replacement programmes and has improved and created further choice and flexibility within our specifications. The L&H Quality of Homes standard is being produced in partnership with the Your Home Group. This group comprises of six elected tenants, two Board members, contractor representation and members of staff. Develop and publish a Quality of Home Standard moving beyond Decent Homes which is subject to biennial review Establish a 5 year stock condition survey programme for all of our assets Implementation of the Sheltered Housing Review Objective 2 To deliver an efficient and effective responsive repairs and maintenance service which provides value for money Since April 2011 the responsive and void maintenance and gas servicing and repairs contracts have been operated with two contracts through open book partnering arrangements. Aaron Services currently operate the gas servicing & repairs contract and Kier Services are responsible for the response & void maintenance contract. The long term nature of this partnering arrangement has required a different approach to the client and contractor relationship illustrated with a shared responsibility and risk for achievements of KPI targets and performance within budgets. In April 2012 we carried out comprehensive contract reviews for responsive and gas maintenance which had a strong focus on the financial and operational performance. The review highlighted significant costs savings of 9.7% compared with previous contractors. These cost savings are attributed to our robust procurement process and effective contract management. The contract management has been underpinned by a greater focus on expenditure and forecasting, improved budgetary control and close partnership working and innovation to achieve cost savings. Both contracts have benefited from a reduction in administration compared with the traditional value driven contracts previously being operated. The review also acknowledged in detail the operational performance issues experienced in the first 12 months of the Kier contract. Some of these are not yet fully resolved but we have taken very

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