Worthing Homes Value for money self-assessment 2015 Contents Executive summary Our achievements this year Our plans for next year Social value Strategic approach Service delivery costs and outcomes Return on assets Financial performance 1. Executive summary 1.1. Value for money means ensuring the best social outcomes using the resources available. 1.2. Our financial results show top quartile performance with an operating margin of 45%. 1.3. Our resident s survey results show top quartile performance with overall satisfaction with landlord services at 91%. 1.4. We undertake a number of activities that have a positive impact upon the lives of our residents and others in the local community. We have assessed the social value of these activities using the HACT social impact value calculator which estimates the impact of a service upon people's self-reported wellbeing. The net benefit of our community development activities in 2014/15 was 3,022,000. 1.5. Our asset management strategy and analysis of return on assets show that our homes are situated in appropriate geographic locations, include no disproportionally high value stock, and are in good condition that does not require significant investment. 1.6. Our plans for next year include our modern working agenda which will bring working practices within Worthing Homes up to the best current modern working standards and give the company a sound, cost effective platform for future working. This includes fully mobilising our service delivery teams and better information sharing across the company and better access to information and services for our residents. 1.7. In the Budget on 8 July 2015 the Government announced a number of changes which will impact on the finances of housing associations and their residents. The major announcement was that there will be a rent decrease of 1% each year for the next 4 years, starting in April 2016. This is in addition to the Government announcement to extend the Right To Buy to all housing association tenants. Given the timing this has constrained the ability of the board to comment in this self-assessment. We will be assessing and quantifying this and adjusting our approach accordingly to mitigate the impact. 2. Our achievements this year 2.1. Our financial statements demonstrate our track record in improving our operating efficiency and financial results. The operating margin has remained at 45% which is top Value for money self-assessment 2015 Page 1
quartile performance, as demonstrated by benchmarking our (2014) performance against other housing associations in the PlaceShapers group of community based housing associations. 2.2. We completed the building of 45 new homes. We have 121 new homes currently being built including a scheme containing our first new builds for outright sale which will cross-subsidise our social housing building. 2.3. Along with our residents at their annual conference we reviewed our service standards. Our revised standards reflect those which our residents placed the most importance on and voted for as enhancing their customer experience. 2.4. We are actively providing financial inclusion advice and signposting advice to our residents. Our financial inclusion co-ordinator saw 76 residents during the last year at the drop in sessions and we carried out 157 affordability checks for new and transferring tenants. The nature of the resulting advice or signposting was spread over these broad headings: 2.5. In addition to this 66 residents were helped to increase their income by a total of 100,000 either by having assistance making applications for discretionary housing payments or other benefits. 2.6. We continue to invest in digital inclusion, installing free Wi-Fi in our reception and at our sheltered schemes and accessing training for our residents via a partner organisation. Weekly IT drop-in sessions at our Resource Centre and Community House saw over 100 people get online and learn how to benefit from using the internet. Our board and our residents scrutiny panel were all given tablets and training on how to use them. All the written material they need including board and committee papers are now sent electronically saving on printing postage and staff time. 2.7. Our asset team was restructured following the creation of our new decorating team, this enabled our in house surveyors and clerk of works to work on other planned projects; as part of these changes we were able to create resources to proactively manage our servicing contracts and stock condition database. Our gas servicing was 99.96% compliant with just one property overdue at 31 March 2015. 2.8. The review of our empty homes process is in progress. The review is being carried out in order to improve both the customer experience and also to make the process more efficient and cost-effective for the business by reducing our re-let times and the cost spent on the properties. Property inspection training was delivered to our housing and maintenance teams highlighting the tenants responsibilities and ensuring we take Value for money self-assessment 2015 Page 2
action to either have properties returned to us in an appropriate condition and / or recharge costs where appropriate. 2.9. Our new Relish advisor has been appointed and several new initiatives set up as a result which we will continue to build on. A local network has been set up with partner organisations giving wider access and support to our residents and staff to help them increase their sustainability and reduce their outgoings. Cross-team training has been given to enable all employees to identify fuel poverty among our residents and tools to help them gain access to support and advice. There have been 30 visits to vulnerable residents, 20 residents have accessed the new drop-in sessions and 27 staff have accessed the advice service. 2.10. We continue to provide post occupancy support for the Smartwire powerdown switches installed, ensuring residents continue to reduce their household fuel bills. More information on this initiative can be found on our dedicated website www.relish.org including the Smartwire report. 2.11. We were successful in our Big Lottery bid for continued funding for our award winning community house. This funding of 350,000 over a 5 year period, along with the ongoing Worthing Homes funding commitment, and grants from our community partners, will ensure we will be able to deliver our innovative community activities, both at the community house and at an additional location. 2.12. Our resident involvement team were re-structured saving 40,000 per year, and activities were reviewed. New initiatives are reaching different residents and broadening our base of involved residents. 3. Our plans for next year 3.1. Our value for money focus follows the main themes of our corporate plan for the next five years of excellent customer experience, place shaping, one team and great business: 3.2. We will continue to generate surpluses to enable us to invest in building new homes with a 4.1million surplus being budgeted in 2015/16; an operating margin of 42%. 3.3. Our aspiration is to build 500 homes over the next 5 years. 3.4. We are actively providing financial inclusion advice to residents needing support managing their money. Those impacted by the reduction in the benefit cap will be contacted individually and offered support. We will continue to engage with and build up relations with other organisations, including the DWP, to ensure we can assist our residents when Universal Credit is implemented in our area. 3.5. We are investing in digital inclusion to help our residents gain greater skills on-line and via social media. This will be provided through our use of Wi-Fi and access to the internet at the community house, resource centre, and Love-it hub as well as our other schemes during 2015/16. Our Resource Centre has become an IT junction in partnership with Worthing Borough Council and will be run voluntarily by our residents who will impart their IT skills and knowledge to others. 3.6. Our modern working agenda will bring working practices within Worthing Homes up to the best current modern working standards and give the company a sound, cost effective platform for future working. This includes sustainable practices through the use of a dynamic document management and agile working. Mobile staff / visiting Value for money self-assessment 2015 Page 3
officers are to have the information they need for their visits on a mobile working device without needing to come into the office. Mobile working will also enable tasks to be completed through the mobile devices. This will increase the number of visits which can be made which will lead to improved opportunities for tenancy, arrears/rent collection and asset management. 3.7. We will be opening up more communication channels with our residents. Linking the modern working to our digital inclusion initiatives, making it easier for residents to communicate with us and to self-serve with rent and maintenance information, empowering residents and freeing up resources. 3.8. We will be investing in our staff with training in implementing and using the modern working tools. Alongside this refining and streamlining our recruitment process so we can develop and retain a highly skilled workforce. 3.9. Continuing with our empty homes process, we will be involving the local authorities to review our nomination agreements and choice based lettings systems. 3.10. A review will be undertaken of both our sheltered housing provision and our RedAssure (careline) services to gauge future needs against our current provision and the plans for supported housing in our area. 3.11. We will continue to build on our sustainability initiatives with more outreach sessions available for residents and staff and identify opportunities where we can benefit from Solar PV feed in tariffs. A viability review of our communal boilers is to be undertaken to potentially give each resident more control over their usage. The management of energy data through Keystone Asset Management will be considered with the Relish Adviser during the latter part of 2015 with a view to having this in place during 2016/17. 3.12. We will ensure we deliver a market driven product for our homes for outright sale, whilst ensuring our marketing strategy is appropriate to ensure we maximise the desirability of the properties to appeal to our future buyers. By maximising the price achievable, we can cross subsidise the remainder of the affordable housing development. 4. Social value 4.1. Measuring the social value of our existing activities provides us with an opportunity to ensure the services we deliver offer value for money and maximise the return on our investment, while meeting our organisational objectives. 4.2. We undertake a number of activities that have a positive impact upon the lives of our residents and others in the local community. 4.3. For the first time, we have assessed the social value of these activities using the HACT social impact value calculator. This calculator estimates the impact of a service upon people's self-reported wellbeing and uses these estimates to calculate the exact amount of money that would produce the equivalent impact on wellbeing. 4.4. Our outcomes have produced some promising results: In 2014/15 every 1 spent on our Community House project returned 26 in social value. The project secured a further 5 years funding from the Big Lottery fund and was awarded the TPAS Excellence in Community Action Southern Region award. Engagement with the Community House led to 24 people reporting relief from depression and anxiety at a social value in excess of 600,000. Value for money self-assessment 2015 Page 4
32 people volunteered at our Resource Centre in 2014/15 delivering over 50,000 in social value. 9 people gained full-time employment and a further 4 gained part-time employment as a result of participating at the Resource Centre at a social value of 89,000. The net benefit of our community development activities in 2014/15 was 3,022,000. 4.5. We see combining financial and social value as a key factor in robustly ensuring we deliver value for money for our customers and will be doing more work on this in 2015/16 which will help guide how we invest our resources. 5. Strategic approach 5.1. Value for money means ensuring the best social outcomes using the resources available. 5.2. Obtaining value for money from our resources is essential to ensure we can continue to provide excellent services to our residents, deliver new homes and invest in our community. 5.3. This VFM self-assessment demonstrates to our residents and other stakeholders how we are achieving this aim. We publish this information to all our stakeholders on our website, within our annual report to residents, and within the strategic report in our financial statements. 5.4. Our corporate plan sets out our business priorities and how we will deliver our business objectives. This is informed by our financial business plan to ensure what we do is affordable and does not jeopardise the long term viability of the business. Our annual VFM self-assessment sets out a number of key principles to ensure our activities focus on maximising VFM, what we are achieving for the resources used and our investment plans not only in terms of the quality of services we provide but also report the wider effect of our work in terms of social, environmental and financial impact and outcome. 5.5. The corporate plan and key priorities are monitored by corporate managers and the senior management team with quarterly reports to the board on progress against the targets. Individual departmental targets are reviewed at team meetings and personal targets at each member of staff s one to one meetings with their manager to ensure the accountability and effectiveness of every member of our team. Quarterly service standard performances are reviewed by our resident scrutiny committee and reported to the board. 5.6. In setting the corporate plan and budget for the coming year the board sets targets that will achieve efficiency gains and service improvements each year. Budgets are set using a zero-based budgeting approach. The board receives quarterly reports on our finances to monitor against detailed budgets to ensure that financial objectives are achieved and funding covenants maintained. Activity based costing continues to form the basis of our evaluation of the cost effectiveness of each of our services. 5.7. The resident scrutiny committee review areas of work of their choice. The committee is provided with performance and financial data, as well as facilitated wider research of residents views. This enables the committee to make informed and objective Value for money self-assessment 2015 Page 5
recommendations to our board on value for money and service improvements measured against the service standards agreed with our residents. 6. Service delivery costs and outcomes 6.1. The results from the 2013 STAR (Survey of tenants and residents) are very positive. Overall satisfaction with landlord services is considered to be very high (91%), quality of home (89%), repairs & maintenance (88%), being kept informed (87%) and value for money for rent (87%). Satisfaction with the value for money of the service charge is also higher (81%) than is found nationally. 6.2. The results from our STAR survey of our resident satisfaction are: 6.3. The results from our STAR survey compared to our previous survey: 2013 2009 % change Benchmark top quartile position Satisfaction with overall service 91% 90% +1% 90% Satisfaction with quality of home 89% 89% 0% 89% Satisfaction with general condition of property Satisfaction with value for money of rent Satisfaction with value for money service charges Satisfaction with the neighbourhood as a place to live Satisfaction with repairs and maintenance Satisfaction with keeping residents informed 85% 83% +2% - 87% 87% 0% 88% 81% n/a n/a 75% 84% 81% +3% 89% 88% 89% -1% 88% 87% 85% +2% - 6.4. Our feedback from our ongoing customer surveys and business performance value measures during the year is: Value for money self-assessment 2015 Page 6
2014/15 2013/14 2012/13 % change in the last year / trend Target 2015/16 % homes failing Decent Homes Standard 0% 0% 0% 0% 0% Customer feedback - reactive maintenance surveys Customer feedback planned maintenance surveys 97% 99% 98% -2% 95% 98% 95% 89% +3% 95% Customer feedback RedAssure surveys 100% 100% 98% 0% 97% Customer feedback - empty homes surveys Customer feedback - new homes surveys Emergency repairs completed within target 100% 99% 99% +1% 95% 90% 100% 100% -10% 95% 99.9% 100% 99.9% -0.1% 99.8% Urgent repairs completed within target 99.5% 99.2% 98.7% +0.3% 99.1% Routine repairs completed within target 98.8% 98.5% 97.1% +0.3% 98.6% % gas services completed within last 12 months 99.9% 99.9% 99.9% 0% 100% 6.5. We benchmark our performance using the HouseMark LSVT (Large Scale Voluntary Transfer) benchmarking group. HouseMark benchmarking works on the principle that members share information regarding their financial and operational performance to enable comparisons to be made. High performing organisations can be identified at a detailed service level through comparisons of both cost and performance, rather than simply relying on public documents and reports. In the latest 2014 HouseMark dashboard, Worthing Homes were in the top quartile of the dashboard in 4 out of 7 categories. 6.6. Our lettings results show increasing average relet times. The average relet time of all void properties increased to 54 days in 2014 and reduced slightly to 53 days in 2015. Value for money self-assessment 2015 Page 7
We have a project to review the entire empty homes process. We have created a dedicated lettings team during 2015/16, and the ongoing project includes our internal systems as well as involving local authorities to review nomination agreements and choice based lettings systems. 6.7. Estate services include caretaking, grounds maintenance, concierge services, estate lighting, CCTV and communal cleaning. The costs of these services are above average; one of the primary reasons is the large amount of landscaped areas transferred from Worthing Borough Council within the original stock transfer in 1999. Worthing Homes has to maintain whole estate open spaces despite owning a small proportion of the stock; however, we recognise the importance of well-maintained open spaces as part of our asset management strategy. Other areas which are not carried out by other providers, such as concierge services, provide other benefits including a reduction in vandalism, ASB and support the pro-active management of our stock. 6.8. The efficiency summary produced from the HouseMark benchmarking is: Value for money self-assessment 2015 Page 8
6.9. Details of our cost per property compared to our HouseMark benchmarking group are shown below: 6.10. Direct cost per property of housing management 6.11. Direct cost per property of major works and cyclical maintenance 6.12. Direct cost per property of responsive repairs and void works 6.13. The HouseMark analysis breaks down the overheads into categories; the details of our total cost per property compared to our HouseMark benchmarking group are shown below: 6.14. Cost per property of IT and communications 6.15. Office premises 6.16. Cost per property of finance Value for money self-assessment 2015 Page 9
6.17. Cost per property of central overheads 7. Return on assets 7.1. We have a comprehensive approach to managing our assets having a single strategy which embraces asset management, development, open spaces and sustainability in a single approach. Asset management is considered as a range of activities that ensure the housing stock meets needs and standards both now and in the future. The considerations contained within the strategy must be balanced with customer (resident) aspirations, resources as well as professional and technical considerations and value for money. 7.2. The strategy (asset, development and sustainability) goes beyond investment in repair and major improvements; with reference to our size and location, we have reviewed our asset base to ensure that we have the right accommodation in the right locations. Our stock is well maintained, its location is concentrated in areas within a 30 minute drive of our offices. Former hostel and bedsit accommodation has been converted, as stock values for these assets on the open market are limited. It is for these reasons that we currently consider stock disposal as the last resort. In fact, we believe our approach to development and on-going management has avoided disposals needing to be made and we have maintained our local focus from the outset. 7.3. Our board review each development opportunity against an agreed set of benchmarks. If the development does not achieve the required benchmark the scheme may be rejected. The financial impact of each scheme is included within the business plan to assess its impact before the scheme is approved. We have plans to complete 52 new homes over the next year including our first homes for outright sale. 7.4. The return on assets is shown graphically by comparing the net present value (NPV) of the rental stream for each of our homes against the vacant possession valuation: Value for money self-assessment 2015 Page 10
Valuation Analysis of net present value compared to valuation 350,000 300,000 250,000 200,000 150,000 100,000 General needs Sheltered Affordable Intermediate 50,000-0 50,000 100,000 150,000 200,000 250,000 Net present value 7.5. This graphical analysis shows a positive correlation between NPV and valuation. The graph shows minimal deviation from this correlation. There are no properties showing particularly high above the correlation line (i.e. none with a high open market value against low net present value from rents), in other words, no properties which would indicate that sale or churn is appropriate. There are 3 properties with a low NPV of 10,000 which are sheltered properties, where long standing tenants still have a low rent because it started at a low base. With no more rent convergence this will be a feature until a new tenancy is set using the target formula. 7.6. Using information collected from the asset and housing teams, we continue to assess the viability of our existing assets and in turn their long term use. The impact of any proposal both in terms of the business plan and the community will be taken into consideration. In summary, Worthing Homes stock is considered and can be demonstrated to: be situated in appropriate geographic locations (primary areas of operation) include no disproportionally high value stock, that may generate a greater return through disposal on the open market rather than letting as social rent, with income generated from sale used to subsidise more affordable homes be suitable accommodation, in good condition that does not require significant investment be the appropriate tenure for the location 7.7. We regularly review the value of the homes we manage in order to utilise the stock valuation for funding to build new homes. Using our properties as loan security we have secured an additional 20million of loan funding from Lloyds Bank and are negotiating a further loan of 10million with Worthing Borough Council. 8. Financial performance 8.1. Our financial statements demonstrate our track record in improving our operating efficiency and financial results. The operating margin has remained at 45% which is top quartile performance, as demonstrated by benchmarking our (2014) performance Value for money self-assessment 2015 Page 11
against other housing associations in the PlaceShapers group of community based housing associations. 8.2. Our detailed financial performance is shown in the following analysis: 8.3. Operating efficiency: 2015 2014 2013 2012 2011 Operating margin 45% 45% 43% 40% 38% Average operating surplus before interest per home owned Average operating cost per home owned Surplus for the financial year as % of turnover 2,672 2,598 2,291 1,920 1,730 3,263 3,216 2,975 2,909 2,855 23% 24% 19% 15% 16% Net surplus per home owned 1,388 1,387 1,000 717 755 8.4. Debt servicing and use of assets: 2015 2014 2013 2012 2011 Interest cover (operating surplus after charging depreciation divided by net interest payable) Gearing (total loans less cash and current asset investments as % net loans and reserves and capital grants) 2.0 2.0 1.7 1.5 1.7 64% 66% 68% 70% 69% Average loans drawn per home owned 34,801 34,858 34,005 35,553 28,390 8.5. Performance of asset base: 2015 2014 2013 2012 2011 Turnover to total operating assets 11% 11% 10% 10% 10% Return on capital employed (operating surplus divided by total assets) 4.8% 4.8% 4.4% 3.9% 3.9% Average cost of capital 4.0% 3.9% 4.1% 3.6% 3.6% 8.6. Business growth: 2015 2014 2013 2012 2011 Growth in turnover 3% 12% 12% 9% 7% Growth in total assets 4% 5% 10% 15% 16% New homes completed during the year 46 59 116 118 246 Value for money self-assessment 2015 Page 12
8.7. Cash flow: 2015 2014 2013 2012 2011 Earnings margin (earnings before interest, tax, depreciation, impairment and amortisation including major repairs expenditure as % of turnover) 48% 47% 45% 42% 39% Earnings interest cover 204% 200% 167% 160% 177% Value for money self-assessment 2015 Page 13