By John Fisher, Chief Executive
“Spend on repairs and maintenance costs reaches £10bn in another record year” was the recent front cover headline in Inside Housing. This referred to the 200 largest Housing Associations, which together own and manage 3.5m homes (17,500 each on average).
If you have read the housing press over recent years, you will have seen a continuing trend of reports about big increases in the spend on maintenance, all suggesting this is rather surprising.
Big numbers make big headlines and headlines like to surprise and attract the reader. So, should we be surprised?
Taking this reporting to a level most people can attune to is to look at it through a tenant’s lens. After all, it is they who should benefit from an improved repairs and maintenance service. £10bn spent on 3.5m homes is £2,857 per home per annum on average. Is that good, should we be surprised, or pleased, or concerned?
CHIC supports £0.35bn of maintenance related spend each year – placed through over 1,200 contracts for 300 landlords. CHIC’s managing agent, ARK Consultancy, holds benchmark costs for sector maintenance spend. So, what do these tell us?
| £ | |
|---|---|
| Day to day repairs and works to void properties for reletting | 821 |
| Cyclical Servicing and repairs (e.g. gas, electrics, lifts, fire prevention, legionella testing, compliance assurance), decoration and other FM costs for communal areas | 851 |
| Planned Investment – replacing building components (roofs, windows/doors, kitchens, boilers, bathroom etc) that have reached the end of their lifecycle | 414 |
| Average cost per home per annum | £3,086 |
Of course there are numerous variables, for example:
- Delivery by an in-house (DLO) or external contractor
- Geographical location (North/South, urban/rural)
- Specifications
- The mix of homes (houses vs. flats, low rise vs. high rise)
- Heating source
- Property age
- Current stock condition – is there a backlog?
- Environmental performance
All of these feature in calculating the ARK benchmarks. If then, on average, a landlord should spend £3.1k on each property each year, how does this compare to the latest headline?
Well, for 3.5m homes, it is £10.8bn per annum. The headline is 8% below the benchmark – or £229 per home per annum, so it is getting closer.
I have spent a long career in housing, talking up the importance of a strategic approach to asset management, to encourage enough of tenants rent being spent on properly maintaining their homes. For so long, on average across the sector, it was way off. Big number headlines masked this reality.
But now, rather than reporting surprise that the numbers are (finally) in the right ballpark we should applaud that they are. Tenants are starting to see the levels of investment that their homes need and that their rents pay for.
Then factor in any backlog of work across the sector (there is quite a lot), the investment needed to get to net zero and to meet the New Decent Homes Standard by 2035 and we realise it is only a move in the right direction, with more to do.
£10bn supports c.150,000 jobs in the direct delivery of the work, plus many more for the landlords and in related supply chain partners. By planning future investment strategically (smoothed rolling programmes of work year to year) and coordinating this scale of investment, CHIC can help to procure longer term contacts cost effectively and to secure efficiencies through supply chain integration. In turn that can support sustained employment and help contractors to invest in apprentices and training. Tenants rents paying to support sustainable jobs in their local communities, boosting local economies, as well as delivering better homes.
So let’s change the headlines to celebrate that the investment levels for repairs and maintenance are getting up to the sort of levels they should be at. Then keep them there – better homes, more jobs and added social value.
