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Social Housing Financial State of the Sector FY19/20

The fourth annual sector report presented by vantage and the performance improvement club

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Social Housing Lettings

Social Housing Lettings made up 73% of the total turnover and is broken down as follows:

TURNOVER BY SEGMENT: CORE SOCIAL HOUSING

Void Losses

In FY19/20, £158.3m was lost due to properties being empty compared to £150.9m in FY18/19. This equates to £67.15 per unit, an increase in relation to FY18/19 which was £65.24 per unit.

For FY19/20 the loss equates to approximately 33,481 empty homes for an entire year. This could also be illustrated as 1,740,999 homes empty for one week per year at an average rent of £90.93 per week, £158m worth of lost rent.

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“This report provides in-depth insight for the executive team into the sectors performance based on geography and size. Last year, we built upon this by commissioning Vantage to produce a tailored financial report for us including all the VfM sector metrics and then presented to our Board as part of our strategic away day. This helped us understand our position and identify our targets as part of our VfM strategy.”

Mona Shah, Executive Director of Finance & Information, Grand Union Housing Group

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Operating Margin

We have analysed overall operating margin for FY19/20 and compared to FY18/19. Our analysis shows the overall operating margin was £5.04bn for FY19/20, a 5.6% decrease on FY18/19, at £5.33bn.

Social Housing Lettings Operating Margin

There has been a reduction in the highest four categories of social housing lettings operating margin (those over 25%) and an increase in the bottom two categories (those under 25%). There has been an increase in the number of organisations earning less than 20% margin from 11 in FY 18/19 to 16 in FY19/20.

Operating Costs

We have analysed operating costs for FY19/20 and compared to FY18/19. Our analysis covers management costs, repairs and maintenance.

Management costs increased from £2.23BN to £2.29BN in FY19/20, an increase of 2.8%. A major proportion of management costs is employment costs. Employment costs increased by 7.3% between FY18/19 and FY19/20 from £3.69BN to £3.96BN.

The number of employees increased by 3.8% from 102,688 to 106,607.

Repairs and Maintenance Costs

Overall Repairs and Maintenance Costs (including capitalised costs) were £4.65BN in FY19/20 compared to £4.26BN in FY18/19, a 9.1% increase. Capitalised components spend was £1.58BN in FY19/20 compared to £1.37BN in FY18/19, a 14.7% increase.

The increase reflects a number of factors including greater and accelerated spending on building and resident safety. Our cost studies have shown great differentials between providers’ costs with many still paying excessive rates. Working with providers we are achieving savings of upwards of 15% in many areas of spend.

Financial Health & Viability

Overall, total arrears for rent and service charges increased by £21.3M in the year, however proportionally in relation to turnover they have decreased from 4.4% to 4.2%, reflecting the continual drive by registered providers to support their residents and ensure rent arrears do not build up.

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Nick Horne, CEO, Wythenshawe Community Housing Group

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