Over the last few years the meaning of “asset management” has changed from it being all about repairs to an understanding of, well, managing an asset and, in particular, understanding assets might not stay in an organisation forever. 

Many, if not most, registered providers (RPs) know the total costs of managing a particular asset and especially can identify those assets that are expensive to manage.  The surplus generated by any social housing property is finite and can easily be turned into a loss in the event of higher-than-average management costs.

The other understanding that has developed within RPs is the market value of an asset.  Coupled with an understanding of where assets are truly needed means there are multiple routes to deciding that some properties need to be sold on the open market when they come up as a void. 

The stock rationalisation market is also developing; there is a growing market for shared ownership portfolios (providing a holy grail for pension funds through the ability to give “guaranteed” Retail Price Index (RPI) returns) as well as a lively market for other types of social housing.  Supported housing portfolios have come to market; disposing providers wish to exit that market or prefer to leave to others redevelopment. 

Current issues are:

  • Ethical stock rationalisation – is moving properties that are expensive to maintain and live in into what typically is the private rented sector the kind of thing registered providers should be doing?   It is conceivable the Regulator will become interested in this issue in which case providers need to be ready with a cogent answer.
  • Stock swaps – after a very long gestation period (we wrote the original NHF Guide in 1997!) there are actual large transactions underway.  Stock swaps can provide a more cost-effective solution for stock rationalisation given that both parties are in the same negotiating position.
  • Tenant consultation – though the Moat downgrading happened over a year ago, providers are still working through the need to engage critically with tenants when there is a contemplation of the sale of their homes.  In our view, being transparent with tenants about why their property is being sold, what the new provider’s offer is, (as it affects tenants), and providing a “warts and all” appraisal of the provider and, most particularly, remembering that tenants are charitable beneficiaries of providers are the issues providers need to take into account.
For more information

Please contact Jonathan Cox.

Jonathan is speaking on “Ethical Stock Rationalisation” at Homes UK 2019.