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  1. 1. ASSET MANAGEMENT STRATEGY 2006 – 2010 Asset Management Strategy Version 1 Date 26.6.06
  2. 2. CONTENTS PAGE Introduction 3 1.0 Governance 5 2.0 Management 6 3.0 Stock Condition 8 4.0 Decent Homes Standard 12 5.0 Risk Management 14 6.0 Marketing 15 7.0 Local Employment 16 8.0 Development 17 9.0 Communication and Consultation 17 10.0 Conclusion 19 Asset Management Strategy ~~ Page 2 of 19~~ Version 1 Date 26.6.06
  3. 3. Introduction Under arms length management arrangements, Tristar Homes Limited was incorporated in 2002 and is responsible for the day-to-day management, maintenance and sustainability of the Council’s Housing Stock (including residential dwellings and garages). Sheltered housing blocks are not included, remaining instead within the Council’s retained housing service. The successful management of the Housing stock relies heavily on the relationship between the Shareholder (the Council) and its Management Company (Tristar Homes). Whilst the Council remains the landlord and therefore owns the stock, the strategic direction and the future of the stock, will be directly influenced by the Company’s Asset Management Strategy. The Council, together with other stakeholders, have been consulted in the production of the Strategy and will continue to be involved in the decision making process under various Asset Management Implementation groups. The diagram below illustrates the working relationship between the Company and the Council and how they influence each other in the sustainability of the asset. Stockton Borough Tristar Homes Limited Council Management / Ownership/Resources Delivery Asset Management Strategy Planning Asset Management Strategy ~~ Page 3 of 19~~ Version 1 Date 26.6.06
  4. 4. Asset Management is an essential business process for Tristar Homes in the delivery of its Mission Statement: ‘Working in partnership to provide quality homes and services in safe and sustainable communities’ The process needs to be policy and economics-driven with the Board providing the strategic direction, ensuring connection to the business planning activity of the Company. At a functional level it is critical that all departments have clarity and understanding of their role in both developing and delivering the overall Asset Management strategy. The Company will maximise the use of its intangible assets i.e. the knowledge and experience we have and the things that we do well, as these factors are intrinsically linked to the successful delivery of asset management. The Corporate Context Tristar Homes is committed to providing quality, decent and affordable housing. Housing alone however, does not in itself make a sustainable community. Sustainable communities are a top priority for the Company and require the engagement of local people in decision-making, in order to ensure well designed and maintained open spaces and a feeling of safety and liveability for tenants and residents. Supported by partnerships, stock rationalisation strategies and stock improvement strategies, the Company believes, over the medium to long term it can make a positive contribution to delivering urban renaissance in the Borough. The production of an Asset Management Strategy is a critical aspect in the viability and the overall delivery of satisfactory housing to tenants and as such is a key item within the Company’s Risk Management Strategy. This strategy covers to the period 2006 – 2010 and is subject to a major review in 2008 by the Asset Management Steering Group. Asset Management Strategy ~~ Page 4 of 19~~ Version 1 Date 26.6.06
  5. 5. 1.0 Governance Tristar Homes’ Board of Directors have sole responsibility for the overall direction of the Company, and for ensuring that it has appropriate staff and resources to achieve its strategies and plans. An Asset Management Steering Group will provide the necessary commitment to drive forward the asset management strategy ensuring that it links and supports the Company’s, as well as the Council’s overarching strategies and policies concerning housing and sustainable communities. Business Plan Procurement Asset Strategy Management Strategy Policy Policy Policy Membership will be established at a senior level within the Company and the group will also benefit from Board and Council’s representatives to ensure a unified approach to Asset Management is developed and maintained. Delivery of the strategy will be achieved through a variety of Asset Management Implementation Groups, consisting of members of staff from each of the business areas within the Company as required. These groups will be the key resource in developing and implementing action plans which support the decisions and direction agreed by the Steering Group. The Board will establish a neighbourhood investment planning approach (in line with the Council’s Housing Strategy) that incorporates all aspects of activity associated with sustainability and creating communities to be proud of. Asset Management Strategy ~~ Page 5 of 19~~ Version 1 Date 26.6.06
  6. 6. Strategic Goal 1.0 To ensure Tristar Holmes’ strategies, policies and action plans provide efficient and effective management in, promoting, maintaining and preserving the Council’s housing stock, contributing to sustainable communities. To continually review, monitor and re-evaluate the delivery of Asset Management. Key Objectives 1.1 Establish an Asset Management Strategy Steering Group to oversee the delivery of the strategic aims and objectives. 1.2 To have a nominated Board Member with special responsibility for asset management issues. 1.3 To have a nominated Senior Officer from the Council. 1.4 Establish Asset Management Implementation Groups with membership across each of the Company’s business areas as required. 1.5 To report performance against key objectives to the Board on a quarterly cycle. 1.6 That action plans are developed, with appropriate time scales for the completion of key objectives. 1.7 To undertake a review of the Asset Management Strategy on an annual basis amending the strategy as appropriate. 2.0 Management The core activity of the Company is to improve, maintain and manage the Council’s housing stock and it is paramount that the right plans for the right properties are in place ensuring that the full potential of the housing stock is realised. Asset Management can be viewed as a range of activities undertaken to ensure that the Council’s housing stock continues to meets the needs and aspirations of its tenants now and in the future. Borough wide, the demand for certain types of social housing has shifted over the past 4 years and the importance of understanding trends concerning future supply and demand cannot be underestimated in the asset management process. A significant number of tenants are seeking adaptations to council properties due to their medical/ill health problems. Demand for adaptations is projected to increase over future years and is already outreaching available resources. Asset Management Strategy ~~ Page 6 of 19~~ Version 1 Date 26.6.06
  7. 7. Much of the Council’s bungalow accommodation is one bed and too small to satisfy tenants aspirations. Some of the more unpopular one bed bungalows have been programmed into the Stock Rationalisation Schemes as part of the Council’s wider regeneration schemes. Demand for two bed bungalows looks certain to continue over the next five years, the indication is that the percentage of people at retirement age will increase from 17% (2005) to 20% (2011) (source: HRA Business Plan 2005). Although currently there is demand for two, three and four bedroom houses, trends over the next 5 years predict a decline in the average household size, which will impact on the requirement for the larger property types in the future (source: HRA Business Plan 2005). A recent trend has been the reduced turnover in properties due to increased satisfaction from investment work and closer and more procative management of empty properties. As a result less properties are becoming available (943 in 2000/01 reducing to 373 in 2004/05) and families presenting themselves as homeless in the last five years has increased by 156% (source: HRA Business Plan 2005). As demand increasingly outweighs supply it is essential that void turnaround times are continually improved. Void property levels also have a direct impact on rental income, which is critical to the sustainability of the Council’s Housing Revenue Account (HRA), the Company’s only source of funding. In this context, the Company considers demand versus supply is an immediate area of potential concern. We must be satisfied as to the future availability of the appropriate housing stock if we are to sustain success in the long term. Decent standard and other capital works will ensure that the Council’s housing stock will, within the next five years, meet the Government’s “decent home” guidelines. In line with these works are management issues, which require a more fundamental analysis of the options available e.g. the desirability and location of our properties. The quality and amenity value of an estate must be examined whilst taking into account the broader issues of demographic trends. The Company will develop a neighbourhood approach to housing investment and sustainable communities, including areas such as Anti Social Behaviour, Tenancy Support and Estate Plans, which will all support the asset management strategy. Asset management must not be considered as an in house technical function only. It requires a strategic cross cutting approach with significant involvement from our stakeholders, who have a vested interest in the Company and must be involved in the decision-making process. Working in partnership will continue to be an essential element of the asset management process. Through consultation with tenants, the Council and other strategic partners, informed decisions will be made ensuring that decent and affordable housing is available. Asset Management Strategy ~~ Page 7 of 19~~ Version 1 Date 26.6.06
  8. 8. Strategic Goal 2.0 Ensure the future viability of the Council’s housing stock within the wider context of supply, demand and neighbourhood planning. Key Objectives 2.1 To develop a methodology for future investment works. 2.2 To carry out gap analysis of future demand against stock availability 2.3 Produce an Empty Property Strategy. 2.5 To develop an adaptations policy linking to investment work 2.6 Demonstrate robust financial planning to underpin the delivery of asset management 3.0 Stock Condition The Company is responsible for the delivery of stock investment and rationalisation works to the Council’s housing stock. The current improvement works are programmed to 2010 in line with the Governments Decent Standard target. It is recognised that future investment works post Decent Standard are essential in order to ensure Decency is maintained and for the continued sustainability of the right housing stock. The need to ensure that accurate stock condition information is established, recorded and readily available will ensure that future improvement and maintenance works are effectively programmed and budgeted. In addition, the Government’s Housing Health and Safety Rating system (HHSRS) comes into force on 6th April 2006, delivering a new approach to the evaluation of the potential risk to health and safety from deficiencies identified in dwellings. The HHSRS replaces the current Housing Fitness Standard and as such this poses a risk to the achievement/maintenance of homes reaching decency. Measures need to be in place to ensure that all properties are rated and this information is available and used to assess hazards and treat where necessary. During 2004/05 approximately 4,000 properties were surveyed and the results were used to update stock condition information and to programme the remaining Decent Standard works. Knowing the physical condition of the stock alone is not sufficient to make informed decisions about future investment. Demand, location, wider Asset Management Strategy ~~ Page 8 of 19~~ Version 1 Date 26.6.06
  9. 9. regeneration/neighbourhood plans, maintenance and responsive repair levels all contribute to what stock will be affordable and required in the longer term. The lettability and demand for the housing stock is a key consideration and must be contrasted with the potential for alternative strategies, i.e. disposal or remodelling. The Council’s property portfolio, managed by Tristar Homes Limited, is varied and must be continually evaluated to address these issues and any future changes in the housing market, government legislation and component/labour costs. It is anticipated that a sustainability modelling tool will be implemented this year to enable the future viability of the stock to be assessed and rated. Non Traditional Properties There are a number of non-traditional properties, where the type of construction is subject to specific defects or problems that although can be rectified, need assessing to ensure they are sustainable in the future. High Rise Blocks There are eleven blocks currently managed by the Company. The condition of these blocks varies considerably, ranging from highly demanded properties that have benefited from recent substantial investment, to those such as Prior and Melsonby Courts, which are in poor condition and originally scheduled for demolition. The increase in demand for council housing has resulted these types of properties being removed from the demolition programme and assessed for their future viability. This resulted in reinvestment works to these properties. This alone will not ensure that the properties will be fully let and therefore the Company will need to ensure joint working of technical and housing management to develop sustainable lettings for these properties. Structural surveys carried out in 2004/05 have identified £7.3 million worth of investment required to the high rise blocks, including structural, lifts and heating works. In addition, each of these blocks will be further surveyed to ensure that they reach the Government’s decent standard. A working group has been established to assess the general management of these blocks, including the maintenance and repair levels. Low/Medium Rise There are over 2000 low/medium rise units managed by the Company. At this stage there are no letting issues concerned with this type of property and a review of their condition, in particular structural and communal areas, is being carried out. Current capital improvement plans (up to 2010) only include decent standard works for the low/medium rise units. Any extra investment required for structural, communal and other work would need to be presented to the Council for approval of additional financial resources. Asset Management Strategy ~~ Page 9 of 19~~ Version 1 Date 26.6.06
  10. 10. Garages A feasibility study is currently being carried out on the future viability of the garages. The need to balance costs to maintain the garages (now and in the future), against revenue collected is a key consideration that will influence the continued viability of the garages. Estate Shops The Company manages approximately 90 estate shop on behalf of the Council. These shops are let on a commercial basis and attract rent, which feeds into the Housing Revenue Account. Initial discussions have been held regarding the future of the estate shops with the possibility to sell the shop portfolio. Estate shops do not attract Major Repairs Allowance (MRA) and as such, there is no current capital funding identified to invest in these properties should the decision be made to retain them. The decision to sell/not to sell needs to be balanced between generating a commercial return from the properties, costs to improve and maintain them and providing locally useful retail facilities to the communities in which they are located. Most of the shops have living accommodation attached to them. All the shops need to be fully surveyed so that their physical condition and future repairs liability can be calculated. Major Structural Defects Major structural defects are a major drain on capital and revenue resources and are a significant risk area for the Company. The need to be proactive in identifying potential and current MSDs and have a structured framework in place to assess the treatment required in order to minimise costs/risk. Planned Maintenance & Responsive Repairs The Company plans to spend £163 million on improvement works to the Council’s housing stock over a 10 year period (ending December 2010). In order to support this investment a robust planned maintenance framework needs to be established to protect and maintain our investment. In 2005/06 approximately 27,000 responsive repairs were undertaken, including repairs taken from the Emergency Out of Hours Make Safe Service. The Company recognises that the provision of an effective repair service is paramount to tenants and must be delivered in the most cost effective manner. The further development of planned maintenance schemes will be designed to ensure the transition from a costly responsive repair service. Asset Management Strategy ~~ Page 10 of 19~~ Version 1 Date 26.6.06
  11. 11. This approach will have a direct impact on the way in which we deliver the repairs service to our tenants, including the standardisation of materials used for improvements works, planned maintenance and responsive repairs. The balance between achieving substantial economies using planned works whilst maintaining high satisfaction levels will be challenging. Currently, responsive repairs and planned work delivered by the Company’s in house work force, extends to Council tenants only. As more and more tenants exercise their Right to Buy, many council estates are now becoming a mixture of owner occupiers and tenants. Offering an affordable repairs and maintenance service to owner occupiers is seen as a proactive approach to sustaining estates and communities. Strategic Goal 3.0 To ensure a fit for purpose property portfolio within a value for money context. Key Objectives 3.1 To carry out a full review of the Non Traditional Properties. 3.2 To carry out a full review of the Garage portfolio 3.3 To develop the stock condition module on Saffron V7. 3.4 To review the condition of the Low/Medium rise units (Structural/communal) 3.4 To develop a rolling programme of Stock Condition surveys. 3.6 To develop an asbestos database that is fully accessible. 3.7 To review Estate Shops in line with the overall stock option appraisal for Council homes. 3.8 Achieve BV211a target 60:40 Planned to Responsive works. 3.9 Carry out market testing of the repairs service 3.10 To produce a policy for the management of major structural defects, including criteria for disposal. 3.11 To develop an implementation plan based on recommendations made by the High Rise working group 3.12 Develop a framework for the standardisation of materials used to assist with future maintenance works. 3.13 Develop and implement sustainability framework/model for the Housing Stock. 3.14 Introduce a Housing, Health and Safety Rating System 3.15 Carry out feasibility study to extend the repairs service to owner occupiers and leaseholders 3.16 Develop a Repairs & Maintenance Business Plan Asset Management Strategy ~~ Page 11 of 19~~ Version 1 Date 26.6.06
  12. 12. 4.0 Decent Homes Standards The Decent Homes Standard was introduced by the Government in July 2001, with the intention of improving the standard of social housing in England. The Government has set two targets, to: • Reduce by one third the number of social housing properties which fail the Standard by 2004 • Ensure all social rental homes meet the Standard 2010 The Decent Homes Standard incorporates four basic criteria. • Statutory minimum fitness standard for housing (replaced by HHSRS 6th April 2006) • It is in a reasonable state of repair • It has reasonably modern facilities and services • It provides a reasonable degree of thermal comfort The scale of improvement work needed to bring the Council’s housing stock up to the decent standard initially prompted the introduction of four major strategic partners (established in 2003). This partnership arrangement was introduced in order to effectively take advantage of economies of scale and ensure the large programme of works could be practically achieved to the agreed timescales. The Company has made good headway in the delivery of the Decent Standard works, with over 7000 properties reaching decency at February 2006. An average of 1000 properties per annum are planned for the remaining future programme. The current programme of Decent Standard works are only available to Council tenants, however the Company recognises that Leaseholders are an important stakeholder and must feature heavily within the overall Asset Management Strategy, including the delivery of its Decent Standard programme. The Company initial secured partnering arrangement with four Major Strategic Partners. To date, these arrangements have been reduced down to three partners and the Company, in consultation with the Council, is considering further rationalisation, optimising the number of properties to each partner and maximising efficiencies. In addition, the Company is examining component costs through its overarching procurement strategy, which will address value for money issues for improvement programmes and subsequent repair and planned maintenance works. The Company is also reviewing the feasibility of early completion of the decent standard programme, by assessing the potential cost savings associated with bringing work forward balanced against the cost of borrowing. For properties that have already met the decent standard, stock condition information is available and will be used to programme improvement works beyond 2010. This information will also feed into the scheme of planned maintenance works. Asset Management Strategy ~~ Page 12 of 19~~ Version 1 Date 26.6.06
  13. 13. Strategic Goal 4.0 Ensure that the Council’s housing stock is brought up to Government’s Decent Homes standards by December 2010. Key Objectives 4.1 Review the technical design and materials used in order to achieve a reduction in the real cost of improvement works. 4.2 To ensure that planned maintenance programmes are implemented to support the Decent Standard works 4.3 Develop a Decent Homes Strategy to deliver decency by 2010. 4.4 To carry out a feasibility study and cost benefit analysis to accelerate the completion of the Decent Standard Programme. 4.5 Ensure a 10% year on year reduction in contractor prices. 4.6 Review costs for professional services linked to the Decent Standard Programme 4.7 Develop a programme for surveying properties not yet at decency 4.8 To make recommendations to the Board of changes within the improvement programme which reflect the success of achieving Decent Homes. 4.9 All future decent homes surveys require compliance with the HHSRS 4.10 Develop a framework for the inclusion of leaseholders within the Decent Standard programme Asset Management Strategy ~~ Page 13 of 19~~ Version 1 Date 26.6.06
  14. 14. 5.0 Risk Management The Company will use risk management techniques in all option appraisals and reviews generated by the asset management strategy. In particular, the Company will fully appraise the financial implications of any investment into a property. Strategic Goal 5.0 Ensure risk management techniques are used on all aspects of asset management. Key Objectives 5.1 To set up a financial appraisal model. 5.2 Ensure all staff involved in asset management are fully aware of risk management issues. Asset Management Strategy ~~ Page 14 of 19~~ Version 1 Date 26.6.06
  15. 15. 6.0 Marketing The profile of Tristar Homes Limited as a dynamic, dependable organisation, which can be relied upon to consistently deliver its business objectives, needs to be projected to a wide audience using all available media. Business opportunities go to organisations that not only perform well but also are able to convey their messages in a clear and consistent way to both existing and potential partners. The Company is ever mindful that the Management Agreement between itself and the Council expires in 5 years. As such, the Company endeavours to be well placed to take every advantage of the changing housing and ALMO environment. The Company will need to ensure that the housing stock is viable and robust plans are in place for continued sustainability in order that the stock can be marketed as a valuable asset. Strategic Goal 6.0 To ensure that the management of the housing stock is marketed effectively in order to optimise the Company’s position in the market place. Key Objectives 6.1 Develop a PR and Marketing Strategy 6.2 To Develop a strategy to market Tristar’s intellectual assets in providing services to other social landlords. 6.3 Development of a positive identity for Tristar Homes, which is recognised regionally and nationally as well as locally. 6.4 DLO – To develop a marketing strategy to sell the Repairs and Maintenance service to external markets including leaseholders. Asset Management Strategy ~~ Page 15 of 19~~ Version 1 Date 26.6.06
  16. 16. 7.0 Local Employment The inception of Tristar Homes has created a welcome increase in work for the local community. The Decent Standards Improvement Programme will provide continuity and sustainability of employment within the local labour market. In employing local, regional and national contractors, Tristar Homes will encourage the use of local labour. The majority of Tristar Homes current strategic partners labour force is procured locally Local labour forms the backbone of our own in house contractor division. Their local experience and knowledge is essential in providing services to our customers and Tristar Homes The current climate within the construction industry has led to a decline in tradesmen and apprentices. Tristar Homes recognises the need to employ, train and continually develop its workforce and by employing apprentices, to endeavour to meet the shortages currently being experienced throughout the Country. Strategic Goal 7.0 To ensure that whenever possible the utilisation of local labour and supplies/suppliers are employed in promoting and maintaining the local economy. Key Objectives 7.1 To actively recruit and retain local labour through excellent packages of employment. 7.2 To establish an ongoing programme of employing local apprentices. 7.3 To develop a training plan for the “In house team” to include multi-skilling in ensuring we retain in house skills required to maintain the assets of Tristar Holmes. Asset Management Strategy ~~ Page 16 of 19~~ Version 1 Date 26.6.06
  17. 17. 8.0 Development The Company recognises that the reduction of housing stock year on year has a direct impact on the viability of the Company’s future. Current stock projections show a steady decline in stock numbers (through RTB sales and rationalisation schemes), cumulating in a projected stock level of 9528 by 2010/11. This reduction in the property portfolio not only represents a risk to the Company, but also has a direct impact on the future levels of funding available to continue to invest and deliver decent affordable housing. The Company together with the Council need to urgently address this decline and what it means to its tenants. A stock option appraisal will be carried out to establish the future management/ownership of the Council’s housing stock. The Company aims to be in poll position to compete, by ensuring the continued delivery of the Management Agreement, achieving a three star status and also by shaping / influencing the direction taken by the Council and its tenants. The Company recognises that a proven track record is essential, along with the development of a forward-looking entrepreneurial culture. New innovations such as property development, “purchase and repair” (specific high demand properties) and widening the portfolio of stock in general, are all ideas, which although not currently within an ALMO’s remit, are opportunities, which cannot be left unexplored. Strategic Goal 8.0 To assess the opportunities to develop, acquire or manage additional properties, in ensuring Tristar Homes Limited remain viable in the supply of affordable homes. Key Objectives To continue to investigate the need and feasibility of remodelling stock to meet future demand 8.1 for specific stock types 8.2 To carry out a feasibility study for widening the portfolio in future years 8.3 To develop strategic plans for preparation for the impending Stock Option Appraisal 8.4 To investigate alternative funding streams for future improvement plans. 9.0 Communication and Consultation Tristar will continue to consult with Board, staff and customers to ensure that the strategy and its aims and objectives are consistent with: • Business Plan • Procurement Strategy Asset Management Strategy ~~ Page 17 of 19~~ Version 1 Date 26.6.06
  18. 18. • Financial Regulations/Contracting Procedures • Standing Orders • Operational Plans • Customer expectations • Delivery of services Tristar recognises the importance of ownership in the management of its asset i.e. the housing stock. Whilst it is appropriate that the Technical Services Division has overall responsibility for the delivery of the strategy, the delivery of asset management is cross cutting and requires significant input from a variety of officers throughout the Company. Communicating the strategy to all parties is therefore essential to ensure that the holistic approach is maintained. Staff in particular, need to be aware of what is happening but more importantly how they can challenge the process in ensuring continual improvement. Awareness training will be carried out to promote understanding of the Strategy, together with specific specialised training as required to ensure all actions are delivered. Strategic Goal 9.0 To consult with all internal stakeholders of the company to ensure that the strategy and its aims objectives meet the needs of the company and its delivery of services to customers. Key Objectives 9.1 To provide workshops to disseminate the strategy and to receive feedback that can be incorporated into the final version. 9.2 To consult with board, staff and customers via focus groups 9.3 To provide regular updates on the intranet and the Tristar Tribune regarding Asset Management. 9.4 To develop a mechanism for ensuring that best practice guidance is analysed against the Company’s Asset Management Strategy and it is amended to ensure continual improvement. 9.5 To provide a feedback mechanism to ensure continual improvement of the strategy and its policies and procedures. 9.6 To analyse results from consultation sessions and ensure they feed into the strategic and operational activities and provide formal feed back to consultees. 9.7 To ensure that the Strategy and associated policies and procedures are available and promoted in various languages in line with Corporate, Equality and Diversity guidelines. 9.8 Promote understanding of the Strategy, together with any further specialised training required to ensure delivery of the actions Asset Management Strategy ~~ Page 18 of 19~~ Version 1 Date 26.6.06
  19. 19. 10.0 Conclusion The strategy is intended to provide a framework in which the Company organises and co-ordinates all activities that constitutes the continued viability of the housing stock. It sets out the Company’s commitment to provide decent and affordable homes to residents, through effective investment and neighbourhood planning. It provides the necessary strategic and measured approach to the delivery of key objectives, ensuring high performance and continued re-evaluation of asset management within a best value culture. Asset Management Strategy ~~ Page 19 of 19~~ Version 1 Date 26.6.06