Asset Management Strategy

L&H Homes

Asset Management Strategy

2013/18

L&H Homes Limited Asset Management Strategy

Foreword

This document sets out the L&H Homes Asset Management Strategy (AMS) with detailed targets and outcomes for the period of 2013-2018.

This is the first Asset Management Strategy for L&H Homes since our creation in 2009. The two former companies, Longhurst Homes and Havelok Homes had strategies in place that have had continued use albeit separately over the last 2-3 years.

This is our first opportunity to bring together all of our assets, including our 3 key business areas into a comprehensive strategy document and take the opportunity to reflect on our progress and achievements since 2009.

We have been very clear about our strategic objectives and what outcomes we expect in order to deliver benefits to our customers and our wider business strategy.

The Asset Management Strategy is for the use of staff, residents, L&H Homes Board members and any other individuals or organisation interested in the asset management service provided by us.

It has been developed by a number of colleagues, in conjunction with residents, stakeholders and with third party advice and guidance. We have listened and understood our customer priorities and are currently translating these into our standards of service and local offers. Our Resident Service Review Panel structure has enabled us to consult directly with the Your Home Group whose focus is Asset Management and the implementation of a new home standard for L&H Homes.

We must strike the balance between meeting customer aspirations and business needs. Through careful planning and review of our investment programmes, we ensure compliance with our legal and regulatory obligations and wherever possible meet our customer aspirations within our financial business plan and capacity.

Mike Hardy Managing Director L&H Homes

L&H Homes Limited Asset Management Strategy

Contents

Page

Executive Summary 7

Section One

Introduction 10

L&H Homes Vision, Aims and Key Objectives 10

Asset Management Strategy Aims 11

Principles of the Strategy 11

Strategic Context and Links to Corporate Strategies 11

Section Two

Our Assets 13

Property Portfolio 13

Rented Stock

Shared Ownership and Shared Equity Shared Ownership for the Elderly

Leasehold Schemes for the Elderly (LSE)

Right to Buy Managed and Staircased Shared Ownership Flats Managed Properties

Other Assets 14

Growth Strategy 15

Section Three

Our Approach to Asset Management 17

Asset Management Functions 17

Condition of Our Assets 17

Decent Homes 18

L&H Homes Limited Strategy Delivery Plan

Page

Section Four

Delivering our Objectives 20

Existing Commitment 22

Renewable Technologies 22

New Funding Opportunities 22

National Policy - Co2 emissions 23

Gas Safety 23

Housing Health and Safety Rating System 24

Fire Safety 24

Asbestos Management 24

Electrical Safety 25

The Control of Legionella 25

Construction (Design and Management) Regulations 2007 26

Equality Act 2010 26

Section Five

Funding the Strategy 30

Section Six

Strategy Delivery and Monitoring 32

Section Seven

Annexes 34

Annex A - Stock owned and managed Annex B - Non Residential Assets

Annex C - Maintenance Repair Definitions Annex D - Average SAP by EPC band.

Annex E – Funding (30 year plan)

L&H Homes Limited Asset Management Strategy

L&H Homes Limited Asset Management Strategy

Executive Summary

Our Asset Management Strategy (AMS) 2013-18 sets out a strategic framework, within which we will manage, maintain and invest into our assets. We aim to deliver capital investment, planned/cyclical repairs and responsive maintenance to all our homes in a structured and sustainable way.

This strategy is based on:

• A comprehensive review of the existing asset management strategy

• Findings from our recent stock condition survey and validation programme

• Best practice, in particular the ‘Managing Assets’

guidance produced by the National Housing Federation

• L&H Homes Vision for Service Excellence

• Existing and future performance requirements

• Existing and future legislative requirements

• Taking opportunities to improve our assets through government initiatives and incentives

• Making sensible predictions on future growth The strategy identifies our 10 key objectives required to develop and maintain an effective and sustainable asset management strategy:

Objective 1

To ensure all of our homes are decent Key Actions

• Develop and publish a ‘Quality of Home’ Standard – moving beyond Decent Homes – which is subject to biennial review

• Establish a 5 year stock condition survey programme for all of our assets

• Implementation of the Sheltered Housing Review

Objective 2

To deliver an efficient and effective responsive repairs and maintenance service which provides value for money.

Key Actions

• Continue to work with our two main contractors to develop a solution for a contractor interface and direct handling of customer calls / contact

• Ensure risk management is embedded and

• Analyse responsive repairs data to support future investment programme and options appraisal

• Continually improve performance and reduce costs

Objective 3

To ensure that the delivery of planned and responsive works is programmed in the most efficient and cost effective way.

Key Actions

• Integrate responsive repairs data and intelligence into the Asset Management Planning Programme

• Review existing and future planned programme requirements

Objective 4

Increase the sustainability and energy efficiency of our homes

Key Actions Energy Efficiency

• Review our SAP performance following the launch of Promaster Energy Module and the revised ratings calculations

• Develop clear and transparent energy efficiency targets and objectives to ensure we achieve maximum benefit for L&H and our customers

• Increase awareness of energy efficiency measures and a promote a behaviour change programme amongst our employees and customers

• In partnership with tenancy services teams

develop a strategy for identifying and working with customers in fuel poverty (where possible)

Renewable Technologies

• Complete an impact analysis of the trialled air source heat pumps and agree further pilot projects

• Identify funding opportunities to incorporate solar/thermal panels into the boiler and heating replacement programmes

• Develop specifications in partnership with our development team for installations in new properties New Funding Opportunities

• Proactively source ECO funding to support Asset Management Investment Programme

• Ensure we have clear process / policies on the Green Deal and are able to respond to customer requests

• Communicate clearly to all of our customers using

L&H Homes Limited Asset Management Strategy

National Policy – Co2 emissions

• Ensure we capture all energy data required to calculate emissions for domestic dwellings

• Ensure the energy module is operating effectively within Promaster

• Ensure we are complying with regulations in respect of our public buildings.

Objective 5

To be compliant in relation to health, safety and equality

Key Actions

• Fully utilise the Gas Servicing module within Promaster

• Review the controls assurance and audit

processes for gas servicing and production of KPIs.

• Complete HHSRS assessment as part of the stock condition survey

• Identify short / medium term financial impacts of HHSRS

• Implementation of fire risk assessment module into Promaster

• Review operational procedures aligned for Fire Safety

• Ensure asbestos register is fully accessible and being utilised by all contractors and 3rd parties

• Devise a combined stock survey programme which ensures we are fully compliant with regulations for our domestic properties.

• Review asbestos operational procedures

• Devise a 5 year electrical testing programme – reaching full compliance by 2018.

• Comprehensive review Control of Legionella, policy and practice

• Complete a review of our assets to ensure DDA compliance where appropriate

• Ensure the SHEF principles and equality analysis programme is fully understood and delivered within the property services team

Objective 6

Improve our neighbourhoods, creating safer and cleaner environment

Key Actions

• Deliver our current service standards for estate management

Objective 7

Exploit and extend the use of the Asset Management Software

Key Actions

• Review the training and skills requirements of users within the organisation

• Play an active role within the internal User Group to ensure the product is strategic priority for ICT

• Establish a Quality Assurance Audit for key processes within Promaster

• Procurement of an options appraisal tool

Objective 8

Ensure current and future procurement approaches provide and achieving value for money

Key Actions

• Review the procurement strategy and policy for L&H

• Complete the CHIC value for money review

Objective 9

Develop an options appraisal methodology which enables us to understand the performance of our assets and better inform our investment plans and disposal strategies

Key Actions

• Develop an options appraisal tool which can integrate with our existing ICT systems and processes

Objective 10

Consult and engage residents fully in the development and implementation of the Asset Management Strategy

Key Actions

• Develop the monitoring role of the Your Home Group in the delivery of the AMS

• Publish the Quality of Home Standard

• Continue to monitor satisfaction levels with all aspects of asset management

• Review our communication methodologies

• Increase customer involvement in the procurement strategy and decision making process

• Improve customer involvement opportunities in

Section One

L&H Homes Limited Asset Management Strategy

L&H Homes is a dynamic housing and care provider, owning and managing approximately 8,500 homes across East and West Midlands, East of England and Yorkshire and Humberside.

We provide a range of social rented properties, intermediate housing, low cost home ownership, leasehold retirement living, specialist registered care and accommodation based and community support services. The diversity of our business is likely to extend to market rent and for sale properties and our strategy will reflect this.

Our business diversity means we manage a vast range of assets in very different operating contexts.

These complexities require a clear strategic approach to asset management but one which enables flexibility for our different business areas to deliver locally and achieve their business needs and objectives.

Historically our strategy has focussed on the delivery of stock condition based investment programmes with less regard given to the wider asset management issues including environmental sustainability, social and economic factors.

We recognise the need to adopt a strategic approach to asset management, one which plays a significant role in business planning by understanding the long term performance of our portfolio as a whole and of each individual asset.

The 2013-18 strategy incorporates the principles of active asset management

This strategy sets out:

• How we work with our customers to deliver decent homes and sustainable investment up to 2018.

• How we deliver all capital investment, planned/

cyclical maintenance, repairs to empty properties and responsive repairs.

• A strategic framework from which informed decisions can be made about investment in and maintaining our housing assets.

• How we deliver value for money and improve the service we provide to residents.

Our primary focus is “to achieve, sustain and build on Customer Service Excellence”. This vision is underpinned by six corporate aims:

• Growth and business development – delivering excellent affordable homes, care and support and management services

• Organisational culture and development – developing a shared culture, empowering

colleagues and encouraging positive relationships

• Communication and access – furthering innovative and effective ways to communicate with customers, providing relevant business information and improving service delivery and efficiency through technology

• Customer insight and involvement – delivering services which meet customer needs and preferences, promoting resident involvement and using customer feedback to drive service improvements

• Delivering quality services – that meet our published standards, support and enhance local communities and demonstrate value for money

• Governance and viability – ensuring appropriate levels of scrutiny, assessing and monitoring success and maintaining financial viability

1.1 Introduction 1.2 L&H Homes Vision, Aims and

Key Objectives

L&H Homes Limited Asset Management Strategy

1.3 Asset Management Strategy Aims

In the development and delivery of our strategy we aim to achieve:

• Effective stock investment: a stock investment programme designed to keep all properties to the required standard and deliver carbon reduction

• Active asset management: identifying

properties which have poor social, economic or environmental performance, because of low demand or high costs, and either improving them or replacing them with properties which are fit for purpose

• Supporting wider strategic objectives: being clear where and how asset management is supporting these objectives, such as reducing financial exclusion or supporting wider community investment

The detailed objectives of the strategy are covered in Section 4.

1.4 Principles of the Strategy

Our strategy is based on the following principles:

• Tackling homes in the worst condition first and ensuring all of our homes are decent

• Programming delivery of works in the most cost effective manner

• Our investment programmes are driven by our stock condition data and information

• The Asset management strategy aligns with the Business Plan

• Asset management includes all aspects of repairs and maintenance, growth and stock rationalisation

1.5 Strategic Context and Links to Corporate Strategies

The backdrop for developing this strategy is challenging and likely to become increasingly so over the coming years. The sector is experiencing an unprecedented level of change with increased pressures on financial resources through tougher lending criteria from funders, reduced or nil grant

rates for developing new homes, changes in accounting rules and the unknown impacts of welfare reform.

Our strategic response to these challenges to adopt a holistic approach to asset management which incorporates and takes account of other key strategies including:

• Growth

• Value for Money

• Sustainability

• Financial Inclusion

• Procurement

• Equality and Diversity

• Welfare Reform

• Risk management

The aligning of these strategies will be covered in more detail in under Section 4

Longhurst & Havelok Homes Limited financial statements

Section Two

L&H Homes Limited Asset Management Strategy

2.1 Our Assets

L&H Homes own and manage just over 8,500 homes across over 30 Local Authority areas across the Midlands and East regions. We provide a range of homes and tenures including social rented properties including sheltered housing, affordable and intermediate housing, LCHO ownership, supported housing and residential care homes.

In addition to our residential assets we also have a range of non-residential assets including our offices, garages and communal facilities. Please refer to section 2.3.

2.2 Property Portfolio

A summary of our asset profile including a breakdown of stock owned and managed and geographical spread can be found in Annex A.

2.2.1 Our Rented Stock

The social rented sector of our stock makes up over 70% of our overall property portfolio and requires the largest proportion of investment. The properties are widespread across our geographic operation and are managed from our area offices in Boston, Grimsby, Lincoln and Nottingham.

We have a number of Sheltered Housing schemes across operations for which we have full repairing responsibilities. Over the past 2 years we have been reviewing the long term viability of these schemes and have a Sheltered Housing Strategy in place which includes specific recommendations in terms of asset management and programmed investment.

We have two specialist supported schemes, STEPS and HARPS which provide short term accommodation for homeless people and prison leavers and we own and manage two care home facilities in Lincolnshire:

Ashley Court is a dedicated care facility for up to 15 adults with a physical disability. Each person has their own room. All rooms are situated on the ground floor enabling independent access to the community.

Cranwell Court is currently undergoing a significant redevelopment programme and on completion will

provide 27 residential beds, 17 enhanced care beds for long term residents with advanced dementia, 8 shared care and assessment (SCA) beds used for respite and emergency short term placements Intermediate rented properties currently represent a small proportion of our asset profile. L&H Homes are fully responsible for the repairs and maintenance of our intermediate rented properties.

The small number of Rent to Homebuy properties should remain fairly static or reduce over time as the units are purchased through the shared ownership scheme or converted to alternative tenures. L&H Homes are responsible for the repairs and maintenance of these properties whilst they are occupied on a Rent to Homebuy basis.

It is our intention to develop market rent

accommodation for customers who do not qualify for subsidised housing but want the assurance of renting from an experienced and reputable landlord.

These homes will be developed in accordance with the growth strategy.

2.2.2 Shared Ownership and Shared Equity Generally under the terms of the lease agreement L&H Homes do not have any repair and

maintenance responsibilities for these properties except for a small number of Shared Ownership flats and houses located in North East Lincolnshire.

If a Shared Ownership property falls into disrepair, L&H Homes as the freeholder are able to enforce terms in the lease to make sure the resident addresses these issues.

Shared Equity properties are sold on a freehold basis and L&H Homes do not have any repair or maintenance responsibilities for properties sold under this scheme.

2.2.3 Shared Ownership for the Elderly L&H Homes are responsible for the general maintenance of the external parts and structure of the building in Shared Ownership for the Elderly schemes.

2.2.4 Leasehold Schemes for the Elderly (LSE) Under the terms of the lease for Leasehold Schemes for the Elderly properties, L&H Homes are generally responsible for the repair and

L&H Homes Limited Asset Management Strategy

maintenance of the structure of the building as well as any communal areas, communal buildings and facilities on the scheme. On schemes where there is a presence of a resident Scheme Manager, L&H Homes are also responsible for the full maintenance of the accommodation provided.

Subject to the terms of the Lease, L&H Homes are also responsible for undertaking within the domestic properties on these schemes, annual gas servicing and all repair responsibilities to the heating systems. There are, however, a small number of schemes where L&H Homes are only responsible for providing an annual gas safety check.

To enable relevant works to be carried out, L&H Homes are obliged to work within the requirements of leasehold legislation, including the Commonhold and Leasehold Reform Act 2002 and the

compliance of Section 20 consultation in respect of qualifying works and long term agreements.

2.2.5 Leaseholders (Right to Buy Managed and Staircased Shared Ownership Flats)

Leaseholders are represented by those that have purchased flats under the Right to Buy scheme or where shared owners of flats have staircased to 100% ownership; in both instances the freehold title remains with L&H Homes. L&H Homes are responsible for the repairs and maintenance of the external parts, structure and communal parts of the building.

These units often form part of mixed tenure

developments and as the Landlord and Freeholder, we are obliged to adhere to the legislative

requirements as defined within the Commonhold and Leasehold Reform Act 2002 when procuring contracts for major works and the recovery of costs from leaseholders.

2.2.6 Managed Properties

The association manages 452 units of

accommodation across a range of tenures on behalf of around 20 landlords which range from individual owners through to the management of homes on

the Lincoln area. L&H are also the Trustees for an alms house charity, Jubilee Teetotal Homes and has full maintenance responsibilities for the 4 units belonging to the charity.

Where management arrangements are in place, our maintenance responsibilities are limited to the undertaking of responsive repairs, the cost of which is recoverable from the owning landlord. We are not responsible for the planning or provision of major repairs, although through our management arrangements we may agree to take on some aspects of the work, with costs again being fully recoverable from the owning landlord.

In addition around 60 units of both supported and general needs housing is either managed or leased to other providers. For properties that are managed on our behalf we retain full maintaining responsibilities. Almost all of these units are for more specialist housing provision, including a small registered care home managed by Sense and two hostels managed by Lincoln Women’s Aid and Boston Women’s Aid. The nature of these schemes means that in some cases we may have enhanced asset maintenance responsibilities due to health and safety regulations, in particular those relating to properties in multiple occupation, as well as due to the general design, layout and service provision at these schemes.

2.3 Other Assets

Alongside domestic dwellings L&H have other assets requiring on-going management and maintenance including offices, communal facilities, external areas and items such as un-adopted roads and pumping the stations. See Annex B.

The strategy recognises the need to better identify all non-domestic assets, understand the short, medium and long term investment requirements of these and to ensure appropriate management arrangements are in place to minimise the liability, for e.g. applications to transfer responsibility for sewerage pumping stations to Anglian Water.

L&H Homes Limited Asset Management Strategy

2.4 Growth Strategy

Our growth strategy has delivered a substantial level of new provision over the last 3 years resulting in an additional 400 homes for rent across our business and an increase in managed stock through

agreements with other registered providers.

Our business plan anticipates we will provide a further 850 homes for rent and sale by 2018. The existing strategy will develop predominantly S106 sites in the Southern parts of our operation.

As part of a stock rationalisation programme we disposed of our Hull assets in 2011, therefore reducing our geographical spread and creating receipts to enable the acquisition of stock in the Holbeach and Grantham area which increased our presence in this part of Lincolnshire. In December 2012 we acquired a further 159 rented properties in the West Norfolk area.

Our future growth strategy focuses on increasing provision of social housing and opportunities to offer Market rent tenures on larger development schemes in the Peterborough area.

NORTH SEA

WASHTHE 202

734 227

492

250 651

169

5 470

35

113 96

238 36

41

17

South Holland

Fenland Charnwood

Leicester

Hull

NorthamptonshireEast

East Lindsey West Lindsey

North Lincolnshire

North East Lincolnshire

Lincoln East Riding of Yorkshire

Rutland Doncaster

Bassetlaw

Mansfield

Gedling Rotherham

Chesterfield

Boston North Kesteven

South Kesteven Newark and

Sherwood

Melton

Bolsover

Derbyshire Dales

North East Derbyshire

South Derbyshire

Amber Valley

Erewash

Ashfield

Rushcliffe Broxtowe

Nottingham Derby

North West

Leicestershire King’s Lynn and

West Norfolk

North Norfolk

Breckland

Forest Heath CambridgeshireEast

Huntingdonshire Peterborough

433

1462 395

594

Section Three

L&H Homes Limited Asset Management Strategy

We recognise that managing assets effectively is crucial to delivering our social landlord role, our ability to achieve our wider business aims and maintain our cultural values.

The strategy covers all properties owned and managed L&H Homes and for which we have any repairs and maintenance liabilities, including non- domestic asset.

Alongside considering future investment needs and when these will arise, we will also consider alternative options such as demolition, disposal and change of use or stock rationalisation to improve the financial and social value of our assets.

A fundamental part of this approach is to fully implement an Options Appraisal methodology which enables us to understand the social and financial performance of our properties and make informed decisions about their future.

3.2 Asset Management Functions

The strategy sets out how a range of traditional asset management functions are defined and delivered including:

• Capital investment (major repairs)

• Responsive maintenance and empty homes works

• Planned repairs and cyclical contracts

• Service contracts

• Aids and adaptations

Refer to Annex C for more details

In January 2012 L&H Homes commissioned property surveyors, Savills to undertake a

comprehensive stock condition survey of 50% of social rented housing stock (2700 homes). Savills achieved access to 84% of these homes and completed full internal and external surveys. The properties with no access were cloned with similar property types.

The survey programme targeted all properties which did not have current survey data (pre-dating 2006).

The remainder of the stock data was internally validated by our internal property surveyors.

The primary purpose of the survey was to assess the existing standard of our stock and to identify the investment requirements for our properties over the next 5 and 30 year period.

The survey enabled us to assess the condition of our stock against the decent homes standard criteria and to drive our future investment plans to ensure we are tackling homes which are in the poorest condition first.

The key findings from this survey programme identified:

• Underinvestment in the DHS component

replacement programmes resulting in £1.2million of over-due works

• Substantial levels of lifecycle extensions of many components owing to satisfactory or good condition

• High levels of kitchen replacements

• Underinvestment in our other heating i.e. storage heaters

The survey programme alongside the internal validation exercise has provided us with a comprehensive picture of our assets future maintenance requirements. We have collected actual property survey data for 70% of our assets and it is essential this level and quality of data is maintained and refreshed in accordance with a 5 year rolling programme.

3.1 Our Approach to Asset

Management 3.3 Condition of Our Assets

L&H Homes Limited Asset Management Strategy

Maintaining all of our homes to the decent homes standard remains a requirement within our

regulators National Standards for the Home. We are encouraged by our regulator to use these criteria as a minimum standard.

L&H Homes historically delivered planned maintenance programmes to meet the decent homes standard and since 2009 have reported low levels of homes failing to achieve this.

This strategy aims to manage and prevent future non decency and where practically and financially viable to do so, exceed this standard by replacing components in a timely manner, irrespective of whether the home is deemed non decent.

We have concluded from the recent survey and validation programme that 99% of our homes meet or exceed the decent homes standard. We are estimating that 30% of our homes are potentially non-decent and are likely to become non decent within the next 5 years.

Investment of £5 million over the next 5 years is required to prevent homes becoming non-decent, a key deliverable of the strategy which is to ensure all homes are in a good state of repair and have reasonably modern facilities.

Our total investment into Asset Management has risen over the last 3-4 years by nearly £1million.

The anticipated spend on property investment and maintenance is in excess of £8million for 2012/13.

* estimated outturn

The spend profile over recent years shows we are achieving a higher ratio of planned works versus responsive repairs in the region of 56:44%. Our regulators have historically sighted between 60:40 and 70:30 as best practice. An objective of this strategy is to ensure we maximise our planned programme where is it appropriate and achieves value for money.

The strategy review has included redefining our budget cost heads to ensure works and programmes are appropriately allocated. The 2013/14 budget setting process has seen revisions in these cost heads and also further refinement of the responsive maintenance contract to clearly identify items such as scheme costs and office costs.

3.4 Decent Homes 3.5 Financial Investment

DHS Properties

31st March 2010 3.3% 121 31st March 2011 0.0% 0 31st March 2012 1.0% 59

Mar 11 Mar 12 Mar 13*

Responsive £2,330,687 £2,064,366 £1,950,000 Voids £1,472,574 £1,376,451 £1,420,000 Planned/

Cyclical £1,433,234 £1,242,020 £1,440,000 Major £2,804,572 £3,071,020 £3,700,000 Total R&M £8,041,067 £7,744,857 £8,510,000

Year 1 (13/14) 1,470,982*

Year 2 (14/15)) 81,866 Year 3 (15/16) 1,211,796 Year 4 (16/17) 268,059 Year 5 (17/18) 1,909,755

Section Four

L&H Homes Limited Asset Management Strategy

4.1 Delivering our Objectives

The objectives covered within this section apply in principle to all of our assets as described in Section 2, although there may be variances in specific tasks as required by our different tenure groups.

Objective 1

To ensure all of our homes are decent

We are committed to meeting the Government’s Decent Homes Standard and maintaining properties above this standard where financially viable to do so.

The asset management data we hold provides us with a 5 year plan for non-decent homes and an overall component replacement programme. We will integrate these plans to ensure homes which are not meeting the decent homes standard have their work prioritised.

Through the 5 year survey programme we anticipate there being significant numbers of components having their lifecycles extended owing to good condition. This assumption is supported by our recent external Savills survey and our internal validation process.

Our investment programmes will be driven by our condition assessments using age and lifecycles as a trigger point and for guidance and financial planning.

Robust planning is critical in preventing future non decency and where possible combining works in properties where multiple component failures exist. This exercise was undertaken for 2012/13 programme and will be replicated for the 5 year programme.

Our engagement with customers has influenced the standard and variety of works we provide in our component replacement programmes and has improved and created further choice and flexibility within our specifications. The L&H Quality of Homes standard is being produced in partnership with the Your Home Group. This group comprises of six

Key Actions

• Develop and publish a ‘Quality of Home’

Standard – moving beyond Decent Homes – which is subject to biennial review

• Establish a 5 year stock condition survey programme for all of our assets

• Implementation of the Sheltered Housing Review

Objective 2

To deliver an efficient and effective responsive repairs and maintenance service which provides value for money

Since April 2011 the responsive and void maintenance and gas servicing and repairs contracts have been operated with two contracts through open book partnering arrangements.

Aaron Services currently operate the gas servicing

& repairs contract and Kier Services are responsible for the response & void maintenance contract.

The long term nature of this partnering arrangement has required a different approach to the client and contractor relationship illustrated with a shared responsibility and risk for achievements of KPI targets and performance within budgets.

In April 2012 we carried out comprehensive contract reviews for responsive and gas maintenance which had a strong focus on the financial and operational performance.

The review highlighted significant costs savings of 9.7% compared with previous contractors.

These cost savings are attributed to our robust procurement process and effective contract management.

The contract management has been underpinned by a greater focus on expenditure and forecasting, improved budgetary control and close partnership working and innovation to achieve cost savings.

Both contracts have benefited from a reduction in administration compared with the traditional value driven contracts previously being operated.

The review also acknowledged in detail the

L&H Homes Limited Asset Management Strategy

positive steps through a structured Operational Improvement Programme.

The Aaron gas contract review did not find any material concerns with financial or operational delivery however highlighted the benefits of

including some planned works into the contract and two recommendations for future improvements to the customer experience.

Key Actions

• Continue to work with Kier and Aaron to develop a solution for contractor interface and direct handling of customer calls/contact

• Ensure risk management is embedded and operating effectively within the contract

• Analyse responsive repairs data to support future investment programme and options appraisal

• Continually improve performance and reduce costs

Objective 3

Ensure that the delivery of planned and responsive works is programmed in the most efficient and cost effective way

Through our improved stock condition database and maturing involvement with CHIC we aim to achieve greater value for money through an increased planned programme, resulting in fewer responsive repairs and increased tenant satisfaction.

To ensure we can deliver this we need to ensure the following are in place:

• Comprehensive and property specific 5 year capital programme comprising decent homes works and component replacements

• Preventative maintenance programme which includes external repairs and decorations and internal communal areas

• Reviewing what responsive works can be more effectively undertaken as part of a planned / cyclical programme

• Complete non-urgent low risk repairs as part of our planned projects

• Analyse repairs data / intelligence to identify trends in terms of costs, work types

• Encourage service centre staff to use planned and capital programmes prior to raising responsive works orders

• Ensure responsive maintenance reduction and planned growth is factored into future budget planning

Key Actions

• Integrate responsive repairs data and intelligence into the Asset Management Planning Programme

• Review existing and future planned programme requirements

Objective 4:

Increase the sustainability and energy efficiency of our homes

Through improving the energy efficiency of our homes we can improve our customers’ quality of life and address financial exclusion through reducing the numbers of our customers in fuel poverty.

Our current average SAP (Standard Assessment Procedure) rating for our rented properties is 67:30 using the 2005 version. Initial analysis of our SAP performance shows a significant number of properties rating under 60 which is largely

attributable to electric heating and solid walls. Refer to Annex D for average SAP by EPC band.

Following implementation of the Promaster Energy Module in April 2013 we expect to see a small improvement in SAP ratings to electrically heated properties and to those which have received major works over the last 12 months.

Over the next 12 months in depth SAP analyses will be undertaken to ensure we are targeting investment programmes in the most effective manner to improve our overall property performance. To date, the early findings have supported our fuel change programmes and partnership working with Kier energy.

Alongside improving outcomes for our customers we also reinforce our commitment to the

Sustainability agenda through reducing our carbon emissions and encouraging behaviour change amongst our customers.

We are committed to providing a cost neutral service whilst achieving environmental, economic and social improvement by:

• Identifying proven technological enhancements particularly in relation to the delivery of the asset

L&H Homes Limited Asset Management Strategy

• Research and engagement with external agencies to identify funding opportunities for environmental improvements for L&H and our customers

• Helping to raise awareness of fuel poverty and work with our customers to alleviate this Key Actions

• Review our SAP performance following the launch of Promaster Energy Module and the revised ratings calculations

• Develop clear and transparent energy efficiency targets and objectives to ensure we achieve maximum benefit for L&H and our customers

4.1 Existing Commitment

Within our existing investment programme we deliver our energy commitment through:

• Installing A rated gas boilers on our boiler replacement programme

• Installing new gas connections to previously electrically heated properties and installing A rated gas boilers (where possible)

• Carrying out loft and cavity wall insulation works

• Installing high performance double glazing and external doors

• Installing secondary glazing to listed buildings / flats

• Provision of over bath showers within our bathroom replacement programme

Recognising the increasing issue of fuel poverty and our responsibilities as a landlord we provide all potential tenants with an energy performance certificate to enable them to make an informed decision about whether to take a property based on estimated fuel costs.

Key Actions

• Increase awareness of energy efficiency measures and a promote a behaviour change programme amongst our employees and customers

• In partnership with tenancy services teams develop a strategy for identifying and working

4.2 Renewable Technologies

We continue to monitor the renewable technologies available in the market place and are currently trialling two different air source heat pumps within our homes. During 2013 we will be measuring the impacts of these installations, in terms of energy usage and fuel cost, customer feedback and environmental impact.

Over the lifetime of this strategy we will complete further pilot projects and research to ensure financial savings are realised and technological reliability is achieved.

Swan House, a scheme of 23 flats underwent a large solar thermal panel project earlier this year which has resulted in lower bills for tenants’ hot water usage. This project received acclaim on a national level being nominated for the Best Sustainability Project.

Key Actions

• Complete an impact analysis of the trialled air source heat pumps and agree further pilot projects

• Review funding opportunities to incorporate solar/thermal panels into the boiler and heating replacement programmes

• Develop specifications in partnership with our development team for installations in new properties

4.3 New Funding Opportunities

ECO (Energy Company Obligation) is a successor to CESP and CERT ECO and places an obligation on the leading energy suppliers to assist in

reduction of the carbon footprint and cut energy bills.

ECO is split into two parts; Carbon Saving ECO and Affordable Warmth ECO.

Carbon Saving Eco is aimed primarily at ‘hard to treat’ properties where significant carbon savings can be made, such as houses with solid walls.

Affordable Warmth ECO is aimed at low-income

L&H Homes Limited Asset Management Strategy

cases contribute to the upgrade of heating systems and boilers.

As part of the ECO (Energy Company Obligation) we have engaged with Kier Services Specialist Energy Department to complete an assessment of our existing assets to determine our opportunities for funding.

The assessment estimates funding will be available to support our fuel change and hard to treat property initiatives.

Key Actions

• Proactively source ECO funding to support Asset Management Investment Programme

Green Deal

The Green Deal is designed to help householders and businesses increase the energy efficiency of their properties. The deal enables residents to take out loans to pay for the cost of installing insulation and other energy efficiency measures – the cost is then to be offset in the mid to long term through reduced energy bills.

We have decided not to act as a Green Deal provider and will focus on communicating the key messages of the initiative to our customers and ensure we can respond to individual requests. We will evaluate our position on a regular basis.

Key Actions

• Ensure we have clear process / policies to respond to customer requests

• Communicate clearly to all of our customers using our newsletters, website and Involvement structures.

4.4 National Policy – Co2 emissions

The Climate Change Act introduced in 2008 sets out the Government’s targets to reduce green- house emissions from the 1990 baseline by 80%

by 2050.

We do not have comprehensive data on our existing Co2 emissions for all of our assets and therefore cannot accurately assess our progress since 2008.

We acknowledge this to be a key gap in our asset

data and will be addressed throughout 2013 with the implementation of our Energy Module within Promaster.

More recent regulation requires us to complete Display Energy Certificates (DEC) for our public premises which assess our energy performance in a similar way in which we measure our domestic dwellings.

Key Actions

• Ensure we capture all energy data required to calculate emissions for domestic dwellings

• Ensure the energy module is operating effectively within Promaster

• Ensure we are complying with regulations in respect of our public buildings

Objective 5

To be compliant in relation to health, safety and equality

4.5 Gas Safety

With respect to gas safety our key objectives are to:

• Ensure we meet our legal obligations under the Gas Safety (Installation and Use) Regulations 1998

• Ensure all reasonable steps are taken to issue a Landlord Gas Safety Record (LGSR) to all tenanted dwellings before the expiry date of the previous certificate. The legal requirement is 100% compliance

In 2011 we entered into a partnering 3* Contract Aaron Services with which was an extension of their appointment and delivers the service to the whole geographic operation of L&H Homes.

In 2011 we appointed Blue Flame to complete our external Gas Audit programme for which they complete annually on a 10% sample basis.

Comprehensive and prompt reports are provided to Aaron and L&H for action as required.

Key Actions

• Fully utilise the Gas Servicing module within Promaster

• Integrate the findings of the annual service programme into the survey module

L&H Homes Limited Asset Management Strategy

• Ensure compliance with the current gas safety regulations and any future amendments or new legislation

• Review the controls assurance and audit

processes for gas servicing and production of KPIs

4.6 Housing Health and Safety Rating System (Housing Act 2004)

The Housing Health and Safety Rating System (HHSRS) came into force on 6th April 2006. The underlying principle is that any residential premises should provide a safe and healthy environment for any potential occupier or visitor. To satisfy this principle, a dwelling should be designed, constructed and maintained with non-hazardous materials and should be free from both unnecessary and avoidable hazard.

All our stock condition surveys include a HHSRS assessment and where Category 1 hazards are identified the property is classified as non-decent until the hazard is either removed or the identified repairs are completed.

In acceptance that the principles of the HHSRS are based on an individual’s assessment of risk and hazards L&H Homes work closely with the local authorities in our area to ensure that practical and effective solutions are jointly agreed and implemented.

Key Actions

• Complete HHSRS assessment as part of the stock condition survey

• Ensure compliance with compliance with Housing Act 2004 and any future amendments or new legislation

• Rectify any Category 1 hazards within prescribed timescale

• Identify short / medium term financial impacts of HHSRS

4.7 Fire Safety

including common or shared parts of blocks of flats and for houses in multiple occupation.

Our responsible person ensures our programme of 156 FRAs is completed and detailed action plans are in place to inform our Asset Management strategy. The action plans include a prioritised list of remedial measures, physical and /or managerial, that are necessary to ensure the fire risk is

maintained at or reduced to an acceptable level.

The existing FRAs have identified £50k works for 2013/14 however we expect this will be subject to change following a review of the risk assessment procedure and the increased requirements set upon us as a landlord.

To respond to the increasing administrative and surveying requirements associated with fire risk we have purchased a bespoke module for Promaster which is currently being implemented across the Group. This is designed to assist in the data collection, assessment and ratings and future programming of fire safety related works.

Key Actions

• Implementation of fire risk assessment module into Promaster

• Improve quality and frequency of report monitoring

• Review operational procedures aligned for Fire Safety

4.8 Asbestos Management

Current legislation requires us to manage asbestos in our stock and take all reasonable steps to

minimise the risks to our customers, employees and contractors.

An overarching Asbestos Policy is in place,

applicable to all members of the Longhurst Group.

The policy was developed by the Longhurst Group Head of Health and Safety with input from Group members.

Within our detailed operational procedures we ensure compliance with our legal and regulatory obligations by:

L&H Homes Limited Asset Management Strategy

undertakes invasive works on a residential property

• Maintaining a current and accurate asbestos register, available for contractors and 3rd parties, as appropriate

• Provision or training and awareness for all persons at risk of disturbing asbestos To date we have carried out 1142 asbestos surveys including management surveys for all void properties and refurbishment and demolition (R&D) surveys for all properties undergoing major repairs.

We have full compliance with communal parts and 21% of domestic surveys completed to date.

Regulatory requirements stipulate we should hold 100% survey data for our domestic dwellings.

The responsibilities associated with asbestos regulation presents a significant cost to the organisation of approximately £150 + VAT per survey equating to £160k per annum.

The information gathered through surveys is recorded and actioned where required and then available to all contractors via Citrix or Promaster web reports.

Key Actions

• Ensure asbestos register is fully accessible and being utilised by all contractors and 3rd parties

• Devise a combined survey programme which ensures we are fully compliant with regulations for our domestic properties

• Identify financial implications in the short, medium and long term

• Review asbestos operational procedures

4.9 Electrical Safety

The NIC EIA Regulations (17th edition) recommend all domestic properties have a 5 year periodic electrical inspection. Until 2012 the requirement was set at 10 years for a domestic property and 5 year for a business.

We are currently operating a 10 year domestic and a 5 year communal inspection programme which will require significant revision to meet regulation standards.

Delivering a 5 year inspection programme will require a phased approach over the life of the strategy to reach the standard and manage the increased direct costs of inspection and associated remedial works.

Key Actions

• Devise a 5 year testing programme – reaching full compliance by 2018

• Ensure remedial works completed within defined priorities

• Ensure compliance with compliance with NIC EIC Regs (17th edition) and any future amendments or new legislation

• Integrate the findings of the annual service programme into the survey module

4.10 The Control of Legionella

Our policy for the control of legionella is designed in accordance with the Approved Code of Practice L8.

The code recommends we carry out routine testing of communal water systems.

The review had identified some inconsistencies with the control of legionalla across the different parts of the business. There are separate contracts in place with specialist contractors however we are not able to demonstrate full compliance with the recommended code of practice or that we are achieving value for money within the current arrangements.

Key Actions

• Comprehensive review Control of Legionella, policy and practice

• Contract review and tendering process, as required

• Review compliance with compliance with HSE

‘Guidance to Employers’ and ACOP L8 .

4.11 Construction (Design and Management) Regulations 2007

The regulations place specific duties on clients, designers and contractors, to rethink their approach to health and safety, so that it is taken into account

L&H Homes Limited Asset Management Strategy

throughout the life of a construction project from its inception to its subsequent final demolition and removal. The regulations are designed to:

• Improve planning and management of projects from the very start of the project

• Assign right people for the right job at the right time to manage the risks on site

• Target effort where it can do most good in terms of health safety

• Discourage unnecessary bureaucracy To ensure our regulatory compliance we:

• Check competence and resources of all appointees

• Ensure there are suitable management arrangements for the project welfare facilities

• Allow sufficient time and resources for all stages

• Provide pre-construction information to designers and contractors

• Appoint a CDM Co-ordinator

Our CDM duties are provided through the Longhurst Group which provides us with the following benefits:

• Group cost benefit (zero rated VAT)

• Additional services such as site inspections and contractor performance reviews

• More visible presence from project conception to completion

• Specifically designed documentation and procedures

• Effective lines of communication between staff Key Actions

• Ensure compliance with compliance with the CDM Regulations 2007 and any future amendments or new legislation

4.12 Equality Act 2010

The Equality Act was introduced in 2010 and sought to replace all other previous Equality related legislation into one piece. The Act places a proactive duty on all public bodies to take positive action and promote equality.

As part of our policy review and development process we complete an Equality Analysis (EA). The EA helps to identify any existing or potential barriers for any of our customers accessing or receiving a service from us irrespective of their social identity or protected characteristics.

We have completed EAs for our responsive

maintenance, gas servicing and aids and adaptation services which have demonstrated that we are legally compliant and demonstrating good practice.

Moving forward we need to ensure these are regularly reviewed and these are completed for all aspects of the asset management functions.

Key Actions

• Complete a review of our Assets to ensure DDA compliance where appropriate

• Ensure the SHEF principles and equality analysis programme is fully understood and delivered within the property services team

Objective 6

Improve our neighbourhoods, creating safer and cleaner environments

We aim to provide an estate management service to tenants, residents and shared owners which allow them to have quiet enjoyment of their homes in a safe and clean environment that they can take pride in.

Estate management includes:

• Grounds maintenance

• Litter, fly tipping and unauthorised dumping of rubbish

• Removal of abandoned vehicles

• Removal of graffiti

• Condition and cleanliness of communal areas.

We commit to providing safer and cleaner environments by:

• Maintaining our communal landscape areas.

Our contractors inspect each scheme at least once every 2 weeks to assess the works that are required

• Removing items of rubbish that could be a

L&H Homes Limited Asset Management Strategy

serious risk to health and safety, which have been left through fly-tipping, within 24 hours of the report being received. In all other cases rubbish is removed in 5 working days

• Responding to reports of an abandoned vehicle within 5 working days and take any necessary action to deal with the removal of the vehicle.

• Removing graffiti within 5 working days, unless the person reporting considers the graffiti offensive is of a sexual or racial nature when we will remove it within 24 hours

• Providing a cleaning service to the communal areas at some of our flat schemes. Where there is a cleaning service the costs are recovered through a service charge. (Where a cleaning service is not provided, residents are expected to keep communal areas clean and tidy as part of their tenancy contract)

Key Actions

• Deliver our current service standards for estate management

Objective 7

Exploit and extend the use of the Asset Management Software

The Promaster software was introduced across the Longhurst Group in 2009 as our primary asset management database.

We have invested significantly by increasing the number of modules deployed to improve our overall administration and management of asset management functions, as below:

• Property Core Data – stores the core data that underpins all of the other modules

• Condition Survey – a core constituent of the Promaster suite and holds property information relating to repairs and renewals

• Service Contracts – manages the planned maintenance of all plant requiring regular servicing or inspection

• Energy – calculates energy ratings, stores energy data and generates EPCs and provides indicative affordable warmth figures

• HHSRS – enables efficient onsite assessment of the 29 hazards, produces calculation results and an effective audit trail

• Project Management – tracks the finances, dates and administration of planned maintenance

projects from inception to completion

• Asbestos – records the location, material, asbestos content, resultant risk and

recommended action for each ACM identified

• Promaster mobile – enabling the use of PDAs on site for stock condition surveys

The formation of Longhurst Promaster User Group recognises the increased importance in fully exploiting the software available to us and increasing the skills and knowledge base across the member companies and within the ICT service Key Actions

• Review the training and skills requirements of users within the organisation

• Play an active role within the internal User Group to ensure the produce is strategic priority for ICT.

• Establish a Quality Assurance Audit for key processes within Promaster

• Procurement of an Options Appraisal tool

Objective 8

Ensure current and future procurement approaches provide and achieving value for money

We currently operate a combination of procurement approaches in relation to asset management, including membership to a procurement club, through open tendering processes and tendering within existing contracts.

A multi way approach to procurement provides flexibility and efficiency when delivering a complex asset management function.

The geographical and business diversity of the organisation does create complexities when procuring services and the capacity of contractors to deliver single contracts across the whole of L&H.

We routinely test VFM all procurement

methodologies through a combination of cost and quality measures however there needs to be a greater transparency around the outcomes of these exercises and wider consideration for other factors such as social and environmental value.

Key Actions

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• Review the procurement strategy and policy for L&H

• Complete the procurement club value for money review

Objective 9

Develop an options appraisal methodology which enables us to understand the

performance of our assets and better inform our investment plans and disposal strategies

It is essential we can understand the performance of our assets now and in the future and use this intelligence to shape our investment programmes, disposal and rationalisation projects.

We have good quality information on our assets including stock condition, energy efficiency, repair costs, rent collection levels, turnover and long term demand. However we are not able to easily use this information collectively to make assessments of the financial and social value of our assets either individually, by groupings or as a whole.

To ensure we can maximise the outcomes for our investment it is essential we can identify our poorer performing assets and make informed decisions about their future, including investment, change of use, modernise, decommission and replace in a timely and planned nature. In addition to understanding current performance, we need to scenario model our assets, for e.g. increasing rents or reducing turnover levels and assessing the impacts of these factors on an asset(s).

Key Actions

• Develop an options appraisal tool which can integrate with our existing ICT systems and processes

Objective 10

Consult and engage residents fully in the development and implementation of the Asset Management Strategy.

Customer involvement is one of the key principles of helping us to deliver our agreed objectives. The input we receive has been integral to the process

for developing our Asset Management Strategy.

Involvement to date has primarily been through our Your Home Group within the Operational Services division.

The consultative stage has centred on the

development of the Quality of Home Standard. This will set a standard service informing our customers of what they can expect when they rent one of our homes. Customers have reviewed the way we deliver key aspects of our asset management services and specifications attached to these works and made recommendations for improvements and alterations.

Our customers are routinely able to influence service provision and policy making both through the formal involvement structures but also via the giving of feedback, participation in STAR survey of which we achieve record levels of satisfaction in 2012 in relation to repairs and maintenance.

Key Actions

• Develop the monitoring role of the Your Home Group in the delivery of the AMS

• Publish the Quality of Home Standard

• Continue to monitor satisfaction levels with all aspects of Asset Management

• Review our communication methodologies

• Increase customer involvement in the procurement strategy and decision making processes

• Improve customer involvement opportunities in relation to specifying and letting service contracts

• Comply with Section 20 consultation

requirements in accordance with the Landlord and Tenants Act 1985 as amended by Section 151 of the Commonhold and Leasehold Reform Act 2002

Section Five

L&H Homes Limited Asset Management Strategy

5.1 Funding the Strategy

To ensure we are effective in the delivery of our asset management responsibilities it is important to accurately predict future investment requirements.

The strategy review has required close scrutiny of previous financial predictions and validation of our stock investment data to ensure our future strategy and investment plans are accurate and robust.

It is clear from the current Business Plan that the resources available to complete all major and planned repairs identified in the 30 year plan fall short of what is required in the next five years (refer to Annex E for 5 and 30 year funding plan). This will impact on the standards we are able to achieve with our assets, mainly through a reduction in planned estate works e.g. car parks, paths, walls.

The Asset Management Strategy recognises the financial limitations seeks to address this through ensuring that resources that are available are used in the most efficient way tackling homes is the poorest condition and prioritising decent homes related works first, for e.g. we have identified significant resources to improve the efficiency of heating systems in our homes for the benefit of our residents and the environment.

Recognising the continued drive to maximise value for money it is essential we continue to achieve efficiencies through our contract procurement arrangements.

As detailed in Section 4 we will identify opportunities afforded by the ECO initiative and work with our partners and contractors in securing additional funding for our major repairs programme.

The Asset Management Strategy will be reviewed annually and where budget savings occur they will be used to fund an enhanced planned programme.

Section Six

L&H Homes Limited Asset Management Strategy

6.1 Strategy Delivery and Monitoring

We will carry out periodic reviews and update of our Asset Management Strategy to ensure it is properly aligned with the Longhurst Group business plan and other business strategies.

The updating process will enable us to assess how well we have delivered against the objectives and targets set and identify areas for improvement. We will use feedback received from our customers and latest best practice developments to ensure our strategy and action plan remain current.

The Strategy Action Plan details the activities we will be undertaking to achieve our objectives.

The 10 objectives will provide clear focus for the Organisation in relation to asset management and will be subject to regular monitoring, evaluation and review.

The Board will receive regular performance updates on key aspects of the strategy delivery within the board reporting framework and annually through a formal annual review of the strategy.

6.2 Risk Management

Throughout the development of the strategy, we have undertaken a detailed risk analysis and considered the existing control measures in place and their effectiveness in relation to asset management functions.

The organisation recognises ‘Failure to deliver the Asset Management Strategy’ as a strategic risk and therefore will be subject to regular monitoring and scrutiny with senior officers and the Board.

This risk management processes which exist within the Organisation will closely align with the project management of delivering the Asset Management Strategy Action Plan.

Section Seven

Annexes