Housing Asset Management Strategy

Transcription

1 ANNEX TO ITEM 10 Housing Asset Management Strategy 2004/05 FS 45518

2 Contents 1. Executive Summary Recommendations Methodology Approach to developing the strategy Introduction Background to MK Asset Management The Decent Homes Standard Fitness Standard State of Repair Modern Facilities Thermal Comfort The Property Profile Tenanted Homes Garages Shops Demand and Popularity Tenanted Properties Demand Popularity Offers.v. Refusals Void Trends Garages Demand Asset Valuation Rental Income Tenanted Homes Garages CIM-02-T-10

3 Contents 9. Stock Condition Survey Executive Summary The Survey Methodology Year Cost Projection Aspirational Standard Costs Acceptable Standard Costs Minimum Decency Costs Decent Homes Asbestos Contingency Customer Perceptions Tenant Satisfaction Survey Feedback from special housing forum Asset Management Strategy Introduction Historic Investment Procurement Investment.v. Income Minimum Investment Acceptable Investment Recommended Investment Summary and future work Responsive Repairs Voids Planned Maintenance Associated land and grounds, including garages General Garages Management Information CIM-02-T-10

4 1. Executive Summary This is the Council s first Housing Asset Management Strategy. This strategy considers the assets of the Housing Revenue Account and makes recommendations and sets out the further improvements that are required to effectively manage the assets. This report is not intended to answer all of the many issues that are associated with the assets, but is intended to provide a framework around which strategic asset management planning can be implemented. Detailed recommendations are set out in Section 2 of this report. The Councils primary assets are its 12,250 tenanted properties, 79 shops, 2,983 garages and the rent received form the tenants. The Council also has approximately 1,700 shared ownership properties and 1,400 leaseholders. The first version of the strategy focuses on the core tenanted houses and garages. Considerable work is needed to address the management of decent homes; this has started to be addressed. A Stock Condition Survey was completed in June this year and the final results are still being analysed. The survey has been carried out by FPD Savills, who are a Blue Chip company and experts in this field. Figures quoted in this document are based on the initial draft results, and although subject to minor change, are suitably accurate for this report. The main objectives of the survey were To provide accurate and statistically reliable information concerning repairs and maintenance as well as improvement costs forecast over a 30 year term; To collect, validate and report upon attribute and condition information about the stock for the purpose of improving existing records and future maintenance planning; To establish a methodology upon which further surveys may be undertaken in the future to supplement this survey exercise; To provide accessible, reliable and easily maintainable planning data for future repairs, maintenance and improvement programmes; To assess the properties in accordance with the Decent Homes Standard Whilst the stock has generally been well maintained on a day-to-day basis it has suffered from a lack of sustained planned maintenance investment. As a result, there are a significant number of major components that have reached/are reaching the end of their useful life and will require replacement in the short term. The majority of properties have pitched roofs, which are covered in a mixture of concrete and clay tiles. Whilst the pitch roof coverings are generally in satisfactory condition at the present time, a significant re-roofing programme will be required during the next 20 years. Approximately 55% of the stock would benefit from the installation PVCu double glazed windows. Many of the front and back doors are original and, whilst serviceable, would benefit from replacement with modern secure doors. Environmental issues such as paths, fences and boundary walls have not been a priority and some areas are in need of attention. Page 1

5 Internally, many of the kitchens and bathrooms are original and need modernisation. The majority of the properties have central heating although many systems are now in need of renewal. Much of the wiring throughout the stock is original and an on-going rewiring/upgrading programme will be required during the next 15 years. As part of the survey the properties have been assessed against the Governments Decent Homes Standard. The Decent Homes Standard was originally issued in July 2001 and has had various amendments since, the most recent being in February The standard sets out clear criteria that a property needs to meet in order to be classified as decent. There are 4 main sections of the standard. A property must be fit in accordance with the statutory fitness standards, the key components and non key components need to be in a reasonable state of repair, the property must have reasonably modern facilities and a reasonable degree of thermal comfort. In accordance with a strict interpretation of the Decent Homes criteria, approximately 50% of the stock currently fail the standard and the majority of the remainder will become non decent between now and 2010 without sufficient investment. The survey has identified costs for three standards of decency; minimum, acceptable and recommended. A significant shortfall in funding over 30 years is projected for all but the minimum standard. The minimum standard would be unsustainable in maintaining the assets and would be unlikely to meet even the lowest expectations of the Tenants. The recommended standard is the standard recommended by FPDSavills and presents the Council with a capital investment shortfall of 150m between now and 2010 and a 256m shortfall over the next 30 years. The survey also included an energy survey to assess the energy efficiency of the properties and the current NHER and SAP ratings. This data has been processed and analysed. The average NHER rating of the properties is 6.6 and the average SAP rating of the properties is 58. Whilst these are both above the national average, there is still scope to improve the thermal performance of the properties. The installation of modern and efficient heating systems, upgrading the levels of roof insulation together with the replacement of the single glazed windows with double glazed windows would be particularly helpful. The current valuation of the properties has identified the following; tenanted properties have a Vacant Possession Value of 1,006m, and Existing Use Value (Social Housing) 543m. This must not be misinterpreted as the saleable value to say an RSL. The saleable value needs to be valued as part of the Options Appraisal. Some significant gaps and inaccuracies have been identified in the Councils databases and management systems that need to be addressed to support the successful management of the assets. These particularly relate to financial management. The demand for social housing in Milton Keynes is high. Virtually all properties can be let, despite location and condition. This is due to the sheer volume of current live letting cases and is also a result of the number of homeless that are currently housed in the HRA stock. Supply is the biggest issue facing Milton Keynes housing stock, being compounded by the current volumes of Right to Buy. The current void turn around time is 37 days, which is close to the upper quartile of other unitary authorities at 36 days. This is this year s target. Granby Court, Serpentine Court and Mellish Court have some of the highest void churn rates, indicating these areas of low popularity. Page 2

6 The sheltered housing schemes are also an area with some low demand that would benefit from an appraisal and considerations for disposal of certain schemes or change of use to meet lettings demand. Garages are a concern for the Council. The garage void rate is 38% and many of the sites contribute towards anti social behaviour problems. A desktop study has been undertaken and circa 900 units have been initially identified for demolition. This is subject to consultation with tenants and a formal appraisal. There is limited scope to dispose of the assets for development. The loss of income due to voids for tenanted properties is around 0.5m. The anticipated income is 40m. In March % of Tenants where satisfied or very satisfied with the Council as a landlord. 79% were satisfied with their homes. 68% considered their homes to be in good or very good condition, whilst the repairs service was only given a 51% rating. Feedback from the special housing forum revealed that Tenant priority is, in order of importance, affordability, environment, safety, quality, health, stability and choice. Page 3

7 2. Recommendations This section collates the recommendations that have been made through out the document and acts as a high level plan for managing the assets over the next three years. The recommendations are based on the findings within the strategy. The partnership will need to agree the priority of the recommendations, the delivery approach and any associated resources that are identified. The Asset Management Strategy recommends that investment continues to be made into the Councils existing housing stock and is increased, dependent on alternative funding streams that may become available. Due to the level of housing demand in Milton Keynes there are no recommendations to decommission any of the housing stock, although approximately 900 garages are proposed for consultation for demolition. The recommendations are grouped into the same business areas or sections as identified in the Asset Management Strategy chapter of this report. Item No Business Area Section Reference in Report Recommendation / Actions Benefit / Outcome Decision Maker 1.0 Procurement 1.1 Procurement 11.3 Produce and deliver a recovery plan for the full delivery of the capital programme, signed up to by the partnership and audit. Complete delivery of the capital programme Cabinet 07/09/ Procurement 11.3 Implement agreed partnering contracts during 2005/06 Reduce procurement timescales and improve capital spending profile Tender Acceptance by Cabinet 1.3 Procurement 11.3 Implement procurement strategy Reduce procurement timescales and improve capital spending Director of Housing 1.4 Procurement 11.3 Procure Asbestos Consultants and Contractors on framework contracts to manage the testing, inspection and removal of asbestos by March 2005 Will reduce the resources currently managing the register and on off removals and tests. Will improve the turnaround times for voids and responsive works. Director of Housing Page 4

8 Item No Business Area Section Reference in Report Recommendation / Actions Benefit / Outcome 2.0 Investment.v. Income 2.1 Investment.v. income 11.4 Procure consultants and deliver the options appraisal. This is the key piece of work that will financially model the assets now the stock condition survey is complete. The initial findings will be reported to Cabinet on the 7 th September. Identification of options (ongoing) Cabinet 2.2 Investment.v. income 11.4 Deicide, with tenants, the level of decency that MKC will deliver Recommended, Acceptable, Minimum Standard. Produce a Decent Homes Policy Investment in Decent Homes in Milton Keynes Director of Housing 3.0 Responsive Repairs 3.1 Responsive Repairs 11.5 Implement the Appointments System by October 2005 Deliver improved front line responsive repairs service Director of Housing 3.3 Responsive Repairs 11.5 Implement new repairs partnering contracts by March 2005 Deliver a better service to tenants with improved value for money Tender Acceptance by Cabinet Page 5

9 Item No Business Area Section Reference in Report Recommendation Benefit / Outcome 4.0 Voids 4.1 Voids 11.6 Implement the minimum lettings standard Will deliver a standard for void property refurbishment Director of Housing 5.0 Planned Maintenance 5.1 Planned Maintenance 11.7 Implement the capital recovery plan and the recommendations regarding procurement Delivery of the budgeted Capital Programme Building Services 5.2 Planned Maintenance 11.7 Capitalise repairs expenditure on improvements Reduction in complaints, improved response to tenant complaints and Member enquiries Cabinet through appraisals process 5.3 Planned Maintenance 11.7 Increase surveying resources to address the capital programme under spend and the increase in planned activity that will be required to address decent homes Capital programme delivery Director of Housing 5.4 Planned Maintenance 11.7 Analyse the stock condition survey results and develop the 5 year plan once the Options Appraisal has been completed and the MKC Decent Homes standard has been agreed with tenants. Will provided an informed basis for planned and major works delivery Director of Housing 5.5 Planned Maintenance 11.7 Track Decent Homes performance and statistics through dedicated planning resources using First Housing. Include stock profiling to manage and intelligently predict the changes in decency across the stock. Provides projected and current decency profiles to manage the 2010 objective Director of Housing Page 6

10 Item No Business Area Section Reference in Report Recommendation Benefit / Outcome 6.0 Associated land and grounds, including garages 6.1 Associated land and grounds, including garages 11.8 Identify the total extent of the Council s HRA assets, such as HRA land, and non tenanted properties Provide a clear asset portfolio and understanding of total liability and statutory responsibility Director of Housing 6.2 Associated land and grounds, including garages 11.8 Implement a GIS based system to support the management of operational and strategic roles Areas of responsibility can be easily established an defined Director of Housing 6.3 Associated land and grounds, including garages 11.8 Approve the methodology for appraising sites of derelict garages for demolition A documented process to resolve the issues associated with the garages across the stock Director of Housing and Cabinet 6.4 Associated land and grounds, including garages 11.8 Approve the delegation of authority to the Director of Housing to approve recommendations arising from the garage study Reduction in decision making time regarding nuisance sites Cabinet 7.0 Management Information 7.1 Management Information 11.9 Continue with implementation of the Planned Maintenance Module Delivery of a robust management system (operational and financial) Director of Housing Page 7

11 3. Methodology 3.1 Approach to developing the strategy In preparing the Asset Management Strategy the demand for each property, the anticipated spend on maintenance; together with the potential rental income has been assessed for every property and garage in the property portfolio. The data from which conclusions have been drawn for the Asset Management Strategy are available in the appendices or throughout the main body of the report. Demand has been assessed by analysing available data about void rates, offers and refusals. The expenditure on response, cyclical and planned maintenance has been calculated from the stock condition survey. Calculations have been kept simple and no allowance for Net Present Value or VAT. Management costs have not been included. Void costs and frequency of turnover has been included for the last 12 months. This can be used as an indicator of how long tenants are prepared to stay in a particular area. Right to by trends have not been included in this report. The approach in developing this strategy has been to collate and analyse information from the various housing departments. The research and outputs are to be derived from a common strategic approach by taking stock of the current position through data analysis, mapping the required out comes and then developing the strategy and options that will bridge any gaps. To assess the current position internal data analysis has been carried out that includes: Condition of stock Demand by property Void rates and associated spend Historic maintenance spend Historic responsive repairs spend Rental income Performance of Service This is the Council s first asset management strategy and as such gaps will be identified and further work will be required. This report is the starting point for sound asset management; it does not aim to deliver all of the solutions for the housing assets in one report. Page 8

12 4. Introduction 4.1 Background to MK Milton Keynes was designated as a new town in 1967 and was built from 1970 around the existing towns of Bletchley, Stony Stratford, Wolverton and New Bradwell and thirteen villages. Two thirds of the borough are predominantly rural and include the smaller towns of Newport Pagnell, Olney and Woburn Sands. Milton Keynes is the fifth most affluent area in the country according to the Office for National Statistics but there are areas of localised deprivation in parts of the older towns and particular estates. Milton Keynes has a healthy and rapidly growing local economy. The current unemployment rate is around 1.8% (compared to 2.6% for the rest of the South East Region) and 29,000 workers commute into the Borough each day. The population is growing by 3-4,000 each year and the annual growth in the number of jobs averages 3,800. The population and the local economy are predicted to grow at least for the next 11 years. However, alongside our economic success and prosperity, there is deprivation and disadvantage. The DETR Indices of Deprivation 2000 shows that a number of wards in Milton Keynes fall within the most deprived 5% of wards in the UK. Milton Keynes Council is committed to tackling this. As a unitary authority, the Council has the will and the means to provide integrated, effective responses and is committed to empower individuals, such as tenants, and local communities to make the decisions that affect their lives There are 89,000 homes in Milton Keynes. Most were built after 1964 but around 7% were built before The Council Housing Stock is approximately 12,250 units, or 13.5% of the homes in Milton Keynes. The Private Rented Sector comprises around 6% of the total (below the Regional Average of 10%). Around 428 hectares of residential land remain to be developed the majority of which is owned by English Partnerships. The Greater London Council and the former Milton Keynes Development Corporation built the majority of the public housing stock in the 1970 s. Whilst the stock is generally low rise the former Development Corporation stock was primarily built using non-traditional materials. Examples are the estates of Netherfield and Fullers Slade. A key consideration for MK is that the bulk of the housing stock is reaching an age where investment is necessary now to achieve the Government s 2010 decent home target date. 4.2 Asset Management The development of this strategy has highlighted gaps in the management information. This report considers the assets and liabilities of MKC s housing stock and presents a set of structured recommendations to support a plan of investment into the Council stock. The AMS is not only a vehicle for documenting strategic planning but also serves as a tool for creating joined up working and cross fertilisation of information with the aim of delivering service improvement. The main assets of MKC are its properties and the rental income it receives from tenants. The liabilities are the cost of maintaining the homes and garages used by the tenants and leaseholders. Page 9

13 Prudent financial management is the foundation of a successful asset management strategy. However, if finance were the Councils sole purpose ensuring that rental income exceeded the cost of providing, maintaining and managing the property would be its only consideration. Asset Management for MKC is more than just a financially driven plan and considers the broader objectives of the Council, its priorities and business. An Asset Management Strategy therefore takes a long-term view of the assets and liabilities, the rental income and the expenditure (existing and anticipated) in providing the products and services in return for the rent. Rental income could be affected by demand, competition from other landlords (private and social), the cost of alternative housing tenure, population size, age profile and employment characteristics, as well as rent control, ability and willingness to pay, together with prompt payment of housing benefit. 4.3 The Decent Homes Standard A core consideration for the AMS and any subsequent Options Appraisals is the ability of the Council to bring its stock up to the Decent Homes Standard (DHS) by Therefore it is prudent to give an overview of this standard. The ODPM has recently issued their document A Decent Home The definition and guidance for implementation, February This document sets out the definitions of a Decent Home and provides guidance on implementing the standard. The DHS is designed to support the governments desire to link increased spending in housing to better outcomes. To summarise the target is to: ensure that all social housing meets set standards of decency by 2010, by reducing the number of households living in social housing that does not meet these standards by a third between 2001 and 2004, with most of the improvement taking place in the most deprived local authority areas The targets of decency relates to both Local Authorities and Register Social Landlords (RSL s, or housing associations) In summary a decent home meets the following four criteria: Fitness Standard State of Repair o Key Building Components o Non-key (or Other) Building Components Modern Facilities Thermal Comfort Page 10

14 These four criteria can be summarised as follows Fitness Standard Properties fail the DHS if they are unfit under section 604 of the Housing Act This is basically a property that is uninhabitable because it is: In serious disrepair Structurally unstable Damp to the extent of effecting occupants health Inadequate lighting, heating and ventilation Inadequate supply of potable water Ineffective drainage of foul, waste and surface water In need of a suitably located WC for exclusive use of the occupants Have unsatisfactory facilities for food preparation and cooking Any one of the above would constitute a failure of the Fitness Standard and hence and overall failure of the DHS State of Repair This criteria covers key and non-key building components as follows: Key Building Components Key building components are those, which if in poor condition, could have an immediate impact on the integrity of the building and therefore cause further deterioration to other components. Dwellings which fail the DHS are those where one or more of the key building components are old and because of their condition need replacing or major repair. Key building components are external and internal elements that could have safety implications if in poor condition. They include: External walls Roof structure and coverings Windows and doors Chimneys Page 11

15 Central heating boilers Gas fires Storage heaters Electrics Other Building Components Non - key or other building components are those, which if in poor condition, have a lesser impact on the integrity of the dwelling. Dwellings which fail the DHS are those where two or more of the other building components are old and because of their condition need replacing or major repair. Examples of other building components include: Bathrooms Kitchens Central Heating System Guidance is given in the standard with respect to the definition of old for each element Modern Facilities A dwelling is considered to fail this criterion if it fails three or more of the following facilities. A kitchen which is 20 years old or less A kitchen with adequate space and layout A bathroom which is 30 years old or less An approximately located bathroom and WC Adequate noise insulation Adequate size and layout of common areas for blocks of flats Thermal Comfort To meet this criterion a dwelling must have both; Efficient heating; and Effective insulation The definitions of efficient and effective are dependent on the heating type (gas or electric) and the levels of associated insulation. Page 12

16 5. The Property Profile MKC entered into a 12 year Public Private Partnership (PPP) with HBS Business Services (HBS) on the 1 st January The PPP involved the TUPE transfer of approximately 700 Council staff and the subsequent provision of services. As part of the contractual arrangements HBS manage the Building Services business of the Housing Department. Building Services are responsible for managing the Capital Programmes and Responsive Repairs service for the Councils housing stock. The housing stock comprises of approximately 12,250 tenanted properties, sheltered housing schemes, homeless accommodation and garage blocks across the Milton Keynes area. Competitively tendered contractors execute the majority of all works and are managed by HBS. In summary the stock can be categorised as shown in Table 1. Properties Units (March 2004) Tenanted Homes Shared Ownership Homes Leaseholder Homes Shops 79 Garages Car Ports 104 Total Properties Table 1 Council Housing Stock Units This strategy concerns its self primarily with the Tenanted Homes, Shops and Garages that contribute to the Housing Revenue Account (HRA). The portfolio of these assets is expanded upon in the following sections. 5.1 Tenanted Homes The tenanted homes are the Councils retained stock and include: Houses, bungalows and flats Sheltered housing Homeless accommodation Page 13

17 Caravan sites The Tenanted Homes can be broken down into MRA archetypes and construction types as shown in Table 2. This demonstrates the spread of build period across the housing stock. Over half the remaining stock (54.8%) in the portfolio was built between 1965 and 1981 during the period in which MK was developed under the New Towns Act. Total No of Units % of Stock Flat Pre % House / Bungalow Pre % Flat , % House / Bungalow , % Flat % House / Bungalow , % House / Bungalow Post % Architype Unclassified * % Total 12, % Table 2 Number of Units by MRA Architype * Includes caravan sites, HMO s and properties where build year is currently incorrect or not available. These have been excluded from the initial stock condition survey. Housing in Milton Keynes generally has a mixed tenure population across its estates as apposed to more traditional specifically designated Council estates. The stock is spread over 716 streets within the 75 settlements as shown in Table 3. Page 14

18 Settlement No of Units Settlement No of Units Settlement No of Units Astwood 3 Furzton 65 Oldbrook 175 Beanhill 517 Galley Hill 51 Olney 157 Bletchley 3368 Great Denson 31 Peartree Bridge 42 Bolbeck Park 66 Great Holm 45 Pennyland 93 Bow Brickhill 16 Great Linford 302 Ravenstone 5 Bradville 326 Greenleys 276 Shenley Brook End 8 Bradwell 172 Hanslope 94 Shenley Church End 35 Bradwell Common 149 Hardmead 6 Shenley Lodge 45 Caldecotte 1 Haversham 3 Sherington 44 Calverton 21 Heelands 230 Simpson 25 Castlethorpe 30 Hodge Lea 173 Springfield 196 Central Milton Keynes 173 Lavendon 31 Stacey Bushes 273 Chicheley 10 Little Brickhill 29 Stantonbury 276 Coffee Hall 366 Little Woolstone 3 Stoke Goldington 29 Conniburrow 330 Loughton 57 Stony Stratford 241 Crownhill 14 Milton Keynes Village 13 Tinkers Bridge 163 Downhead Park 36 Moulsoe 17 Two Mile Ash 40 Downs Barn 181 Neath Hill 172 Wavendon 32 Eaglestone 142 Netherfield 730 Westcroft 41 Emberton 29 New Bradwell 302 Weston Underwood 2 Emerson Valley 46 Newport Pagnell 322 Willen 22 Fenny Stratford 60 Newton Blossomville 9 Willen Park 18 Filgrave 3 North Crawley 20 Woburn Sands 80 Fishermead 495 Old Bradwell 21 Wolverton 326 Fullers Slade 319 Old Wolverton 4 Woughton 11 Table 3 Number of Units by Settlement Area Page 15

19 Table 4 shows the top ten largest settlements of housing stock in the area. Bletchley is by far the largest with over a quarter of the stock (27.48%). The remaining 9 settlements, when considered cumulatively are only marginally larger than Bletchey. Settlement Percentage of stock Bletchley 27.48% Netherfield 5.96% Beanhill 4.22% Fishermead 4.04% Coffee Hall 2.99% Conniburrow 2.69% Bradville 2.66% Wolverton 2.66% Newport Pagnell 2.63% Fullers Slade 2.60% Table 4 Top 10 largest settlements Chart 1 shows the property portfolio by build type and archetype. Over half of the properties were constructed between 1965 and Such a disproportionate spread of construction year clearly presents its own issues when considering cyclical maintenance and major works; many of the property elements start to fail or exceed their recommended build life at the same time Number of Units Flat Pre 1945 House / Bungalow Pre 1945 Flat House / Bungalow Flat Unknown Non-Traditional Traditional ,134 1, , MRA Architype Traditional Non-Traditional Unknown House / Bungalow House / Bungalow Post 1981 Architype Unclassified Chart 1 Build type by Architype Page 16

20 A large proportion of the public housing stock was built in the 1970's by the Greater London Council (for example, the Lakes Estate in Bletchley) and the former Milton Keynes Development Corporation. Whilst the stock is generally low rise (there are only two towerblocks in Milton Keynes) the former Development Corporation stock was built using unusual designs and materials that have not stood the test of time. These non-traditional builds provide for 13% of the stock, with the remaining being of traditional construction. The nontraditional buildings are primarily timber frame with cladding to the external leaf and flat roof construction. This information has been extracted from the database and closer examination has identified that the actual non-traditional build type is significantly higher than stated. Further work is needed to update the database. There are many different designs and styles Prime examples are the estates of Netherfield and Fullers Slade. Much of the stock has key elements of kitchens, bathrooms and central heating boilers, all seen as a priority by tenants, which are at, or will reach the end of, their Government predicted life span, by However, working on new town stock may provide the advantage of a lower density arrangement, which should have a positive effect on survey speed and unit repair cost. 5.2 Garages MKC has 2,983 garages spread across the area. The location of the garages and the percentage of the stock by estate can be seen in table 5. Two thirds of the garages are in the settlement of Bletchley. The remainder are spread across another 32 settlements. The garage stock is primarily brick built and is located in blocks of between 4 and up to 80 units. The exact number of blocks is not easily identifiable through the databases, however its is estimated that there are 250 block sites across the area. A desktop exercise is need, with site visits to identify the total number of blocks. Garage blocks, especially in Bletchley, are often located in concealed areas and certain sites encourage anti social behaviour. The garages are without water and electricity, and are generally seen as very poor value for money by tenants. Little has been done to maintain the garages over the past years and many are in poor condition and would need significant investment to bring them back up to standard. The problem is enhanced by the fact that the majority also have roofs containing asbestos, which presents its own challenges in long-term maintenance and costs. The poor condition of the garages is reflected in the low demand. 38% of units are currently void. The asset management strategy needs to consider an options appraisal methodology for the management of garages to better utilise the resources and increase the rental stream. Page 17

21 Estate No of Units Percentage of Stock Estate No of Units Percentage of Stock Bletchley 1, % New Bradwell % Bow Brickhill 9 0.3% Newport Pagnell % Bradville % Old Bradwell 4 0.1% Castlethorpe 4 0.1% Oldbrook 6 0.2% Chicheley 8 0.3% Olney % Conniburrow % Shenley Church End 5 0.2% Eaglestone % Sherington % Emberton 4 0.1% Simpson 3 0.1% Filgrave 3 0.1% Stantonbury % Fishermead % Stoke Goldington % Great Linford % Stony Stratford % Greenleys % Wavendon % Hanslope % Weston Underwood % Hodge Lea % Woburn Sands % Lavendon % Wolverton % Little Woolstone % Woughton 4 0.1% Neath Hill 2 0.1% Table 5 Number and Percentage of Garages Units by Estate 5.3 Shops MKC has 79 shops, forming part of the HRA, distributed across the estates as shown in Table 6. Nearly 50% of the shops are in Bletchley, with the remainder scattered across another 8 of the settlements. The shops are primarily a part of a block of tenanted homes and as such generally serve the tenant community, along with private occupants. The shops are a facility to the areas, where the tenants enjoy comparatively low rents where otherwise commercial enterprise may not operate. Little investment has been made to improve or maintain the stock of shops and subsequently many of the properties are in need of improvement. Page 18

22 Estate Street No of Shops Bletchley Melrose Avenue 10 Bletchley Saint Mary's Avenue 9 Bletchley Serpentine Court 12 Bletchley Whaddon Way 7 Bradwell Common Wimbledon Place 1 Central Milton Keynes Silbury Boulevard 3 Conniburrow Conniburrow Boulevard 8 Conniburrow Ramsons Avenue 8 Downs Barn Downs Barn Boulevard 1 Fishermead Fishermead Boulevard 3 Fishermead Gurnards Avenue 2 Fishermead Penryn Avenue 4 Heelands Swinden Court 8 Oldbrook Oldbrook Boulevard 2 Stony Stratford High Street 1 Total 79 Table 6 No of Shop Units by Estate and Street As part of the HRA assets the shops are the responsibility of Housing, however the leases for the shops are managed by the Council Valuers. Although day-to-day repairs works are carried out through the responsive repairs section of Building Services. Page 19

23 6. Demand and Popularity 6.1 Tenanted Properties Demand Milton Keynes is situated within easy commuting distance of London and has good transportation links both to the MK Centre, industrial estates and to the capital. The area has high property prices and the demand is high for all types of properties. There remains a large gap between private sectors and social housing property rents in Milton Keynes. With rising property prices and the associated increase in rents in the private sector a greater demand has fallen on the social housing sector. It is likely that the increase in property prices in this region is not simply a cyclical problem, such as those experienced in previous boom and bust years, but more of an overall demand issue that could effect Milton Keynes for many years. Indeed Milton Keynes has a history of demand lead property prices for many years. In line with national trends there is an ever-increasing need in Milton Keynes for affordable housing, particularly for key workers. The housing stock is in higher demand than ever before and the supply barely addresses the demand of homeless and priority cases. They key workers issue is being primarily addressed through housing associations across the borough. There is a strong economy in Milton Keynes and the employment rate is one of the highest in the UK. The relatively high wages and house prices in Milton Keynes indicates that rents will rise in the area as the governments rent restructuring scheme is phased in. This should in turn generate additional funding for maintenance programmes. However Milton Keynes has already seen disproportionately high increases in rent in recent years to combat the need to maintenance services. A commitment was given last year to maintain rent increases to 1% a year, and indeed the Council stood by that commitment this year. This may however be unsustainable due to the condition of the stock and when considering the value of catch up repairs identified in the Stock Condition Survey. MKC has little difficulty letting any of its properties with the exception of some of its Sheltered Housing accommodation. This means there is no general rule that can be devised for targeting improvement funding at undesirable stock. In real terms the demand for properties outstrips supply that practically all units, even those that may be viewed as being in areas suffering from deprivation, are relatively easily let. Many of properties are also let on unsecured tenancies to homeless, especially in locations such as Serpentine Court and Granby Court. These two factors cloud the demand picture when trying to introducing a numeric demand rating system e.g. 1 high demand, 2 medium demand, 3 low demand. Making assumptions, not based on factual data, would be inappropriate for this exercise Popularity Offers.v. Refusals Although it is not possible to assess demand by estate in a puerile manner it is possible to assess demand based on tenants choice of location. This involves querying the databases with respect to offers and refusal rate. This gives an indication of area popularity. It must be noted that this is a different measure to demand. Popularity however is still a useful Page 20

24 measure and serves, as an indicator, of areas that could suffer from low demand should supply increase. This is poignant when considering the expansion programme outlined in the Local Plan for Milton Keynes. In the financial year around 1,791 offers where made to prospective tenants, including homeless, or existing tenants requesting transfer. In the same period 193 where refused. This equates to a 10.8% refusal rate. Table 8 below show the reasons for refusal in and the number of occurrences. Refusal Reason No of Occurrences Any Other Reason 61 Wrong Area 33 Condition Of Property 25 Too Small 20 No Wish To Move At Present 20 Personal Safety 12 No contact 12 Wrong Floor 3 Applicant Wishes To Cancel 3 Not Furnished 1 Rent Too High 1 No Garden 1 3 Storey Property 1 Grand Total 193 Table 7 Refusal reasons and number of occurrences for With the exception of any other reason the highest reason for refusal is that the property is in the wrong area. This reason for refusal occurs over 50% of the time in Netherfield and Bletchley, including Serpentine Court. The second highest reason is the condition of property. This reason of refusal is spread reasonably evenly across the estates. As of May 2004 there where 7,562 live lettings cases. This includes homeless, transfers and standard applications. This demonstrates the extent of the supply and demand issue facing Milton Keynes when compared to a stock of 12,250 properties. Page 21

25 Although the results gave some idea of popularity the current demand is so high compared to supply that virtually all properties are in demand. Supply is one of the biggest issues facing Milton Keynes Void Trends Void trends can also be used as a measure of estate popularity, as well as a measure of performance in managing the voids service. In the average re-let time was 46.9 days. Excluding major voids, insurance works, illegally occupied properties and police occupied resulted in a turnaround time of 39.8 days. 1,228 properties void properties where re-let in the period. Indicating a 10% churn rate in tenants. Churn is defined as the number of properties void in the year divided by the total number of properties. Category Number of Properties Total Days Void Average days Void Homeless Void 257 8, Insurance Works 12 2, Low Demand Property 88 8, Major Void Works 38 7, Routine Void , Unknown Void Illegally Occupied 5 1, Void Squatted Table 8 Voids rates for by Void Path Table 8 above shows, for , the number of properties void, the total days void and the average re-let time in days, by Void Path. 63 out of 88 properties identified as low demand are in the sheltered housing schemes. This needs further analysis at scheme level. When considering the routine and homeless voids categories the top 5 areas with the greatest churn rates are shown in Table 9. The percentage of voids compared to the number of units is a good indication of popularity. Kilkenny House Sheltered Housing Scheme is in the top 5; however this property has unique issue that effect the void rate by its very nature in being a very sheltered housing scheme. It is important to note that a key factor that generates such high churn rates in Serpentine Court and Granby Court is there use for Homeless accommodation on non-secure tenancy arrangements. Homeless allocations across the estates cloud the data analysis when trying to identify demand and popularity for the stock. Page 22

26 Location No of Voids No of Units Churn Rate Granby Court, Bletchley % Kilkenny House, Westcroft (Sheltered Housing Scheme) % Serpentine Court, Lakes Estate % Mellish Court, Bletchley % The Hide, Netherfield % Total % Table 9 Top 5 routine and homeless void areas It is recommended that further work be carried out at these locations, especially at Granby and Serpentine Court. 6.2 Garages Demand The demand for garages in the area is far simpler to measure by the fact that the supply far outweighs the demand. As of May 2004, 1,147 garages were void out of the units. The majority of these are long term void. This indicates there is a major over supply compared with the demand for this service. Table 10 shows the number of garage units by estate and the void numbers. The highest number of void units is in the Bletchley area. The garage units across the estates are generally in blocks. Generally some of the units in each block are let and some are void, there are only a small amount of blocks where demand is zero. The analysis of void rate can be determined down to street level. However more work is needed to analyse the data at block level. It is recommended that the data be investigated at street level and then this be used as the starting point for further analysis at block level. Page 23

27 Estate Total Occupied Void % Void Bletchley % Bow Brickhill % Bradville % Castlethorpe 4 4 0% Chicheley % Conniburrow % Eaglestone % Emberton % Filgrave % Fishermead % Great Linford % Greenleys % Hanslope % Hodge Lea % Lavendon % Little Woolstone % Neath Hill % New Bradwell % Newport Pagnell % Old Bradwell % Oldbrook % Olney % Shenley Church End 5 5 0% Sherington % Simpson % Stantonbury % Stoke Goldington % Stony Stratford % Wavendon % Weston Underwood % Woburn Sands % Wolverton % Woughton 4 4 0% Grand Total % Table 10 No of garages void and occupied by estates Page 24

28 The streets with the greatest no of voids can be analysed in two ways: Those with the highest total number of voids (Table 11) Those with the highest percentage of voids, as a total of the overall number of units in that street (Table 12) The database suggests the following areas as being the starting point for further investigation Street Estate Number of Units Occupied Void Percentage Void Whaddon Way Bletchley % Serpentine Court Bletchley % Berwick Drive Bletchley % Middlesex Drive Bletchley % Whitethorns Newport Pagnell % Neath Crescent Bletchley % Saint Georges Road Bletchley % Ennerdale Close Bletchley % Gairloch Avenue Bletchley % Saint Davids Road Bletchley % Table 11 Top 10 Garage sites by streets with the highest total number of voids Page 25

29 Street Estate Number of Units Occupied Void Percentage Void Ramsons Avenue Conniburrow % Calverton House Stony Stratford % Conniburrow Boulevard Conniburrow % Mullion Place Fishermead % Underwood Place Oldbrook % Church Street Wolverton % Helford Place Fishermead % Polruan Place Fishermead % Woodruff Avenue Conniburrow % Brownbaker Court Neath Hill % Fishermead Boulevard Fishermead % Gurnards Avenue Fishermead % Penryn Avenue Fishermead % Yarrow Place Conniburrow % Table 12 Table 12 - Top void garage areas by street where the total number of void garages is the highest across the area Page 26

30 7. Asset Valuation The Vacant Possession Value (VPV) of the stock is estimated at approximately 1,006m. The Existing Use Value Social Housing (EUV-SH) is 543m. The EUV-SH is calculated as a percentage of the VPV considering the location of the stock. For this area it is deemed to be 54% of the VPV. The EUV-SH gives an indication as to the value of the stock when considering its current use. However it is worth noting that this does mean that this would be the valuation for the stock in the case of a sale, such as a stock transfer for example. In such an instance the valuation would be more complex and would include considerations such as the cash flow, future maintenance expenditure, terms of the sale etc. In the 2003 options appraisal the valuation of the stock based on a 30-year programme of 286m, and considering rents levels, was 165m. Considering that the programme for 30-years from the current Stock Condition Survey is now 640m, this figure could be dramatically reduced. The value for sale purposes needs to be revised as part of the Options Appraisal. Page 27

31 8. Rental Income 8.1 Tenanted Homes The majority of the income for housing comes from the rents that the properties generate throughout the year. The expected income for is approximately 40.5m from tenanted homes. This excludes any income from Right to Buy, Shared Ownership, Garages, Shops or loss of rent due to void periods and loss of income from rent arrears. The maximum gross anticipated income by estate, assuming 100% rental period and no voids, is as shown in Table 13 Estate Annual Income Estate Annual Income Estate Annual Income Astwood 10,556 Galley Hill Stony Stratford 179,687 Peartree Bridge 145,501 Beanhill 1,799,834 Great Denson Eaglestone 85,691 Pennyland 305,149 Bletchley 11,063,375 Great Holm 126,974 Pitcher Lane Loughton 21,999 Bolbeck Park 107,922 Great Linford 1,022,601 Ravenstone 18,801 Bolbeck Pk 100,658 Greenleys 968,047 Shenley Brook End 27,595 Bow Brickhill 54,090 Hanslope 304,832 Shenley Church End 116,746 Bradville 1,115,578 Hardmead 21,996 Shenley Lodge 136,409 Bradwell 552,760 Haversham 9,778 Sherington 148,121 Bradwell Common 538,528 Heelands 770,669 Simpson 82,942 Caldecotte 3,470 Hodge Lea 598,609 Soskin Drive Stantonbury Fields 146,208 Calverton Lane Calverton 79,254 Lavendon 108,811 Springfield 630,267 Castlethorpe 81,124 Little Brickhill 92,829 Stacey Bushes 914,588 Central Milton Keynes 490,162 Little Woolstone 10,635 Stantonbury 765,166 Chicheley 33,202 Loughton 145,567 Stoke Goldington 94,861 Coffee Hall 1,203,765 Milton Keynes 3,434 Stony Stratford 761,759 Conniburrow 1,103,852 Milton Keynes Village 46,704 The Leys Loughton 11,401 Crownhill 48,135 Moulsoe 59,313 Tinkers Bridge 532,022 Downhead Park 105,837 Neath Hill 573,133 Two Mile Ash 119,886 Downs Barn 573,510 Netherfield 2,488,616 Wavendon 113,692 Eaglestone 453,470 New Bradwell 945,835 Westcroft 124,072 Emberton 93,960 Newport Pagnell 1,064,831 Weston Underwood 6,260 Emerson Valley 133,240 Newton Blossomville 31,858 Willen 73,819 Fenny Stratford 182,240 North Crawley 64,671 Willen Park 31,280 Filgrave 10,772 North Street Castlethorpe 19,048 Willen Road 30,192 Fishermead 1,667,684 Old Bradwell 66,792 Woburn Sands 252,898 Fullers Slade 1,096,574 Old Wolverton 14,052 Wolverton 1,043,001 Furzton 204,029 Oldbrook 607,585 Woughton 37,724 Olney 519,463 Table 13 Income by Estate excluding any void loss Page 28

32 The loss of income due to voids is currently around 1.1% of the income stream, or 0.5m. This is analysed in more detain in the asset management section. Rents vary from per week for a bedsit up to 119 per week for homeless hostel accommodation (charged on a per person per night basis). The average rent per unit is per week The rental income is dependent on several factors including: Property Value Element upgrades such as upvc windows, central heating The rental increase this year (2003/04) was 1% and the current administration have undertaken a commitment to maintain such an increase next year. Although this is a low annual incremental rise previous years have seen increases in to double figures to support what was an HRA deficit. Currently the HRA account is in surplus by approximately 2.5m 8.2 Garages Garages are let to both Council tenants and private owner-occupiers. Currently the rents charged are 8.72 and weeks respectively. For the purposes of calculating the rental income for garages 9.00 per week has been used for each let unit. The income from the garage stock without any void would be 1.4m per annum. Considering a current void rate of 38% this figure is reduced to 859k, this represents a 537k reduction in possible revenue on a stock the Council still have a duty to maintain. The income can be measured by street. The 10 streets with the highest reduction in possible revenue are shown below in Table 14. Street Estate Occupied Income Reduction in income Whaddon Way Bletchley 19,656 51,480 Serpentine Court Bletchley 13,572 36,036 Berwick Drive Bletchley 9,828 29,952 Middlesex Drive Bletchley 19,188 21,060 Whitethorns Newport Pagnell 24,336 18,252 Neath Crescent Bletchley 7,956 15,912 Saint Georges Road Bletchley 8,424 13,104 Ennerdale Close Bletchley 7,956 11,232 Surrey Road Bletchley 5,616 9,828 Gairloch Avenue Bletchley 8,892 9,828 Total 125, ,684 Table 14- Loss of income from Garages (Top 10 Streets) Page 29