LANGSTANE HOUSING ASSOCIATION LTD BUSINESS PLAN REVISED APRIL 2016

Transcription

1 LANGSTANE HOUSING ASSOCIATION LTD BUSINESS PLAN REVISED APRIL 2016

2 CONTENTS Item Page Executive summary 3 Mission, Vision, Values 4 The Past and the Present 6 Internal Management Structure 9 Linked to the Business Plan 12 National and Local Priorities 14 Internal Challenges and Opportunities 17 The Future Priorities for Resources 20 Risk Assessment 25 Review and Monitoring 26 Appendix 1 Partnership working Appendix 2 Business Plan Appendix 3 Appendix 4 Appendix 5 Appendix 6 SWOT & PEST analysis Internal Management Plan Annual Return on the Charter Analysis 5 Year Financial Forecast 2

3 EXECUTIVE SUMMARY Founded in 1977, Langstane Housing Association Limited is an ambitious, successful housing association that has built up a portfolio of 2,738 homes for its tenants throughout the Grampian region. The vast majority of Langstane s properties are provided to households with limited opportunities to access the private market. Langstane is governed by a Board of Management appointed by the membership to oversee the strategic direction and performance of the Association. This Business Plan, approved by the Board of Management, outlines the direction that the Association will take over the next three years. The key priorities are: Demonstrating financial strength; Delivering excellent customer focussed services; Delivering a wide range of good quality, affordable accommodation; Strengthening social inclusion in the communities served. At all times the Association s actions and homes must be, and be seen to be, a community asset, ensuring it continues to be a landlord, employer and partner of choice. Maintaining an ambition to grow and contribute to wider community regeneration, the Association recognises that it faces a number of challenges in coming years. These are addressed in a structured manner within the Plan with clear outcomes agreed and which will be reported upon. 3

4 MISSION, VISION, VALUES MISSION Langstane Housing Association s mission is to provide good quality housing that promotes social inclusion and generates sustainable communities. VISION In order to achieve success, a clear vision for the future has been agreed and that is to increase the provision of good quality affordable housing, predominantly in the North East of Scotland, providing accommodation and accessible services for those who are disadvantaged in the housing market, in particular single persons. VALUES Underpinning everything that Langstane achieves are core values. These values are those the Association aspires to operate and be measured against as an organisation. As such, a commitment is given to: Delivering excellent services to customers; Respecting diversity and enabling people to participate on an equal basis; Acting with integrity and being open and transparent at all times; Promoting continual improvement and innovation; Working in partnership where appropriate to do so; Demonstrating social responsibility; and Demonstrating affordability and value for money. 4

5 Langstane will demonstrate its commitments to the above in different ways. This will include: continuing to work with local authorities and third sector organisations in the provision of good quality affordable accommodation; gaining and reporting on customer feedback - including making changes as a direct or indirect result of feedback; benchmarking performance against peer groups, locally and nationally where appropriate; undertaking regular tendering exercises for all externally provided services, to demonstrate best value; undertaking internal reviews to ensure that operational structures and services delivered meet customer expectations; supporting community based initiatives that benefit customers and are linked to the Association s objectives; Langstane Housing Association works with over 30 other organisations to support tenants and other residents in local communities promoting the things that are done well, saying sorry when mistakes are made, and learning from mistakes; and being open and transparent in all aspects of the Association s business. This will involve higher levels of interaction with tenants and other customers, using a variety of communication methods. Decision making must ensure the Association can demonstrate overall best value. Therefore, decision-making processes throughout the organisation will take into account projected customer satisfaction levels, the potential costs of proposals; and the potential benefit to the organisation. This will ensure there is a balanced approach in place, considering both the customer and the organisation, offset against the anticipated costs: 5

6 LANGSTANE HOUSING ASSOCIATION THE PAST AND THE PRESENT Registered originally in October 1977 with the equivalent of what is now the Scottish Housing Regulator, Langstane Housing Association is a financially sound, aspirational organisation committed to developing and engaging local communities, in Aberdeen City, Aberdeenshire and Moray. Originally set up to provide low cost rented accommodation for single households, the Association has grown and developed into a versatile organisation that provides accommodation to 2,738 households in addition to supporting a number of third sector organisations through the provision of affordable office and residential accommodation. Registered under the Co-operative and Community Benefit Societies Act 2014, the Housing (Scotland) Act 2010, and as a Scottish Charity, the Association operates as a not-for-profit organisation, reinvesting surplus funds into improving services, maintaining properties and building communities. A voluntary Board of Management, elected from the Membership at the Annual General Meeting, govern the Association. The current governance structure is: Board of Management Operational Services Committee Joint Audit Committee Joint Resource & Investment Committee To facilitate the provision of low cost home ownership options, a subsidiary, Next Step Homes Limited, was created in March 2007 (originally known as Langstane SP founded in 1982). This is a registered social landlord. 6

7 Thereafter, in January 2014, a vehicle for mid market and market rent was established, Stockethill Homes Limited. Stockethill Homes is a subsidiary of Next Step Homes providing scope to diversify and provide more commercial services including market rentals. The profits from Stockethill Homes are reinvested into Langstane s social housing stock and services. Although a non-registered subsidiary of Next Step Homes, Stockethill Homes Limited is registered with the Registrar of Companies and is a private sector registered landlord. The main purpose of Langstane Housing Association is to provide good quality, affordable homes that meet customer expectations and enhance neighbourhoods ensuring that the communities in which Langstane provides homes are considered great places to live. In addition, services are provided to help reduce fuel poverty and promote social inclusion for individuals, for neighbourhoods and for the wider community. It is important to the Association that the homes and services provided help people to feel they belong, and to improve their wellbeing whilst enhancing the communities in which they live. The Association continues to maintain a healthy development programme and capitalise on opportunities that present themselves to increase and improve the provision of good quality, affordable housing, in the Grampian region. Although consideration will be given to developments outwith this area, these will be risk assessed to ensure that projects are not taken forward that could jeopardise existing service delivery. The increased provision of social and other forms of affordable housing is an important priority for the Association. The unique area in which the Association operates, servicing the Aberdeen City housing market area alongside rural communities, brings financial and other challenges for customers wishing to access good quality housing at a reasonable cost. Recognised however, is the need to balance expenditure on existing housing provision against future acquisitions. Partnership working has seen Langstane Housing Association provide a high level of support to third sector organisations. This is demonstrated in a number of ways. For example, the submission of joint-funding applications, modest grant funding, the provision of affordable office and residential accommodation, and the provision of staff resource in the form of staff time and expertise (see Appendix 1). The Association hosts the locally based WorkingRite Project, the Ethnic Minority Outreach project, and the In Control, Scotland project, bringing other organisations to the heart of the Association s business and ensuring that valuable services remain accessible in the communities in which Langstane operate, a key priority for the Association. As owner and manager of 2,738 self-contained homes across the Grampian area, 2,717 of which are leased as social rent; the Association has 77 bedsits, and 1,632 one-bed properties. The remainder are two, three, and four + bed properties. It is crucial that the Association s existing stock is fit for purpose and meets regulatory requirements. Therefore, achievement of the Scottish Housing Quality Standard, the Energy Efficiency Standard for Social Housing (EESSH) and the development of an updated Asset Management Strategy are of significant importance to the Association. This is set alongside 7

8 the need to fully understand the priorities of customers and to involve them more comprehensively in decision making moving forward. Operating in a heavily regulated industry, the Association must meet the requirements of a number of regulatory bodies, including: The Scottish Housing Regulator (SHR); The Financial Conduct Authority (FCA); and The Scottish Charity Regulator (OSCR). The Scottish Housing Regulator is clear that its vision, contained in its Corporate Plan , is successful social landlords delivering good outcomes for tenants, homeless people and others. This vision will be delivered by landlords achieving the outcomes and standards set down in the Scottish Social Housing Charter, and by being financially healthy and well governed. In this era of accountability, the Association will ensure that achievement is evidenced and reported through the Annual Return on the Charter (ARC) 1 and by analysing regular customer satisfaction surveys/feedback. In addition, greater use of public relation techniques will be introduced to ensure customers and others fully recognise where improvements have been made and the overall quality of service provided by the Association. In addition, it is important to summarise the outcomes of the Business Plan. These are detailed at Appendix 2. Scottish Housing Regulator - Corporate Plan Successful social landlords delivering good outcomes for tenants, homeless people and others 1 Annual Return on the Charter relates to the Scottish Social Housing Charter and an annual report must be submitted in May. Thereafter the results must be reported to tenants by end of October 8

9 INTERNAL MANAGEMENT STRUCTURE Langstane has four defined internal structures that work cohesively towards the Association s objectives. The structure of the senior management team is defined below: Chief Executive Asset Management Finance & Corporate Services Housing & Social Justice CHIEF EXECUTIVE S OFFICE this section administers the governance of the Association. Its task is to ensure: development and implementation of the Business Plan authorised by the Board of Management; that implementation is achieved by a corresponding Internal Management Plan with its associated strategies and management practices; that Board of Management is aware of steps and decisions that need to be taken to guarantee good and effective governance and reflect the open and democratic nature of the Association; that training programmes are maintained both for staff and for members of the Board of Management; that the Association s objectives, along with those of partner organisations as appropriate, are widely and effectively promoted; and that new business opportunities are sought and found, subject to criteria of feasibility, value for money and compatibility with the Association s objectives and values. 9

10 Priorities moving forward are to ensure: that the Association and its services are fit for purpose and its objectives effectively delivered; that the profile and potential as well as current work of the Association and partners are promoted in a planned way in all relevant media and forums; and that the Board of Management s plans for succession and training are further developed and implemented. ASSET MANAGEMENT this section is responsible for all acquisitions (including a healthy new build programme), disposals (by way of sale), Planned and Cyclical Maintenance programmes and the disabled adaptations service. Priorities moving forward are to ensure: the development and implementation of a robust Asset Management Strategy; the development of key policies and procedures relating to development and planned repair activities; and the improvement of stock condition data and implementation of an Asset Management IT system. FINANCE & CORPORATE SERVICES this section is responsible for the financial operation of the Association in addition to human resources, facilities management, and information technology. This section is also responsible for disposals (by way of the granting of a heritable security). Priorities moving forward are to ensure: the development and enhanced use of data that flows efficiently and allows performance measurement, ensuring value for money is at the core of all that the organisation does; a full review of the ICT Strategy to ensure the Association is ready to meet future challenges in the work environment; and the development and training of staff to ensure Langstane can attract and retain a skilled workforce that fully understands and supports the objectives of the Association. HOUSING & SOCIAL JUSTICE this section is responsible for all housing management, responsive repairs and support services, including the social justice team. This section is also responsible for disposals (by way of lease). Priorities moving forward are to ensure: the Association fully understands the circumstances and priorities of its tenants and other customers; that key service delivery areas are improved; the improved interaction with tenants and other customers is achieved through Tenant Scrutiny and other consultative methods; and that customer satisfaction levels rise. 10

11 Langstane s ethos of community and social engagement is an important driver for many people involved with the Association including members of the Board of Management, staff, partner agencies, and contractors. Although it is important for the Association that its business is conducted in a responsible manner that demonstrates financial health, equally important is the community work undertaken and the benefit the Association can bring to individuals, households and the community as a whole. Overall it is the responsibility of the Board of Management and the senior management team to ensure that the Association delivers the best possible services it can to its customers, existing and future. This commitment involves more subtle methods of providing benefits for example the Association is committed to the provision of renewable energy use and currently 90% 2 of communal and office energy use comes from a renewable source. In addition, the Association has given an undertaking that all staff employed directly will be paid the living wage. As an employer of local people (in the Aberdeen, Elgin and Peterhead area), this is an important commitment by the Association and one that demonstrates its social responsibility. It is also important that the Association is seen as an attractive career opportunity and that the Association can attract and retain sufficiently skilled and knowledgeable staff at all levels throughout the organisation. This in turn will benefit tenants and other customers who are recipients of the services provided. 2 Figure correct as at 31 March

12 FEEDING INTO AND LINKED TO THE BUSINESS PLAN To ensure a cohesive and joined up approach, Langstane ensures that its main strategic plans link into the Business Plan and support its implementation. This avoids any conflict of priorities and ensures a clear vision for the future. Langstane s Asset Management Strategy 3 is based on an understanding of customers and what their wants and preferences are for the future. The Strategy ensures core stock and neighbourhoods are well maintained and remain that way through effective, proactive planned and cyclical maintenance, as well as good estate management. The Association has been proactive by using a Housing Futures Assessment Tool (HFAT) to highlight stock that may potentially (for a wide variety of reasons) give cause for concern. In addition the Asset Management Strategy gives a clear commitment to growth and ensuring best value which are both supported in the Business Plan. The Association s Tenant Participation Strategy has a commitment to ensure services are improved; tenants involvement and democracy increased; and to strengthen and sustain local communities. This is possible through a wide range of participation opportunities including formal, informal and ad hoc, to suit individual tenant needs and circumstances. 3 Asset Management Strategy currently in draft format 12

13 Langstane has been instrumental in creating a Social Justice team that has overall responsibility for tenancy (new and existing) sustainment. The first Tenancy Sustainment Strategy created in May 2014 was introduced to assist new and existing tenants to set up, manage and maintain their tenancies through the use of a signposting model that introduces early intervention measures. The Financial Regulations form part of the Association s Standing Orders, securing and furthering the proper administration of Langstane s financial affairs. The Association s financial regulations are clear that the Board of Management should at all times be in control of the Association s finances and ensure that the expenditure of the Association is covered by the income it can expect from all sources; also that its financial functions adequately match the scale of the Association s activities. Guidance on financial management is provided by the Scottish Housing Regulator. The Association s Risk Management Policy ensures a clear and defined method of assessing and documenting risk is present and is consistently applied throughout the Langstane Group 4. This policy assists the Group to identify and mitigate known risks to the Association s purpose, assisting the Association to demonstrate adherence to the Scottish Housing Regulator s Regulatory Standards of Governance and Financial Management. Langstane s Information and Communications Technology Strategy requires to be updated. However, the importance of effective information and communication technology has been recognised by the Association for a number of years. Due to delays whilst more formal partnership working was discussed, investment and direction is now being prioritised for improved information and communication technology. To ensure the Association s most critical business operations are restored as quickly as practical following an emergency, a Business Continuity Plan has been developed. This Plan documents the critical functions and activities of the organisation and provides detailed priorities for recovery actions alongside defined key roles and responsibilities and response timescales. This ensures that should an emergency arise, the Association is prepared and can deal appropriately with the situation with minimum disruption for customers and other stakeholders. The Association s Procurement Strategy is currently being developed and will support and link to the Association s procurement policies and annual reporting plan ensuring open and accountable working methods are in place that demonstrate best value. 4 The Langstane Group is an informal term used to define all three organisations operating from 680 King Street Langstane Housing Association, Next Step Homes Limited, Stockethill Homes Limited 13

14 NATIONAL AND LOCAL PRIORITIES There are a number of national and local pressures and opportunities that influence the Association s future strategy and these include: In 2014 the reduction of housing association grant levels (circa 58,000 per unit compared to, on average, 88,000 in earlier years) affected the viability of new build projects. At the time there were in excess of 17,700 households on the Association s waiting list, placing considerable demand on resources. With restrictions in place re cross subsidising schemes, additional assistance was essential. Therefore an announcement in January 2016 that grant levels increased to circa 70,000 was greatly welcomed. Welfare reform although supportive of many parts of the proposed reforms, the Association is clear that with approximately 40.9% of its rental income paid through housing benefit/universal Credit, there lies a considerable risk of non-payment and increased unit costs as staff deal with the issues that arise. This may affect the short-term availability and cost of borrowing facilities available to the housing association sector. Housing Association Grant (HAG) levels for social housing fell in 2012 to circa 42,000 per property before rising again to circa 58,000 in 2014 and 70,000 in early With average new build costs of 135,000 for a two-bed property in Aberdeen, Housing Associations rely heavily on private finance and top-up grants from local authorities The Scottish Government s Homes Fit for the 21 st Century, sets out the housing vision and strategy for the decade to Recognising that as population figures grow, household sizes fall and, as always there is a need to dispose of/refurbish older properties and replace these with modern, energy efficient housing. In addition, 63% 5 of all new lets now go to people in the poorest 10% of the population. The Smith Commission Report detailed an agreed set of powers that are being devolved to the Scottish Parliament. As these are worked through, the implications are becoming more fully understood. However, it is essential that the Association s interests are fully represented. 5 See also The Scottish Housing System: selected economic and social trends, section

15 The introduction of the Public Bodies (Joint Working) (Scotland) Act 2014 seeks new and innovative ways to bring services delivered within the Health and Social Care settings together. However, Housing s role was not considered until discussions were advanced. The challenges this brings need to be recognised and addressed in a proactive manner. The alleviation of fuel poverty is a priority for the Scottish Government and a policy area fully supported by the Association. However, it is recognised that this issue straddles more than the fabric of the building or the heating type installed. The Association ensures, as far as reasonably practical, that its customers maximise their income, reduce their fuel consumption and that fuel costs are competitive. The Scottish Government s Social Housing Charter has an outcome that requires social landlords to manage their business so that tenants and other customers find it easy to participate in and influence their landlord s decisions at a level they feel comfortable with. The Association fully supports this requirement and will actively promote a culture that values the contribution tenants and other customers make. The introduction of various low cost home ownership initiatives by the Scottish Government (for example, Help to Buy) fuelled an already buoyant local housing market, resulting in raised house and land prices. Although the economic downturn within the oil and gas sector is having an impact locally, access to affordable housing remains an area of challenge. Private accommodation in the Aberdeen housing market area, and in particular Aberdeen City, is unaffordable for a high number of households. The local housing allowance 6 in Aberdeen and parts of Aberdeenshire being the highest in Scotland for bedsits, one and two-bed homes and the second highest for three and four + bed homes. This reaffirms the need for social housing for a range of economically active residents, especially housing for single and smaller households. The successful City Region Deal will be a catalyst for driving the local economy and the affordable housing agenda forward as well as improving transport links and connectivity for local residents. 6 Local Housing Allowance is the rate that local authorities use to determine how much housing benefit they will pay based on where a person/household lives and how big the property and family are 15

16 All three local authorities in Grampian - Aberdeen, Aberdeenshire and The Moray Council, have identified significant demand for new housing. 415, 400 and 424 affordable properties are needed, year on year, respectively 7. Local authorities guide the housing mix 8 and tenure in new schemes although the Association can negotiate depending on circumstances. The alleviation of homelessness is a key priority for local and national government. Eviction levels have increased and currently stand at an unacceptably high level. However, with the introduction of robust action plans, early intervention measures, and a commitment to ensuring that as far as reasonably practical eviction action is advanced only as a last resort, the Association is getting back on track to support this initiative. LANGSTANE S STORY 61% of tenants have held a tenancy for over four years 62% of stock is either bedsits or one bed 18% of households either have, or have access to their children on a regular basis Current projections suggest that the Scottish population will rise to 5.78 million by 2037, and that the population will age significantly with the number of people aged 65 and over increasing by 59%, from 0.93 million to 1.47 million 9. This will impact considerably on the Association s design specifications moving forward as properties are built and refurbished to meet the lifetime needs of tenants. In addition to the older persons agenda, the Association supports the continued provision of good quality housing for those who benefit from a more protected and sheltered homely environment. 88.6% of stock meets the Scottish Housing Quality Standard or is exempt/in abeyance The improved involvement of tenants and other customers in decision making has seen an increase in satisfaction levels from 59.1% to 74.6% 7 Information taken from each current Local Housing Strategy 8 Housing mix can include the size and tenure of properties built 9 Source NRS 2013, 2011 Census - Population Estimates for Scotland 16

17 INTERNAL CHALLENGES AND OPPORTUNITIES As in any organisation, Langstane Housing Association has internal challenges and opportunities that affect how and when progress can be advanced. In addition to those identified via an annual SWOT 10 and PEST 11 analysis (see Appendix 3), these include: Current financial capacity will allow the Association to develop a further 88 properties by Support activities are dependent upon grant availability. Grants are normally renewed on a one or three-yearly basis. This makes service delivery very unpredictable and difficult to plan. The Association s plan to meet the Scottish Housing Quality Standards is behind schedule but a clear plan for achieving compliance by 2017 is in place, alongside which is a developing plan for meeting the Energy Efficiency Standards in Social Housing (EESSH) by The Association is particularly keen to ensure that new build, refurbishment and response repair activities, future proof the homes it provides. This will be achieved by the introduction of an innovative Langstane specification that all new build and refurbished properties (including major repairs) will meet. A more cohesive process has been introduced for dealing with empty properties. All improvement works carried out will meet future standard specifications. Although the Association has a strong commitment to housing for single people, it recognises that balanced communities rely upon a mix of property sizes, property tenures and economic activity. The ethos of Langstane Housing Association is to ensure that, where practical, support is provided to community based projects that enhance the lives of tenants and other residents. This raises the profile of Langstane Housing Association and ensures that there are strong links to community based projects. 1% of rental income can provide 23 new kitchens or 18 new bathrooms 10 SWOT Strengths, Weaknesses, Opportunities, Threats. 11 PEST Political/legal, Economic, Social and Technological. 17

18 LANGSTANE THE FUTURE, PRIORITIES FOR The Association s Board of Management fully expects Langstane Housing Association to continue to build on past success and have a long and independent future as a leading provider of affordable housing and services for a variety of customers in the north east, in particular single people and those with additional support needs. It is essential that the Association bases decision making on good quality information and that all those involved with the Association constantly strive for continual improvement. The key priorities set for are: 1. DEMONSTRATING FINANCIAL STRENGTH 2. DELIVERING EXCELLENT CUSTOMER FOCUSSED SERVICES 3. DELIVERING A WIDE RANGE OF GOOD QUALITY, AFFORDABLE ACCOMMODATION 4. STRENGTHENING SOCIAL INCLUSION IN THE COMMUNITIES SERVED The above priorities will be achieved by: 1. DEMONSTRATING FINANCIAL STRENGTH 1.1 Review lending facilities and negotiate terms/explore alternative funding mechanisms that facilitate future growth and allow opportunities to be advanced. 1.2 Ensure best value is achieved through a structured tendering process (that adheres to future procurement legislation) and timetable, and advance partnership working where appropriate and cost effective to do so. 1.3 Protect the Association s income streams, as far as reasonably possible, from external influences, reducing net rent arrears to below 4% in 2017/2018. Your Voice Counts* You can have your say in how we deliver our housing services to you and how we manage your neighbourhood. Why do you need to get involved? We want to know what matters to you about your home and your community. We need your views and experiences to help us develop and improve our services. What difference will I make? By getting involved you will help us to: 1. Deliver a responsive housing service that is value for money 2. Make informed decisions on services that matter to our tenants 3.Involve tenants at the heart of our decision making process * taken from Langstane Housing Association s website 18

19 1.4 Continue to develop new build affordable housing, offering a range of tenure options including social and mid-market rent, maximising grant opportunities, and ensuring a value for money procurement process. 1.5 Invest surplus funds in the Association s homes and in services and community initiatives that demonstrate sustainability and/or regeneration. 2. DELIVERING EXCELLENT CUSTOMER FOCUSSED SERVICES 2.1 Understand the diverse range of customer needs and act upon information gathered through customer profiling, satisfaction surveys and other forms of feedback. 2.2 Provide a range of options to encourage and maximise customer participation, including training, tenant scrutiny and customer panels. 2.3 Ensure services and tenure options are delivered that promotes social inclusion for individuals, families, and communities. This will include signposting to ensure the improved health and wellbeing of those living in the communities served by Langstane. 2.4 Introduce a programme of continual improvement across a range of services starting with those that are customer priorities. 2.5 Improve overall satisfaction levels amongst tenants from 81.42% in 2013/2014 to 90% in 2017/ DELIVERING A WIDE RANGE OF GOOD QUALITY, AFFORDABLE ACCOMMODATION 3.1 Implement an innovative but achievable Asset Management Strategy that maximises return on investment, ensuring assets remain viable and meet future expectations. 3.2 Fully comply with the Scottish Housing Quality Standard (SHQS) and prepare and embark on a programme for Energy Efficiency Standard for Social Housing (EESSH) compliance. 3.3 Create a forward thinking Langstane Housing Standard Specification that future proofs properties, ensuring replication in planned maintenance and major repair works. 3.4 Provide a first class repair and maintenance service that demonstrates best value and meets the needs of tenants and other customers. 3.5 Reduce the time taken to re-let an empty property (void) from 34.6 days in 2013/14 to 25 days in 2017/2018 whilst improving customer satisfaction and keeping costs competitive. 3.6 Analyse income levels and review the Association s Rent Setting Policy to ensure rents (and associated service charges) remain affordable. 4. ADVANCING SOCIAL INCLUSION IN THE COMMUNITIES IT SERVES 4.1 Develop a Community Benefit Strategy that is supportive of social inclusion initiatives but retains value for money principals. 19

20 4.2 Support third sector partners through the provision of cost effective and sustainable residential and office accommodation, and where appropriate, consider ways in which new developments can accommodate such facilities and other initiatives to support partners (such as commercial shop units). 4.3 Support third sector partners through the continued provision of advice and assistance (including the sourcing of funding) and, where practical, the provision of agency services and participation in/support of local initiatives; 4.4 Ensure the communities served by Langstane Housing Association are safe and well maintained environments where people from a diverse background wish to live; and 4.5 Promote equality and diversity in all the Association s activities, ensuring that no one is excluded from services or support due to discrimination of any kind. Performance will be managed through an internal management plan (IMP) (see Appendix 4). The IMP details SMART objectives (specific, measureable, achievable, realistic, timely) to ensure achievement of the above priorities. The IMP will be reviewed regularly and formally reported to the Board of Management on an annual basis. However, Committees will receive quarterly updates on improvements affecting their area of remit. In addition, the Annual Return on the Charter performance indicators will be analysed to demonstrate achievement against previous year sector averages, registered social landlord averages, and internal performance (see Appendix 5). In particular, and due to concerns regarding current outcomes, the following areas will be closely monitored: Complaints; Customer satisfaction levels; Rent arrears; Scottish Housing Quality Standards (SHQS); and Voids A void is where a property is vacant and no tenant is being charged for rental 20

21 RESOURCES The Association s Rules allow for lending facilities of up to 100million to be drawn down and current facilities in place amount to circa 42.5million. However, there are other considerations that need to be taken into account and these are reflected in the Association s Five Year Financial Forecast (see Appendix 6 for a summary). The Five Year Financial Forecast shows the following expenditure on the Association s development programme, 14,900k, resulting in 208 new units built/acquired over the next five years (from 2017). This is an overall capital spend of 23,700k, ( 8,800k of which is public grant and the remainder private finance). In addition to the development programme, significant expenditure is programmed for Scottish Housing Quality Standard (SHQS) works and also the Energy Efficiency Standard for Social Housing (EESSH) ( 1,053K and 150K respectively). Additional direct planned maintenance expenditure will equate to 11,100k. The Association s Statement of Financial Position summary is healthy and reflects where the Association is currently at and where it intends to progress over the coming years. STATEMENT OF FINANCIAL POSITION SOFP '000 '000 '000 '000 '000 '000 Property 180, , , , , ,135 Net Property 140, , , , , ,835 Cash Loans 42,513 47,242 48,305 50,298 51,699 54,175 Deferred Income (Grants) 88,684 89,840 88,262 87,280 86,905 86,539 Reserves 8,094 9,938 11,955 14,160 16,277 18,275 The Association s Statement of Financial Position reflects an ambition to continue with the development of good quality affordable accommodation within the Grampian area. All lending facilities are well within acceptable parameters. 21

22 STATEMENT OF CASH FLOW Statement of Cash Flow '000 '000 '000 '000 '000 '000 Development Spend 4,164 6,795 1,837 3,711 5,623 5,738 Grant (Housing Assoc. Grant) 457 3, ,210 1,833 1,871 Net Development Spend 3,707 3,528 1,238 2,501 3,790 3,867 Capitalised Repairs 915 2,439 2,753 2,753 1,110 2,037 Total Major Repair Spend 2,571 4,154 4,547 4,628 3,081 4,101 Loan Drawdown 0 6,374 5,546 18,601 5,509 7,013 Loan Repayments 1,645 1,646 4,146 16,646 4,146 4,574 Net development expenditure over the next five year period is circa K with capitalised repairs circa 11,092K. This will be funded through lending facilities and reserves. In 2018/19, the Association intends to renegotiate loan facilities in respect of expiring facilities and additional requirements. LOAN COVENANTS Loan Covenants '000 '000 '000 '000 '000 '000 LLOYDS BANKING GROUP Gearing 43% 47% 48% 50% 50% 52% Maximum 50% 50% 60% 60% 60% 60% Interest Cover 138% 118% 117% 134% 201% 159% Minimum 110% 110% 110% 110% 110% 110% SANTANDER Gearing 43% 47% 48% 50% 50% 52% Maximum 50% 60% 60% 60% 60% 60% Interest Cover 138% 118% 117% 134% 201% 159% Minimum 110% 110% 110% 110% 110% 110% The interest cover rates are well within the minimum levels agreed. Care is however, always taken to ensure the rates are not breached. 22

23 UNIT COSTS Unit Costs (annual charge except where stated) '000 '000 '000 '000 '000 '000 Weekly Rent (including service charge) Reactive Maintenance Cyclical Maintenance Major Repairs (including capitalised) , , , Management Costs per Unit 1, , , , , , The above assumptions have been used to predict income and expenditure levels across the Association s residential stock. The figures spike in following receipt of more detailed stock information and reflects a need to ensure replacements are made in a timely manner. ACQUISITIONS / NEW BUILDS Completions Total Social rent Mid Market Rent Total The Association has been realistic regarding the split of social housing that can be achieved over the five year period. However, the ration of social housing: mid market rent is changing. It is a high priority to retain social housing as the Association s first priority. In addition, it is felt that the above predictions are modest and that as opportunities arise and if additional funding is available, the above figures will increase. 23

24 KEY ASSUMPTIONS Key Assumptions Inflation 1.0% 2.0% 2.0% 2.0% 2.0% 2.0% Libor 0.5% 0.5% 0.8% 1.8% 2.8% 3.5% Rent Increases 1.2% 3.0% 3.0% 3.0% 3.0% 3.0% Salary Increases 2.0% 1.5% 2.0% 2.0% 2.0% 2.0% Maintenance Costs 1.0% 2.0% 2.0% 2.0% 2.0% 2.0% Void Rates 1.0% 1.5% 1.5% 1.5% 1.5% 1.5% Bad Debt Rates 2.4% 3.5% 3.5% 3.5% 3.5% 3.5% The above assumptions have been taken into consideration. With regards to the void and bad debt rates, it is anticipated that these will fall to meet industry averages. 24

25 RISK ASSESSMENT Langstane Housing Association has a robust Langstane Group 13 Risk Management Policy in place that covers all entities of the Association and guides the Group s Risk Register. The Register identifies overall risk areas and details specific risks within the following categories: Financial / economic Legal / Regulatory Political Organisational Thereafter the risks are analysed to determine the likelihood of the risk occurring, the severity of impact and the overall impact to the Association. This is analysed using a scoring system before looking at current control measures against future mitigation/control measures and analysing the net risk to the Association, the status of the risk, the responsible person/people and the review date. The higher risks for the Association (as identified following a SWOT 14 and PEST 15 analysis are: The introduction of Universal Credit This could, and indeed is expected to have a detrimental affect on the Association s arrears levels, costs and cash flow. Although it is anticipated that the impact of this policy will plateau, there may be significantly increased resources required to ensure tenants are supported to manage the process. Scenario planning has been undertaken to ensure the Association takes into account the possibility of reduced income, higher costs and undetermined cash flow. Non compliance with regulatory requirements The Association is aware that compliance with the Scottish Housing Quality Standard was required by end of March However, this is now a matter of extreme importance and will be achieved by March The costs associated with meeting the SHQS are included in the Association s budget for 2016/17 budget as well as the five year projections. 13 Langstane Group is an informal term used to capture Langstane Housing Association Ltd, Next Step Homes Ltd (a Langstane subsidiary) and Stockethill Homes Ltd (a Next Step Homes subsidiary) 14 SWOT Strengths, Weaknesses, Opportunities and Threats 15 PEST Political/legal, Economic, Social and Technological 25

26 A structured training programme is being developed to ensure Staff and the Board of Management are aware of any significant requirements with regard to regulatory compliance. Political changes to British and Scottish Governments are of concern to the Association although it is felt that there is sufficient feed-in to consultation documents, national and local policy agenda talks, etc. Business continuity business continuity relating to a significant IT failure, is a concern to the Association. However, improved mitigation action is currently being considered. Succession planning continues to be an issue for the Association, especially within the Governing Body where a number of experienced members have been active for a considerable number of years. However, this is currently being analysed and a recruitment drive is due to be launched prior to the Annual General Meeting. REVIEW AND MONITORING Langstane Housing Association will review the Business Plan on an annual basis to ensure it remains fit for purpose with a full review taking place every three years. Reports on progress will be presented to Board of Management on an annual basis with Committees receiving quarterly updates on improvements made that affect the services under their remit. Performance management will be a significant driver for the Association over the coming months whilst reports are developed and performance improved. 26