"Use assets effectively and support sound financial health"
Business improvement has become a general trend across all areas as English Rural looks to achieve efficiency gains and become more effective operationally.
Dedicated staff resource and planning is now applied to this. Enhancing our digital potential and offer has been a focus during the current year. Notable projects have include improving internal workflow by using new collaboration software, commencing a capacity review of existing management software and launching our self-service online offer for residents. Outcomes have included better productivity and quality of offer.
By participating in a benchmarking group facilitated by Acuity, English Rural is also able to compare itself against and learn from peers with a similar profile as well as the wider housing association sector via the benchmarking website Housemark.
During the year a new asset management strategy was agreed, reflecting the results of the stock condition survey completed in 2018. This strategy commits to providing a safe place for residents to live, whilst in the longer term mapping the broader performance of homes as assets through the application of the asset management toolkit. The continued emphasis on safety meant that fire, gas and electrical compliance was maintained across the year. Recognition of the declared climate emergency is embedded within the strategy, with an acceleration of upgrading the environmental credentials of poorly performing homes.
The annual budget setting process was used as a trigger to review expenditure and income, with the opportunity taken to consider where costs could be managed and income potential maximised. Examples of this include a review of rent setting for both rented and shared ownership homes, with the former returning to a positive increase in line with regulatory guidance from 2020/21.
The approach to rent setting supports the financing of strategic ambitions shown in the 30-year financial business plan. Revenue income streams have diversified, specifically by blending in cross-subsidy secured from the development subsidiary ER Homes Ltd, which now pursues an independent moderate sales programme reflecting agreed risk tolerance.
This approach is consistent with the updated development strategy outlined during the year, which also included a review of and improvement to the performance standard to be achieved by new build projects.
As English Rural borrows more to fund ambitions, treasury strategy is also used to manage the profile of debt, taking advantage of the continued low interest environment and hedging against future interest rate changes.
The average interest paid on debt at the end of the year was 3.74% (3.81% 2018/19). Borrowing potential has also been supported by making sure that, so far as possible, new homes can secure a Market Value Subject to Tenancies (MV-STT) value. This being higher than traditional the Existing Use Value Social Housing (EUV-SH), that reflects greater restrictions on property titles and rents. There have also been some retrospective changes to achieve this on legacy stock. The combined impact of these measures being the freeing up assets and increasing available cover for new borrowing.
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Focus on business improvement and investment in staff capacity
New asset management strategy
Improved operating margins and key metrics secured
More income secured from development subsidiary ER Homes Ltd
Review of approach to rent setting
Improvements to asset potential used for security cover
Landlord health & safety compliance maintained
Our affordable rural homes in Bolney, Sussex
>> Overall, the current programme of retrofitting renewable energy heating in older homes has been successful but delivering has taken much longer than agreed. This reflects a range of challenges, some of which were not anticipated. For example, a reluctance for households to accept the level of disruption that comes with installation work. Unforeseen grant restrictions have also caused problems. Moving forward, a more planned approach to achieving environmental improvements to existing homes is needed.
>> The complexity of incorporating existing data, contained within management software, with that captured by the Stock Condition Survey has been more time-consuming than expected. Data cleansing and mapping have all been necessary as progress is made.
