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Associations slash spend on major repairs as rent cut bites
Housing associations in England slashed spend on major repairs work to their estates as the government enforced its policy of cutting social rents.
An exclusive survey carried out by Inside Housing reveals that associations cut expenditure on major repairs by 7.3% to £386m in 2015/16. In July of that year the government announced its decision to cut rents by 1% a year for the next four years. The survey reveals that associations’ planned maintenance expenditure also dropped by 1.6% to £630m.
John Kiely, director of housing and public sector at Savills, says he thought the fall in expenditure “is all down to the rent reduction”.
Mr Kiely said that there were some organisations that “put a complete hold on their investment” after the cut was announced.
A number of associations also linked their reductions in spend to the rent reduction.
Stonewater, the 30,000-home association that formed in January 2015 following a merger between Raglan and Jephson, cut its major repairs work by 28% to £4.9m and its planned maintenance spend by 16% to £5.9m. A spokesperson said this was due to a change in accounting methodology following the merger and “the summer Budget rent reduction that required Stonewater to scale back planned works”.
Home Group said it had been “able to mitigate much of the financial impact” of the rent reduction due to the information it had gathered from a detailed survey of all its stock over the previous few years.
“This enabled us to target our planned maintenance budget and reduce anticipated costs,” it said in its 2015/16 financial statements.
Despite the reductions, the full impact of the decision is likely to become more apparent in the 2016/17 financial statements. Hyde Group, which saw its major repairs spend drop 51% to £1.2m last year, said in its accounts that 2016/17 would see it begin a programme of savings in maintenance and management to meet challenges such as the rent reduction.
Inside Housing’s survey revealed a slight drop in overall expenditure on repairs and maintenance to £2.55bn from £2.56bn for the 100 associations surveyed. Spend on day-to-day repairs increased by 2% to £1.54bn. The figures are compiled from housing associations’ financial statements.
