Housemark research suggests that there is little benefit from entering into large-scale Long Term Agreements to provide repairs.

HouseMark is the leading provider of statistical information on UK public sector housing. Over 950 housing organisations are members of HouseMark and it is from the data that these organisations have provided which HouseMark’s report has been created. For the full data set click on the link to HouseMark’s Repairs Benchmarking analysis.

In undertaking this report HouseMark have attempted to quantify how much public sector organisations are spending on repairs, if there are differences between what social housing organisations spend, and to assess whether the way these services are provided impacts significantly on cost and performance. The results are striking, and contradict the assumptions which several large Housing Associations, including Circle Housing Group and The Hyde Group, have followed in procuring their outsourced repairs service.

The key finding of the research were:

  • In England and Wales, on average social landlords spent most per property on repairs in London (£824.58) and least in the Yorkshire and Humberside Region (£483.43).
  • The average cost of the provision of repairs is higher in Wales (£680.64) than in any of the English regions except London.
  • Of the £3 billion UK social landlord spend on repairs, £700 million (23.3%) is spent on the cost of management.
  • Management costs for London properties are on average £241.94, nearly three times as much as the cost in the cheapest region of England, East Midlands, with an average of only £98.41.
  • There was no significant link between the cost of repairs and whether the housing organisation used in-house staff (a ‘Direct Labour Organisation’) or outsourced their repairs service to private companies.
  • There was no significant link between the size of an organisation’s repairs operation and the cost of repairs.

This report is going to be uncomfortable reading for those housing organisations which have recently undertaken, or are currently undergoing, a process of reorganising the way they provide repairs into a small number of long term contracts with large private companies. Such reorganisations are costly and difficult to manage, and lock social housing providers into relationships with large building companies for upto 4 years (and possibly more) with financial penalties for early withdrawal.

The reason this strategy has been followed is the belief that by entering into large long term contracts there will be cost savings through economies of scale and negotiation of better prices. Any cost and difficulties involved, so the thinking goes, will be outweighed by the reduction in costs.

The HouseMark report found no evidence to support this belief. Indeed, HouseMark suggest in their report that price and performance is driven by other factors than the size of operation or whether repairs are outsourced. This report, along with the high profile failure of organisations such as Circle Housing Group, is just one more nail in the coffin for the theory that large long term agreements are the best way to provide a repair service to the UK’s social housing stock.

To read more about long term agreement and Service Charges follow the link to Service Charge Dispute Guide’s article on Qualifying Long Term Agreements.

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