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Solon demonstrates value for money - 23/02/2015


The housing association regulator – the Homes and Communities Agency (HCA) – sets a Value for Money Standard which housing associations are required to meet.

We are expected to demonstrate to stakeholders how we are meeting the Standard. As part of that process, we are required to publish an annual self-assessment which sets out how we are achieving value for money in delivering our purpose and objectives.

The self-assessments of all eligible housing associations – published last July – have now been reviewed by the HCA. We are pleased to report that the HCA was satisfied that Solon meets the Value for Money Standard.

 

Our full value for money statement can be found here. However, a very short summary is as follows:

  • Solon’s current operating costs for rented accommodation (£3,137 per unit per year) are lower than the average for all housing providers with over 1,000 homes.
  • Solon works primarily in the inner-city, providing homes and services to a large number of customers who have low incomes, and may suffer multiple-deprivation. This will be reflected by our costs.
  • Our costs also reflect our stock profile, which comprises older properties, (>65% built circa 1900), and requires a relatively high proportion of resources invested annually in asset management.
  • Concerted action has been taken in the last three years to reduce overall costs, including asset management expenditure, whilst improving the repairs service and the quality of the home. This has resulted in positive returns on the investment of staff and other financial resources. For example, asset management costs have been reduced and now represent better value for money. The stock continues to meet the Decent Homes Standard. Customer satisfaction with the quality of the home, and aspects of the repairs and maintenance service has increased.
  • Solon achieved actual cost savings of approximately £102k in 2011/12, £312k pa by end-2012/13 and £259k in 2013/14.  However annual savings would be higher were inflation taken into account at approx. £49k, £431k and £598k respectively. Annual savings (adjusted for inflation) of approx. £452k are projected in 2014/15, and efficiencies will be carried forward into future years.
  • Solon’s financial return on assets and investment resulted in an operating surplus after financing and sales of £1.175m in 20143/14.
  • Key outcomes of the reduction of overall costs comprised improved financial viability, continuous compliance with loan covenants, and increased lenders’ confidence in Solon. This has resulted in a successful application to increase the gearing covenant, enabling us to borrow more money to develop more homes for affordable rent.
  • There have been a wide range of improvements in service quality and customer satisfaction with services in 2012/13 and 2013/14, most notably in asset management services. Our residents think that maintenance is the most important service.
  • However, comparison with our peers demonstrates that performance and satisfaction with some of these services remain in the lower quartile.  The Board and staff team are committed to making further improvements.

The objectives of the Value for Money Strategy, including controlling and reducing costs, improving the quality of homes, building new ones, and increasing satisfaction with the repairs service, continue to be high priorities.

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