The Supreme Court has rejected an application to appeal from L & Q in the Weaver case

The Supreme Court has rejected an application to appeal from L & Q in the Weaver Case.

In June the Court of Appeal decided that L & Q, and by implication all other similar registered housing providers (formerly RSLs) were public bodies.

Associations may want to revisit the original case to consider whether they consider themselves to be a similar association to L&Q in the terms expressed by the Court of Appeal.

The Court of Appeal decision has wide implications for all similar RSLs/Registered Providers. It means that their decisions can be the subject of Judicial Reviews and, like all other public bodies, they are subject to the Human Rights Act. It may also mean that, like other public bodies, they are subject to the Freedom of Information Act.

Associations may want to review their documentation to ensure that it is clear that for various purposes they may be considere ‘Public Bodies’ and that information may be disclosed under the FoIA, for example in contract documentation.

Are Housing Association rents likely to reduce as September RPI is -1.4%?

Following concern over the RPI figure for September 2009, upon which housing association rent increases are based, the figure has been published as -1.4%.

This will mean that rent changes next year could be rent reductions as the rent restructuring formula allows only 0.5% adjustment from the RPI figure, as published in the preceeding September.  However, the NHF in its response to the Government’s consultation on “Directions to the Tenant Services Authority”, is currently arguing that the rent restructuring formula is aimed only at controlling rent increases and does not apply to rent reductions and so the position is, perhaps, still a little uncertain.

Associations have argued that the effect of reducing rents next year, which will have a roll-on impact in all future years, will be to put financial pressures on them that may lead to reduced new homes delivery and lead to a reduction in their activities that support local communities such as work creation and tackling financial exclusion.

Rent restructuring ‘guidance’ requires that rents should change each year by no more that 0.5% above inflation +/- £2 per week.  By use of the +£2 option social landlord should be able to avoid rent decreases and may be able to achive modest rent increases despite the deflationary RPI.

It can be understood that as financial pressures hit associations they may see the need to trim back on some of the peripheral work that they currently underatake and look for efficiencies within their existing processes. This doesn’t necessarily mean trimming jobs but perhaps reviewing how things are done may be enough to sustain associations’ ‘housing plus’ activities.

VAT payable on service charges?

I recently came across this article about VAT on service charges that was considered by the European Courts of Justice.

The ECJ ruling may have an effect on the charging of VAT on some service charges.  A good summary of the case can be found here

The jist of what is being said seems to be that if an element of the service charge can be ‘opted in’ or ‘opted out’ then it no longer becomes an integral part of the ‘rent package’ for VAT purposes, and VAT may become payable on that element. This has yet to be interpreted by HMRC for the UK but some lawyers are encouraging Registered Providers to consider what the impact may be for them.

This seems similar to the treatment of garages and telecare services, where, if there is an element of choice in the charge it will be VATable and where the provision is integral with the letting of the property there is no VAT payable.

Be proud of your performance!

The pictures below were seen at a housing association recently.  I’m not sure if they are proud of their performance or just very good communicators!

Information at your convenience

And in close up…

The association shall remain nameless…

Service Charges: Part 2

There’s been coverage recently in the social housing media about the cost of service charges and the increases applied by some housing associations.  I don’t think this is particularly surprising since I think that a number of associations are beginning to realise how much they are loosing through poorly maintained service charge administration.  And when you think about it, any deficit is met out of rental income from the general rental stock and this results in less income to go towards development and so on.  As associations find themselves having to bear a reduced income from rentals next year (due to an anticipated negative September RPI figure) getting the service charge income in order will be one way to address the losses in 2010 and beyond.

I believe a large number of social housing organisations do not have robust service charge systems in place.  For them to work effectively there needs to be a general understanding of the way that these charges operate throughout the organisation.  I have come across situations where properties have been let and the description of the charges is left blank; situations where maintenance staff have failed to undertake the required consultation before letting contracts for works; situations where staff do not understand the difference between fixed and variable charges and many cases where there are simply no procedures in place (documented or otherwise) for calculating the variable service charges even when tenancies and leases have provision for these to be charged.  I’ve talked to staff about S20 consultation and whilst they undertake some consultation it has been clear from what they have said that they do not understand the legal requirement for variable service charge consultation for works or services over their respective thresholds, and they don’t understand the consequences of failing to undertake this consultation.   I spoke to someone only last week who appeared to think formal consultation was only required for leaseholders and not tenants.

Service charge legislation is complex and appears to have been drafted without due recognition of the real world!  To get to grips properly with the requirements you need to understand the statute, case law and administrative requirements required to put a robust administrative system in place.  You also need ‘buy-in’ from senior staff and a good understanding amongst the staff who have an input to the system (many of whom will likely not even realise their relevance).  Service charges is not something that can be delegated to one person, or one section, to take care of – an understanding needs to permeate the organisation.

As charges get higher the acceptance from tenants and leaseholders that has allowed poor practice to go unchallenged will diminish and more associations will find themselves being taken to tribunals.

Earlier this year I presented an overview of service charges with Robert Wassall from Blake Lapthorn.  The seminar was well received and feedback indicated a desire for a more detailed seminar.  Well, Robert and I are planning a second seminar looking at the requirements for S20 consultation and the practical issues to be considered when undertaking this work.  Robert will also be looking at recent changes to the legislation on service charges and cases from tribunal hearings.  The seminar is planned for Wednesday 21st October and the venue will be Southampton.  If you are interested in attending please get in touch.

Invoicing – avoiding disputes

In the current economic climate it is essential that businesses that trade with each other have mutual respect.   This is particularly important when it comes to paying invoices where services or products are supplied up front.   If you do not invoice promptly and pursue the debt, politely but vigilantly, the customer may assume that you are not serious about wanting the invoice to be settled.   If you continue to trade with that customer there is a good chance that you will be seen as a soft touch!

You don’t want to upset customers by pursuing debts unreasonably,  but what is reasonable should be agreed from the outset of your relationship.   Having agreed the ‘rules’ you should establish administrative systems to ensure that you, at least, maintain them.

• The first step should be to satisfy yourself that your customers are going to be around for some time and that they maintain good relations with their existing suppliers.  Ask for, and take up, references.  Ask about the customer’s payment pattern;  whether they pay on time and in full;  is there a best contact within the company who will sort things out when difficulties arise;  is there anything else that a prospective supplier should know?
• Consider credit checking new customers.  Checks from companies such as Dun and Bradstreet are easily and economically available on the Internet.
• Agree the terms and conditions of trade.   Have your own terms that look after your interests and seek to impose these, although well organised customers may have their own terms that they may ask you to sign up to.  In this case check them carefully and negotiate terms that are mutually acceptable – don’t be intimidated and assume that terms are not negotiable.
• Document the contract or agreement.  If the order is made by telephone ask for it to be confirmed in writing, by fax or e-mail preferable by way of a Purchase Order (but beware of any terms attached to the Purchase Order and check that they are acceptable).  Although verbal contracts are binding they are difficult to prove and only serve to allow debate and argument about what terms were meant to apply – you may be right but it doesn’t help to fall out with a customer!
• Set out your payment terms in the contract or agreement. Some companies have systems that ensure that payments are made by the due date but no sooner (this improves their cash-flow).
• Issue the invoice immediately the goods or service is delivered. If the goods are to be delivered over a period of time, or if a service is on-going, seek to get interim or staged payments agreed.
• When invoicing find out if it is best to send the invoice to the finance section or the person who made the purchase. Some organisations will want the invoice authorised before it goes to the finance section, others will want it registered on their finance system first.
• Be sure to include in the invoice the due date; a description of the goods or services; the customer’s reference and the name of the person you have been dealing with: all this will help their finance section to check the invoice with a minimum of delay.
• For invoices of any significant size follow up the invoice after five days and ask if everything is in order for payment. Often if there is a problem the invoice will be put aside until there is time to track you down to query it (its also helpful to include your contact details on the invoice for the same reason).
• If payment is not received by the due date contact the customer immediately by telephone to see what the problem is. Be polite and remind them of the terms agreed.
• If payment is not received following your telephone call, write to the customer.  Keep a record of all telephone calls and letters. Confirm telephone conversations in writing.
• The next stage would be to advise the customer that you intend to put the matter in the hands of your solicitor, or a debt collection agency.    Give them time to pay up to avoid this action – say five days notice – put this in writing, it will often get the payment without you actually incurring solicitors’ costs.
• Do not make idle threats.   If you have said that you will pass the matter to your solicitor and the customer doesn’t respond pass the matter to your solicitor.
• For smaller debts you may want to take small claims action in the courts without use of a solicitor.
• Remember that although you want payment you may also want to do business with this customer again.  Be polite and business like no matter how angry you may be!  Your objective should not only be to recover the debt but to earn respect and improve the relationship for future business.
• Businesses are able to claim interest on late payments from the public sector, and large and small businesses.    This will help those business that suffer from late payments, however, it will not enhance the customer/supplier relationship and it will be better to have clear understanding and respect for the prompt payment of invoices in the first place.

HousingIT briefing

Yesterday I met up with two people I hadn’t seen for some years, namely Paul Tomlinson and Claire Baylis.  I was attending a briefing at Microsoft’s offices in Reading.  Claire was there to provide an update on the UK housing software business based on research that she undertook with John Stuttard for HouseMark.  The report is available from the HouseMark website and can be downloaded from here.

It was apparent that the acquisitions in the market are continuing and the choice of systems becomes clearer as the number of options reduces.

Paul was there to give an overview of his new offering which, I believe, offers something unique in this sector.  His new housing system, from HousingIT, is called HousingPoint and it offers proper integration with Microsoft Office applications. and is developed using Microsoft Silverlight and has direct integration to Microsoft Exchange and SharePoint giving full integration with products such as Outlook, Excel and so on (we saw it running on Windows 7 and working with Office 2010).  The product is not just browser accessible – it is web delivered, i.e. the software is, maintained by them and managed by them.  Users do not have large hardware costs, software costs or license fees.  IT staff costs can also be reduced since all users need is a web browser.  It was even shown working on a netbook!

Security is always a concern but Paul is planning to have the system hosted by Microsoft and during a presentation by Microsoft we learnt that they had been operating their communications and applications worldwide for many years without significant problems and they are well targetted by hackers!

The application is aimed at small to medium sized organisations although there is nothing really to prevent roll out to much larger entities.

Paul has not finanlised prices but the figures that he mentioned seem very competative.  The application is to be offered on a Software as a Service (SaaS) basis, again, something I believe to be unique in the sector.  Pricing will be based on a cost per seat per annum basis.  Having been responsible in the past for managing costs for IT software, licenses, support, and consultancy I think the approach will be attractive to IT managers charged with managing budgets that can often be stretched in numerous directions.

I’m not on commission for this product but it does seem to me that this is an application for the 21st Century designed to be delivered in a manner appropriate for today.  Furthermore Paul is someone with experience in the housing software business who knows what users want and the best way to deliver it.  He is going to the CIH Conference next month and will be keen to demonstrate the application to those interested.

Young Enterprise Area Finals

Yesterday evening I attended the area final of the local Young Enterprise programme. There were many schools represented but the event covered two areas. The school that I advise on was the only school from their area. The Young Acheivers (as the student are known under the YE programme) didn’t know they were the only school represented and they presented their stand with great enthusiasm and when it came to their formal presentation in front of the judges, other schools and parents they certainly had no idea that they were the only school presenting in their region.

The school won all the award for their region on the night but they also won an award for best business plan, which was judges a few weeks before the finals. So the school now has trophies for best presentation, best accounts, best product, best individual contribution and probably some others too! There was some feeling of disappointment that they had won with no competition but the competition takes place for an academic year and not just one night. The team had managed to run the business, successfully, selling products and services over a number of months and make over £300 profit, even after allowing to pay their shareholders 6% dividend over the academic year. Other schools had failed to maintain the momentum and one had even withdrawn on the night of the finals. I think the school has something important to be proud of. They now go through to the County Final where they will have some significant competition!

Following the formal presentation at the awards ceremony yesterday I took the rash decision to volunteer to join the area board to see what I can offer to promote the scheme amongst other schools in the area.  Watch this space to see how things develop!

For more details of Young Enterprise see here.

Service charges seminar

Well yesterday was a busy day. In the afternoon I was presenting a service charges seminar with Robert Wassall in Southampton. We had over forty people attending from housing associations and local authorities from West London down to the south coast.

The problem with service charges is that they are so complex, what with fixed and variable charges and the complexities of S20 consultation for major works and long term agreements. Many landlords get things wrong and whilst residents continue to pay the charges without complaint it only takes one resident to take action for the flaws within the administration to be exposed for other residents to exploit. The message here is even if you’ve had no complaints it’s worth giving your processes a health check.

Another issue is that so many landlords do not make full recovery of the costs of their services and there are benefits to be achieved in setting up proper systems to gather cost information.

There are so many other issues to do with service charges that we covered but I think a key message for those present to go away with is that service charges need to be understood by many people in the organisation not just the rent accounting staff. When a surveyor is letting a contract it is important to know if S20 consultation is required and whether the contact fee needs to be broken down into estates or blocks so that costs can be recharged and the allocations staff need to understand the importance of including details of what services are being charged for and the management staff need to understand the importance of including details of charge payers’ rights when issuing demands.

We asked about interest in a follow up seminar to include greater details and there was generally good interest and so watch this space for something perhaps in the autumn.

Following the seminar I rushed off to the area finals of the Young Enterprise at the Ordance Survey offices in Southampton.

Your call is important to us – Not!

I know it’s everyone’s complaint but I am about fed up with otherwise caring organisations providing rubbish telephone service to callers!  Yesterday I spent 15 minutes waiting to get through to the right person (having gone through numerous levels of ’select 1 for.., 2 for.., etc) only to finally speak to a real person and have him pretent he couldn’t hear me and hang up!

Today I rang a housing association and listened to 45 seconds of recorded anouncement telling me what they DON’T DO and then several layers of menus only to be left with an answerfone – WHERE HAVE THE PEOPLE GONE?

I then rang back and selected the ‘operator’ option.  At 4.45pm on a Wednesday I was informed that my call was important but they were experiencing a high level of calls.  What I think this really meant was ‘Your call is of moderate interest to us but thanks to the marvels of modern technology we can iron out the peaks and troughs of call patterns by asking you to listen to piped music, at your expense, until our understaffed call centre has capacity to take your call – have a nice day!’

When will organisations that are supposed to be providing a service, or that want to win favour, realise that their public image often starts when someone telephones them?

Of course, I could direct dial but for people who send emails without telephone numbers included in their sign-off!  Don’t get me started again!!

Ah, I feel better for having got that off my chest!