Will s122 of the Housing and Regeration Act 2008 hinder resident involvement?

Following the passing of the Housing and Regeneration Act 2008 the old ‘Schedule 1′ restrictions on non-contractual payments to staff and board members were lifted, however S122 of the HRA 2008 introduced new restrictions on the ‘making of gifts, and the payment of dividends and bonuses by a non-profit registered provider’ to members (ie shareholders), or former members, of the registered provider; members of the family of members or former members, and a company that has a director in either of these two groups.

Some representative groups are considering the position with respect to tenant board members and their travelling and other out of pocket expenses but the impact could be far greater.

Seems reasonable – until you consider the position regarding tenants who are shareholders who may receive any non contractual payment in regards to their involvement with the registered provider; payments such as expenses, invitations to celebratory functions (such as a Christmas dinner, or summer barbeque) and other compensation payments that are not contractual.

This is not an area where there is any de-minimus or discretion. A payment that contravenes this prohibition may be reclaimed by the landlord and the regulator may instruct the landlord to make the recovery.

Many registered providers have encouraged their residents to take up a shareholding so as to improve accountability of the landlord and make residents feel more included.

The position is worsened by the fact that the prohibition affects both current and former members of the RP – so members cannot resign and get around the issue.

Some representative groups are considering the position with respect to tenant board members and their travelling and other out of pocket expenses but the impact could be far greater.

Residents play a leading role in selecting new grounds maintenance contractors

When Dorset based Signpost Housing Association needed to tender its grounds maintenance service saving money was not its only consideration; getting a standard of service that met residents’ needs was also of great importance.  Working with specialist social housing consultant Peter Bird from Primary Business Support the association formed a project working group from staff and residents who were already members of the Association’s Planned and Responsive Repairs Review group (PARRR).

The contracts were let at the higher standard, which, following the tendering exercise, could be afforded within existing budgets

The working group comprised three members of staff and 18 residents and its first task was to agree the tender specification.  Working with a draft the group had real and meaningful input and introduced a number of new elements as well as adjusting the specification to meet their own needs.  There was a desire to improve the standard of specification and the group identified two key areas where it wanted to see improvements.  Grass cutting had long been an area where improvement was wanted, in particular those who lived in communal schemes wanted to see the grass cuttings collected up and taken away.  The group also wanted to see the maintenance of hedges improved.  It wasn’t clear whether improved services were affordable and so the group decided on a three standard specification where the standards on grass cutting and hedge maintenance varied between a reduced, middle and enhanced standard.

Having established the standard the group delegated responsibility for tendering to a sub-group that comprised three staff and six residents.  Because of the size of the contract – the Association has stock in Dorset, Devon and Somerset – the tendering had to be undertaken through the EU tendering route as a ‘Part B’ service and the work was split into three lots each covering different geographic areas.  The restricted tendering procedure was followed which meant that a pre-qualification questionnaire (PQQ) was sent out to potential suppliers.  The sub-group agreed the content of the PQQ including the project specific questions to be included and it also agreed the PQQ evaluation model.  The group went on to undertake the PQQ evaluation and decide which potential providers to invite to bid at the Invitation to Tender (ITT) stage.

Again, the working group agreed elements of the ITT requirement, including the subject areas for method statements that would be used to evaluate the tenders under the ‘most economically advantageous tender’ (MEAT) model employed and also, again, the evaluation model to be used.   The method statements decided by the group covered working methods, staff training, customer service and adding value to the contract.

The procurement process was complicated because the grounds maintenance service is recharged to many residents under variable service charge arrangements.  Alongside the tendering arrangements around 4000 residents were also consulted under a mixture of S20 Consultation for variable charge payers and general consultation with other residents who benefited from the service.  The working group also considered the representations made by residents under these consultation arrangements.

Having completed the tender stage the working group evaluated the tenders for the three contract areas and, based on the evaluation model, selected the preferred suppliers for each contract based on price but also the content of the method statements, and references.

The contracts were let at the higher standard, which, following the tendering exercise, could be afforded within existing budgets.  Residents will see grass maintained at a shorter standard than previously and those in communal schemes will have grass cut using box mowers and clippings will be taken off site for disposal.  Hedge cutting will also be provided at an enhanced standard.

The residents involved have found the process stimulating and enjoyable.  John Pearson, a resident from Winterbourne Whitechurch, said ‘I have found the whole process interesting and I feel that the residents have had a very real role to play in determining the standards to be agreed and the selection of the best contractors for the work.’

Residents continue to be involved and attend joint client/contractor meetings monitoring the delivery of the service in the three contract areas.

Further details about the process can be obtained from Julie-Ann Foster, Divisional Manager for Signpost Housing Association, on 01258 484829 or from Peter Bird, at Primary Business Support, on 01264 324403.

A full case study that includes greater detail and learning points from the project is also available from Peter.

Gender Identity and the Tenant Services Authority’s Regulatory Framework

Going through the TSA’s new Regulatory Framework for Social Housing in England from April 2010 I have come across the requirement for providers to ‘demonstrate how they have taken into account the needs of tenants across the seven equality strands’.  The seven equality strands are race, disability, sexual orientation, age, gender, religion or belief, and gender identity.

I’d be interested to hear from others how they manage to ensure that their services take into account the needs of people across this particular aspect of the seven equality strands in housing or any other service area.

I’m genuinely in favour of equality for all but there do seem to be some practical difficulties in being able to demonstrate having taken some of these aspects into account. Before these factors can be ‘taken into account’ I would think that the landlord needs to identify the numbers, location and needs of the various groups.  I must confess I was not totally clear on the difference between ‘gender’ and ‘gender identity’ and so I turned to Wikipedia.  It told me that gender identity is:

the gender(s), or lack thereof, a person self-identifies as. It is not necessarily based on biological fact, either real or perceived, nor is it always based on sexual orientation. The gender identities one may choose from include: male, female, both, somewhere in between (“third gender”), or neither.

For some time registered providers have had difficulties in obtaining a high rate of return when asking tenants about sexual orientation.  I’m not sure how they will obtain information about such personal, and technical, issues as the Gender Vs Gender Identity of tenants.  I understand from other googling that gender identity seems to be discussed in terms of transgender situations but again many people who have gone through the process of changing gender, or who are in the process of changing gender, will presumably want to keep their situation private.  I can also see great difficulties in getting tenants to understand the differences between ‘gender’ and ‘gender identity’.

I’d be interested to hear from others how they manage to ensure that their services take into account the needs of people across this particular aspect of the seven equality strands in housing or any other service area.

Managing Budgets and Improving Services by Tendering

As the financial squeeze begins to take hold this may be just the right time to consider tendering services.

It surprises me how often people stick with an existing supplier, rolling over contracts, undertaking value for money assessments and generally finding reason not to re-tender services convinced that what they have is the best service possible.

If you are looking to make financial savings now might be the time to consider re-tendering some of your existing contracts.

There are good reasons to re-tender periodically. Number one is that as you are feeling the pinch so are potential suppliers – they are more likely to give better prices or find innovative ways to add value in these circumstances; number two is that as technology moves on so do opportunities for suppliers to make their offerings more attractive, for example, through cost savings brought about by new machinery, equipment and systems.

Another reason is that companies are constantly adjusting to ever changing circumstances; companies are merging and changing so that the offer that they made you two years ago when you asked them for a price may be very out of date to what they can offer today.

Re-tendering also gives you an opportunity to revise the specifications that you currently use to manage your externally supplied services.  These can usually benefit from being brought up to date in terms of user needs, technological advances and legal requirements.  We have undertake numerous tendering exercises and have good experiences working with project teams that comprise staff, residents and external consultants to ensure that the needs of the various stakeholders are recognised and addressed.

People often avoid tendering because they have a comfortable working relationship with current providers: ‘they know what we want and we know how to handle them’.  This can be a good thing but it can also be limiting – when new suppliers are appointed they are usually full of enthusiasm to satisfy you, make you a reference site, go the extra mile.  When the contract has been running for some time the enthusiasm can fall off and ‘what gets measured gets done’.

This is not to say that long term contractual arrangements cannot remain good but a good supplier has little to fear from a bit of healthy competition so long as the competitive process is fairly managed.

If you are looking to make financial savings now might be the time to consider re-tendering some of your existing contracts.

Gas Auditing

I have a client who recently asked me to undertake a number of tenders in readiness for the new financial year.  One of those that he wanted me to tender was a service for gas auditing.  Now I hadn’t come across gas auditing before and so I asked him what he needed.  He explained that in view of the legal responsibilities placed on landlords to have gas systems inspected annually he needed to be assured that the work was being undertaken competently.  I was unsure this was necessary since the engineers are Gas Safe registered, but that was what my client wanted tendered and so that’s what I have been doing.

As I reflected on this I came to realise the wisdom of my client’s decision to have gas audits undertaken, even if his contractor is registered.

I have had a rude realisation that my client was correct to have concerns.  At home we have oil heating (no gas available) and when the boiler stopped working recently (for the umpteenth time and it’s only two years old – but that’s another story) we called out an OFTEC registered oil service engineer.  A week after his visit we found that he had cleaned the oil filter enclosure and left it with a very small leak.  This has led to the Environment Agency being involved and considerable work being undertaken by a specialist oil spills company (thankfully being paid for by our insurers).

As if this wasn’t enough we woke this morning to a cold house (we’re getting used to that…) and when I checked the boiler I found that a large jubilee clip had been left off the flue hose that carries away the noxious fumes.  The boiler is in a rear porch area and so the fumes had not entered the house but our dog sleeps out there!  Fortunately, he seems none the worse for it.  I replaced the clip and within seconds the boiler restarted.

As I reflected on this I came to realise the wisdom of my client’s decision to have gas audits undertaken, even if his contractor is registered.

If you have your gas installations serviced annually and don’t have the work audited you may want to consider where you might stand if one of the engineers has an off day.

Incidently I discussed with my client the percentage sampling to be undertaken in the audit and we thought between 5% and 10%.  Upon checking with one of the specialist suppliers of this service it seems many opt for 10% in the first year and once they are satisfied that work is of a good standard reduce the sampling to 5%.  It also depends on the size of stock and geography and how may different contractors you use and how many different staff they employ.

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.