St John’s estate: stock condition survey findings, additional costs and income

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Timeline

Inclusions and exclusionsThe costs from Hunters’ report are based mainly on visual inspections completed by surveyors without opening the walls to determine the condition beneath the surface. A 20% sample of rented properties were inspected within the homes. All of the external communal areas of blocks have been surveyed and this includes all estate grounds and garages. Please note that the costs assumed are estimates from September 2017 and don’t include estimates for inflation since then.

What was included in the survey

• 20% internal surveys of One Housing rented properties.

• 100% external and communal survey of all blocks.• 100% estate-wide survey (parking, paths etc).• 100% garage blocks (individual garages).• Intrusive survey of high rise and complex blocks.• Small sample of leaseholder propeties based on

them attending drop-in meetings.• If a block contained similar properties, that data

was copied to non-surveyed One Housing rented properties for reporting.

What wasn’t included in the survey

• Freehold properties and inside leaseholder properties (these are not maintained by One Housing).

• Cyclical, responsive and void maintenance — One Housing carries out this type of work regu-larly and has quotes for these costs.

• Planned improvements.• Intrusive surveys of all other blocks (except

those which are high rise and complex).• All fire works including fire risk assessments

— One Housing has separately undertaken fire safety inspections and is implementing any required works.

• Removing asbestos.• Special adaptations for disabled or elderly

people — One Housing will provide adaptations accordingly.

• Energy efficiency measures.

Introduction In March, we held a series of exhibitions exploring the findings of the latest stock condition survey of residents’ homes. The survey was carried out by Hunters and was an independent review of costs for planned maintenance over the next 30 years, and helps us understand the overall condition of the homes, blocks and the estates in general. There are, however, other costs and incomes that One Housing will need to plan for, to be able to understand how each block and estate is performing financially. These additional costs and incomes include things like cyclical maintenance, responsive repairs and rental income.

One Housing commissioned Quod, an independent consultancy, to carry out a piece of work to measure the financial performance of each block using both the results of the Hunters stock condition survey and other costs and income information from One Housing. The findings of this work help both One Housing and residents understand how financially viable each block is and inform conversations about how to plan for the future. Thank you to everyone who attended the exhibitions, this newsletter will provide you with an overview of the exhibition held on the St John’s estate.

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Average cost per home over 30 years for rented homes and leaseholders

The table below shows a breakdown of the average cost per property for each estate and property type over a 30-year period.

Planned maintenance costs for all four estates over the next 30 years

The total planned cost to maintain all four estates and blocks for the next 30 years is £97,444,505 (excluding professional fees and VAT).

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Properties surveyed on St John’s There are 597 homes on the St John’s estate, 90 houses and 567 flats or maisonettes. 60 houses are owned by freeholders and were not included in this survey. The remaining 30 houses are owned by One Housing and Hunters internally inspected six (20%). Of the 567 flats and maisonettes; 293 are owned by One Housing and 274 are owned by leaseholders. Hunters internally inspected 86 (29%) of the One Housing owned flats or maisonettes. Hunters also inspected all the blocks as well as communal areas including garage blocks, children’s play areas, car parking courts, paths and green space.

Hunters’ target to survey at least 20% of the homes is a common approach to give a good indication of the average works required. These averages are then applied to the rest of the homes. For external parts and communal areas, each block has been surveyed in full.

There were a few blocks on St John’s where most of the homes were leaseholder owned and so to be able to get a full picture of the condition of those blocks Hunters internally inspected a small sample of leaseholder owned flats or maisonettes.

Planned maintenance costs

The cost per property for One Housing rented homes is considerably more than the leaseholder cost. This is because One Housing has to factor in the cost to maintain the inside of these homes as well as the communal areas, whereas for leaseholders it is their responsibility. The total planned cost to maintain 597 homes on the St John’s estate for the next 30-years is £21,326,831.

*Costs per block have been rounded up to the nearest whole number. **Houses covers homes on Cardale Street, Castalia Square, Chipka Street, East Ferry Road, Glengall Grove, Hickin Street, Killoran House, Launch Street, Manchester Road, Marshfield Street, and Strattondale Street.

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Costs per repair category across the estate (from largest to smallest)

Miscellaneous costs include various low cost items that have been grouped together for visualpurposes only, these costs vary from estate to estate. The miscellaneous costs for the St John’s estate include: external doors, boundaries, external walls, hard surfacing, external buildings, drainage — above ground, internal structural elements,structural engineering, cold bridging, mechanical and engi-neering lifts, bin chutes, garages and internal doors.

A cost breakdown for each block is available on request. Contact the project team, their details can be found on the back of this newsletter.

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Block viability over 30-years This table shows the costs per home on each block taken from Hunters’ presentation (pink column) alongside the extra costs to show the total cost to maintain each block (blue column). This is then considered against the total income generated from rents for One Housing owned properties to produce the overall net present value for the block. In the business as usual scenario, with no improvements made, 67% of the blocks on the St John’s estate are producing a surplus while 33% are experiencing a loss (all figures shown in the table are per home over 30 years).

*Some blocks have been grouped to reflect the way we store our financial information. Kingdon House include blocks 19–36, 1–18 and 37–54, Glengall Grove include blocks 47–65 and 5–35, Chipka Street include blocks 6–21 and 22–37.

Key termsCyclical maintenance This is planned work that needs to be carried out on a pre-planned schedule. It includes annual work such as gas servicing and less frequent work such as exterior painting.

Maintenance and responsive repairs Repairs for issues such as leaks that are done when residents report them to us on a day-to-day basis.

Voids and bad debts Cost for empty properties, including preparing it for it to be rented again, as well as debts that can’t be recovered. Planned maintenance (Hunters) Planned repairs and maintenance to help keep buildings and estates in a good condition and to reduce the risk of day-to-day issues.

ManagementCosts for administration of the properties, letting and maintenance.

Existing loanThe interest cost from the loan originally used to purchase the homes.

Income from rents The rental income One Housing receives from residents living in the homes.

Net present value (NPV) NPV is a standard calculation used in the financial world, to determine how secure an investment is by considering the value of cash and expenses today, over a long period of time. The NPV shows which blocks are making enough income (through rents and service charges) to cover the long term expected costs to maintain them over a 30-year period. It is a value that represents future income, not income today.

A negative NPV means that the cost of running the block over 30 years is higher than the rental income One Housing will receive. This becomes challenging as it means that there is not enough income to pay for sufficient works such as maintenance and major works.

Where there is a positive NPV, the block is financially viable to manage and maintain over the 30-year period.

Depending on the surplus, it may also be possible to carry out improvements to the block.

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Notes

Contact

To share your views, concerns and wishes for your homes and the future of the Island or to receive a hard copy of the FAQs or block specific breakdown, contact the project team on:Tel: 020 8821 4510 Email: projectcoordinationteam@onehousing.co.uk

Keep up-to-date with the latest news and information on the Island at onehousing.co.uk/Island

1824_OH Published March 2018

This document is also available in other languages, large print and audio format upon request.

For more information, please call our Customer Contact Centre on 0300 123 9966 / 020 8821 5300

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Message from Richard Hill Chief Executive of One Housing

We understand that the financial picture is not the only thing that matters about the homes we provide. Residents have a wide range of concerns including the comfort and size of their homes, the local environment and facilities, and heating and other running costs. But paying for the upkeep of blocks and estates is an issue that has an impact on everyone.

We hope this financial information will help the community to understand some of the challenges we will face together in the future.

We also hope it will inform shared and open discussions about how we can ensure that our residents have safe, comfortable and affordable homes for many years to come.

Once there is an understanding of what residents think and feel about the results of the stock condition survey, we will then be in a better position to think about what we could do as your landlord to ensure better homes for the future.

We want to hear your views, concerns and wishes for your homes and the future of the Island. Please contact the project team, their details can be found below.