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Registered Providers - should you ration or rationalise?

With ongoing pressure on Registered Providers to rationalise stock as part of their asset management strategy, it is important to ensure that all opportunities to maximise the assets you have are being explored. Has your stock rationalisation been taken as far as it can, and has it focused on all elements of the business?

What should you look at as part of a rationalisation strategy?

The key is to look at your housing stock and consider a number of key questions. The discipline of a rationalisation review may bring to light options which you may not have previously considered. When reviewing housing stock, have you considered:

Location and demand: ‎

  • Is the property really fit for purpose in terms of its location and demand? If the property becomes void and is hard to let, is it worth keeping in terms of management and maintenance cost if? Importantly, would selling it on the open market reduce ongoing costs as well as generate a capital receipt?

Your core operational areas: 

  • Is there an area where you have lots of properties which ‎are outside your core operational areas? If so, should you consider packaging properties for sale in certain areas? One of the issues may be of course the current market with RPs and whether there is an appetite to acquire when the sector is retrenching. If that is the position, is there a case for a voluntary sales programme?
  • In non core geographical areas, can you consider other perhaps more profitable uses which will generate subsidy to offset the effect of loss of income? You may for example consider market renting, but clearly this will depend on the area and local market.

Regeneration:

  • Is there a possibility of regeneration? This would be both costly and complex but the long term gains may be worthwhile.

Have you looked at your non housing assets? ‎ 

You may be surprised at how large your portfolio of offices, shops and community centres is. Have you done any analysis of income, costs of keeping these assets and what might be alternative options?

There will be tough questions such as:

  • If you have large expensive offices, or a number of separate offices for staff, are all of the offices required? Would remote working or hot desking in a central hub or hubs allow you to reduce your number of offices?
  • How are your non housing assets managed? Could this be outsourced?
  • Is there a market for a portfolio sale?
  • With assets such as community centres, could you implement a policy ‎of transfer to locally based management companies or even to local authorities?

‎All or some of these may be controversial as they may lead to new working practices or perceived changes in your connection with the community. However, if your analysis shows a clear business reason then engagement with staff and the community will form a key plank in your consultation programme.

What else should you consider?

An early review of your plans with your lawyers is advisable to ensure that any rationalisation programme does not breach your constitution or any re‎gulatory requirements.

You should also consider the terms of any section 106 agreements and the conditions of your loan agreements to ensure compliance and correct procedures are followed. Again an early legal review is advisable.

If you would like to discuss the options available to you please do get in touch with your usual contact at TLT or contact Paul Butterworth on +44 (0)333 006 0284 or paul.butterworth@TLTsolicitors.com 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com

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