Decent Homes

15 April 2005

With FM expanding into the housing sector, Jane Fenwick looks at how FM expertise and its partnering ethos has contributed to improving the living conditions of the most vulnerable through to the more affluent

UNLESS YOU LIVE in a ‘council’ house or in a property rented from a Housing Association in a deprived area of your city or county, you would be forgiven for not knowing what radical change is going on management and renewal of the housing stock. In July 2001, Government set a target to bring all social housing into a decent condition by 2010.

The Decent Homes standard seeks to bring homes up to a reasonable state of repair with modern kitchen and bathroom facilities, adequate levels of insulation and with effective heating systems. According to the English House Condition Survey which published its figures for 2003 last month, there are now 5.3m private and 1.4m social sector homes that are rated ‘nondecent’ – that’s 30 per cent and 35 per cent of their stock, respectively. Inadequate heating and insulation are the most common faults.

Local authorities have to bid to take part in programmes to finance the improvement work, and in February, a further 38 made bids to improve a 160,000 more homes. There are three funding options under the programme:

....Create an Arms Length Management Organisation (ALMO), a company owned by the Council to manage its homes and make them decent while retaining ownership of the properties
....PFI - Government provide financial support for partnerships between public and private sectors with the homes remaining the property of the Council but in most cases managed by the private sector
....Transferring homes (LSVT) to a non-profit making housing association which can borrow money outside the public expenditure constraints.

For many private sector companies in the FM and construction sectors, this has been – and continues to be – a good business opportunity. The skillsets, range of services, management techniques and system support are all found in the FM sector and several companies have become specialists. For example:

....Mansell (part of Balfour Beatty) was awarded a £70m contract to refurbish 34 multi-storey housing blocks totalling about 3,000 homes, and 10,000 traditional houses by Your Homes Newcastle, the body responsible for the £600m 6- year Decent Homes Programme in Newcastleupon-Tyne.
....Haywards Property Services (part of Erinaceous Group) was appointed by Hounslow Homes (an ALMO) to provide professional services and technical support for the management, maintenance and improvement of 16,500 council homes.
....Connaught is a one of five framework contractors selected by the London Borough of Hackney to deliver the Decent Homes Standard to 20,000 homes.
....Mears has a 7 year partnering contract with Tristar Homes, the ALMO established by Stockton-on-Tees Council to manage its housing stock. Tristar Homes is investing £100m to bring 14,000 properties up to the Decent Homes standard by 2010.

It is not surprising therefore that for the first time housing management featured in the PFM Awards last year. Winner of the Public Sector category for its partnership with North Lanarkshire Council, Morrisons (formerly AWG Facilities Services), demonstrated how its facilities management skills could be brought to
bear across the 10 year PPP that covered the work previously carried out by the Council’s inhouse direct labour organisation.

The partners formed Maintenance and Property Care (MPC) a special purpose vehicle responsible for providing a range of services from management of 46,000 council houses and 2,000 council owned commercial properties. Some 690 employees transferred from the DLO to MPC, making Morrisons one of the largest private sector maintenance businesses operating in Scotland. MPC provides 24/7response to
emergency repairs, routine repairs by appointment, reactive and planned maintenance, minor works, adaptations and small capital projects, compliance testing and is first response to the Council for support in civil emergency.

A finalist in the Partners in Expert Services category of the PFM Awards 2004 was the partnership between CAFM solutions provider, FSI (FM Solutions) and Cross Keys Homes, the company that has taken over the housing stock of Peterborough City Council – some 10,200 dwellings occupied by over 14,000 tenants. Cross Keys Homes contracted a consortium led by FSI and including Cognito and Xmbrace, to provide
asset management systems including IT and mobile telecoms systems and support.

The challenge set by Cross Keys was to establish an appointment based system for provision of services under the Better Homes strategy, provide centralised management information tools to incorporate FSI’s Concept, help desk, asset management systems and planned maintenance tools plus a range of
management reports, systems that are familiar tools in the world of commercial FM. The objective was to provide integration of asset information with the Council’s legacy systems, provide added value to tenants and sustain a ‘smarter’ way of working.

FSI’s Concept SQL system is the integration engine at the heart of the solution for Cross Keys. It combines with Xmbrace’s OPT-TIME automated workforce scheduling system to provide a solution to the challenge of an appointment led housing repairs service, and an engineering force equipped with PDAs.

While the social housing sector grapples with its backlog of repairs and improvements, the private housing sector would appear to be booming with the popularity of ‘buy to let’ and the regeneration of city centres with’ loft style’ apartments. Keith Pratt, a consultant who has worked with managing agents and private landlords, explains the dilemma. “Delivering effective FM services to private sector housing estates is both complex and challenging. The service elements are not as simple as they might at first appear and occupiers and owners of private property have a different perspective when spending money from their own pocket.

“With leasehold properties, usually blocks of flats, most owner occupiers are required to pay a charge, which is primarily levied for the maintenance of the external fabric. In addition they may pay a sum towards the ongoing maintenance of common areas and grounds. The Freeholder often saw this income as pure profit on his investment and only allowed agents to carry out a minimum of maintenance. However, with new laws in place this is changing. The opportunity also exists, for leaseholders to buy the freehold, provided they can raise the funds and the majority of other owners agree.

“With freehold the situation is very different. Over the past ten years or so, freehold properties have been built on new style estates, many with common land. The owners then become shareholders in a management company. This has happened because local authorities realised that if the property owners pay for the maintenance of their own grounds and services, then the cost burden on other people in the
community would be reduced. The developers hand over the estate on completion to the property owners and they then have the responsibility for the upkeep of all the common areas. This can include grounds maintenance, play areas, pump maintenance, balancing ponds and rivers, boundary fences, street lighting,
security, street and internal cleaning, lift maintenance, car parks and road repairs, other small running repairs and insurance. In some cases such estates also have an element of social housing or a number of small industrial units as part of the overall planning gain for the local authority.

“Whilst it has been possible for some owner management companies to engage contractors themselves, this has often been with mixed results. The majority of owners pass the task to a professional management company. These are a mixed bunch, but the best are responding to their customers needs with Service Level Agreements and Key Performance Indicator’s together with systems for comprehensive site visit regimes which ensure services are effectively performed. This management task requires a very mobile team. Costs in this sector have increased through new legislation and financial services rules. The services are also very labour intensive and even the most simple of tasks are no longer cheap.

“When engaging a management company it is imperative that property owners are realistic about the cost of providing services. If they are not the appearance of the estate will decline and properties will gradually lose value.”

M&E contractor, Powerminster – part of the M J Gleeson group – has commenced a 30 year PFI to regenerate a run-down Manchester housing estate in a £35.5m contract awarded by Grove Village Limited, the company that has been formed to deliver Manchester City Council’s Pathfinder PFI Social Housing Scheme. The £99m Grove Village project will turn part of Plymouth Grove into a vibrant community with shops, community facilities and over 1,250 new and refurbished homes. Powerminster will provide domestic FM services through its Propertycare team together with any life cycle replacements on all the homes, maintain common areas such as landscaping, all repairs, and refurbishment including decorating, plumbing and electrical, and 24/7 total building maintenance. In addition it will operate the district heating scheme that supplies hot water and heat to 500 homes. The homes planned for Grove Village are a mix of
council owned and privately owned starter homes, the sale of which is helping to fund the scheme that includes shops and community facilities.