Key Issue 2

Question 1

How did you give costs an average based on age?

Answer 1

From information provided by my firms building surveying team
(!Need More!)

Question 2

How might there be irregularity in the rents from the borrower?

Answer 2

Sometimes the rents might be gross not net
Sometimes might show monthly charges as opposed to weekly?

Question 3

What would happen if the rents were above the LHA cap?

Answer 3

The income would not be guaranteed

Question 4

What were the rents? / total rent of portfolio?

Answer 4

£90,974 pa

Question 5

What legislation allows for affordable rents to increase at CPI plus 1%?

Answer 5

The government issues a statement in April 2023 stating it was CPI + 1%
to a maximum of 7%

Question 6

What do management costs cover?

Answer 6

• The cost of administration for the portfolio
  
  • The location can effect this
    
    • The service provided to the tenants can effect this

Question 7

What are your management costs for this instruction?

Answer 7

£850 per unit
Cost up due to condition of the economy

Question 8

How did you research other RPs operations costs?

Answer 8

???

Question 9

What information did you get from the Regulator of Social Housing?

Answer 9

???

Question 10

Why have repair costs split into three?

Answer 10

I would expect the RP to have multiple costs associated with the properties

Yearly costs

Costs associated with one off damage / appliances

Major repair costs keeping the condition of the properties up to date

Question 11

What three costs did you assume and what were the actual costs?

Answer 11

• Major Repairs - £845
• Cyclical - £400
• Day to Day - £425

Question 12

Why were you unable to assign specific costs to each unit?

Answer 12

No maintenance survey

Question 13

Why take into account age, location for the costs?

Answer 13

Age
- older properties generally require continued investment

Location
- The south is more expensive than the north labor wise

Question 14

What cost inflators did you use?

Answer 14

0.5% for management cots
1% for cyclical and day to day

Question 15

Why did you increase Major repair costs by only £25 every 5 years?

Answer 15

The age of the properties means they don’t require a lot of capital investment for the moment

Question 16

How do RPs benefit from mergers?

Answer 16

• They would normally merge with larger associations meaning they
  will benefit from greater expertise
  
  • Better funding
  • Larger stock to use as leverage

Question 17

Can there be a disadvantage to a merger?

Answer 17

Larger associations can lead to slower response times for management

Less personalised team

Question 18

What is an LHA CAP?

Answer 18

It is the set amount of income a person can expect to receive from the Benefits or Universal Credit

Depends on
- House
- Family size
- status

Question 19

What is the Formula rent CAP?

Answer 19

Establishes the maximum amount of rent that can be charged by a housing association dependent on the property size

Question 20

How do you establish your costs?

Answer 20

I have a matrix which has been built in consultation with the building consultancy team
- Puts a cost profile together over a 30 year period based of unit type and age
- It is updated regularly

Question 21

Ok but what if you didn’t have this big firm backing you, how would you establish your costs?

Answer 21

I would require a stock condition survey from the Borrower

Question 22

Why would a stock condition survey be useful when Valuing?

Answer 22

It would effectively de-risk the valuation slightly

It would give me more certainty over cost profile and income stream

Question 23

So why did you not get a stock condition survey?

Answer 23

Housing association can be very large organisations, in this case requesting a stock condition survey could have taken months