Key Issue 2 Flashcards
How did you give costs an average based on age?
From information provided by my firms building surveying team
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How might there be irregularity in the rents from the borrower?
Sometimes the rents might be gross not net
Sometimes might show monthly charges as opposed to weekly?
What would happen if the rents were above the LHA cap?
The income would not be guaranteed
What were the rents? / total rent of portfolio?
£90,974 pa
What legislation allows for affordable rents to increase at CPI plus 1%?
The government issues a statement in April 2023 stating it was CPI + 1%
to a maximum of 7%
What do management costs cover?
- The cost of administration for the portfolio
- The location can effect this
- The service provided to the tenants can effect this
- The location can effect this
What are your management costs for this instruction?
£850 per unit
Cost up due to condition of the economy
How did you research other RPs operations costs?
???
What information did you get from the Regulator of Social Housing?
???
Why have repair costs split into three?
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
What three costs did you assume and what were the actual costs?
- Major Repairs - £845
- Cyclical - £400
- Day to Day - £425
Why were you unable to assign specific costs to each unit?
No maintenance survey
Why take into account age, location for the costs?
Age
- older properties generally require continued investment
Location
- The south is more expensive than the north labor wise
What cost inflators did you use?
0.5% for management cots
1% for cyclical and day to day
Why did you increase Major repair costs by only £25 every 5 years?
The age of the properties means they don’t require a lot of capital investment for the moment
How do RPs benefit from mergers?
- They would normally merge with larger associations meaning they
will benefit from greater expertise- Better funding
- Larger stock to use as leverage
Can there be a disadvantage to a merger?
Larger associations can lead to slower response times for management
Less personalised team
What is an LHA CAP?
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
What is the Formula rent CAP?
Establishes the maximum amount of rent that can be charged by a housing association dependent on the property size
How do you establish your costs?
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
Ok but what if you didn’t have this big firm backing you, how would you establish your costs?
I would require a stock condition survey from the Borrower
Why would a stock condition survey be useful when Valuing?
It would effectively de-risk the valuation slightly
It would give me more certainty over cost profile and income stream
So why did you not get a stock condition survey?
Housing association can be very large organisations, in this case requesting a stock condition survey could have taken months
