VFM for Landlords: Why It’s Important & How To Improve It
Social landlords in the UK are expected to provide high-quality housing and services to their tenants at a reasonable cost. In recent years, there has been a growing emphasis on value for money (VFM) in the social housing sector, with the government and regulators urging social landlords to demonstrate that they are making efficient use of resources and providing good VFM.
But what constitutes VFM exactly? Well, the definition and its interpretation will vary from landlord to landlord as each provider has its own set of challenges dictated by location, budget, housing stock levels, tenant profile. However, in all cases, VFM has as its central tenet financial parity and transparency – something that landlords are compelled to demonstrate at every juncture both to leadership boards and to the taxpayer in general. Read on as we explore why VFM is important for social landlords and how they can improve it…
What is Value for Money?
At a most basic level, Value for Money (VFM) is a concept that refers to the best use of resources to achieve the intended outcomes. In the context of social housing, VFM means delivering quality homes and services to tenants at an affordable cost, ensuring that the services provided are equitable in their approach. Social landlords are expected to provide VFM by balancing the cost of delivering services with the quality of the services provided. However, given the increasing budgetary pressures social landlords are faced with resulting from the ongoing cost of living crisis and soaring inflation pushing up prices of materials and labour, this is not always as straightforward as it sounds.
Why is Value for Money Important for Social Housing Providers?
The importance of achieving and demonstrating VFM in the social housing sector cannot be underestimated. Social landlords are responsible for managing large budgets in order to deliver a public service that is accessible, equitable and offers an satisfactory level of service to tenants. As such, the way in which already stretched budgets and funding pots are deployed must be done in such a way that delivers maximum benefits to tenants and the organisation as a whole.
Failure to deliver VFM can lead to increased costs, poor quality homes and services, and reduced tenant satisfaction; something that is of paramount importance for landlords given the incoming Tenant Satisfaction Measures. In Scotland, social housing providers will soon face increased financial scrutiny resulting from greater financial regulations and ratings.
Value for Money Metrics
Social landlords in the UK use a range of metrics to measure VFM. Some of the commonly used VFM metrics include:
- Cost per unit – measures the cost of providing a housing unit, including capital costs, maintenance, and management costs
- Rent arrears – measures the amount of rent owed by tenants, as a percentage of the total rent due
- Repairs and maintenance costs – measures the cost of repairing and maintaining properties, as a percentage of the value of the properties
- Void periods – measures the amount of time that properties are empty between tenancies
- Customer satisfaction – measures tenant satisfaction with housing and services
- Complaints – measures the number of complaints received from tenants
- Asset management costs – measures the cost of managing and maintaining social housing assets, as a percentage of the value of the assets
- Tenancy sustainment – measures the proportion of new tenancies that are sustained for a defined period
Improving Value for Money
Improving VFM in the social housing sector requires a combination of cost reduction and service improvement measures. As we’ve already mentioned, each social landlord will have its own specific challenges and approaches to those challenges so there’s no ‘one size fits all’ solution to improve VFM. However, speaking generally, some of the ways social landlords can improve VFM include:
- Streamlining processes and procedures to reduce costs
- Investing in technology to improve service delivery and reduce costs
- Conducting regular value for money assessments to identify opportunities for improvement
- Benchmarking against other social landlords to identify areas for improvement
- Engaging tenants to understand their needs and preferences, and tailor services accordingly
- Focusing on preventative maintenance to reduce the need for costly repairs
The Bottom Line
VFM is a key consideration for social landlords in the UK, and there is an increasing focus on demonstrating VFM in the sector, especially given the rapidly shifting economic climate making it difficult for organisations to accurately make projections and put in place plans to mitigate financial risk. As such, it’s never been more important for social landlords to use a range of metrics to measure VFM, and continually seek ways to improve value for money through cost reduction and service improvement measures. Improving VFM is essential for social landlords to meet their obligations to their leadership boards, taxpayers in general, and most importantly, the tenants they house. Implementing measures to improve VFM and then actually being able to demonstrate it are two different things however, with many organisations struggling with the latter.
If you’d like to find out more about how Mobysoft’s can help your organisation streamline overheads, make repairs service operations more cost effective and efficient, and demonstrate upturns in income collection, then book a RentTest by filling in our online form.
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