Delivering value for money

Despite the increasing financial pressures on social housing providers and our customers, our underlying approach to value for money (VFM) remains unchanged – it’s embedded in everything we do.

VFM recognises the need to balance factors such as available resources, risks and other duties that we must comply with (ie health and safety requirements) to ensure long-term financial viability, while securing the best value for our customers and communities.

It considers the quality of our homes and services, as well as how much it costs us to deliver them – we want things to be better for customers, smarter for colleagues, and good value for everyone.

Our three objectives are to ensure:

  • Our core strategies and transformation programme deliver better homes and services to customers, smarter ways of working and good value over the long term
  • The principles of ‘better for customers, smarter for colleagues, good value for everyone’ are embedded in our operational plans and ways of working
  • We understand our performance in relation to value for money and where we can improve.

These objectives are underpinned by the principles of:

  • Effectiveness: Better for customers: the extent to which objectives are achieved and the relationship between intended and actual impacts
  • Efficiency: Smarter for colleagues: the relationship between the output from goods or services and the resources to produce them
  • Economy: Good value for everyone: minimising the cost of resources used while having a regard to quality.
  • Business health
    • Our operating margin (excluding impairment charges) was 18.1% (2022/23: N/A)
    • Our social housing lettings margin was 25% (2022/23: 25.6%)

    We performed strongly this year, outperforming our G15 peers and consistent with the previous year, despite inflation. Social housing lettings margin remained similar, driven by higher repairs costs. We’ve continued to invest in the quality of our homes and how we deliver services. While we don’t expect these pressures to ease, we expect to see a steady improvement in margins in future years.

  • Outcomes delivered

    Customer satisfaction with our services was 77.6%, which is slightly below last year (78.7%) but remains higher than the G15 median and will improve further as we introduce more initiatives in the coming year.

    We’ve continued to focus on improving customer satisfaction this year, rolling out our neighbourhood model to deliver more focused, local services; bringing more repairs services in-house, giving us better control over quality and timescales; introducing more ways for customers to self-serve via MyAccount; and launching a new customer service centre to resolve more than 80% of customers enquiries at the first point of contact.

  • Asset management

    Return on capital employed (ROCE) indicates how efficiently we’ve reinvested our surpluses. Including impairment (the Regulator of Social Housing’s (RSH) definition), ROCE is 2%, demonstrating that we’re performing well against a challenging financial backdrop and similarly to our G15 peers. We expect ROCE to improve with a gradual increase in our margins.

    Our occupancy rate was 99.3% (2022/23: 99.4%), reflecting the continued demand for housing and our ability to turn around empty homes in an average of 41 days.

    Our ratio of responsive repairs to planned and major repairs fell from 62.3% in 2022/23 to 49.1% this year. We expect this to improve with more services in-house, which will give us better control over value for money. We’re also rebalancing our planned maintenance programme, as we’ve had to manage costs carefully in this area, giving recent cost pressures.

  • Funding

    Gearing measures the level of net debt compared to our housing properties. Gearing was 44.4% (2022/23: 45.5%) as we struck a balance between keeping our debt as low as possible, while increasing investment in our homes and continuing to build.

    Our EBITDA MRI interest cover ratio of remains one of the strongest among our peer group, as we’ve reduced our interest costs, by successfully refinancing our debt over the last few years. Including impairment, our interest cover is 80.1% (2022/23: 110.8%).

  • Social housing lettings and operating efficiency

    Our social housing costs per home rose to £5,943 this year (2022/23: £5,172) as we invested to improve their quality; spending more on replacing components such as kitchens, bathrooms and roofs. We’ve reduced our overhead costs to counter this increased spend, which although is higher than our peers, is consistent with our target. Our rent collections also remain healthy at 98.8% (2022/23: 101.6%), despite the cost of living pressures on customers, demonstrating the support we provide is helping them to manage their finances.

  • Development

    We completed 630 homes (including our share through joint ventures) (2022/23: 625). This is lower than target, as we proactively managed our development pipeline to reduce our exposure to build and sales risk. We also benefited by switching tenures and providing more shared ownership new homes and fewer outright sales, thereby offering more affordable homes to new customers in response to the higher costs of mortgages.

    We’re managing our development programme carefully, as we reduce our exposure to market risks, by delivering more homes through our strategic partnerships.