Special report: costs per unit decrease for first time in two years

COVID-19 lockdown restrictions for some of the year meant some planned and routine repairs were deferred. However, the RSH said that providers had “acted quickly” to manage the backlog of non-emergency repairs. Major works figures will vary significantly from year to year for each organisation because they involve big, one-off spending increases, such as programmes to fit new kitchens or bathrooms.

The RSH added that the latest financial forecasts indicate that headline costs were expected to rise by five per cent over the next five years.

Traditional HAs

Social Housing analyses the top 15 HAs with the highest and lowest unit costs across the country, tracking the make-up of their stock and their location to better understand the drivers of any increases or decreases in their costs.

The majority of the HAs with higher costs per unit have high levels of supported housing or housing for older people, while 60 per cent are either based in or operate in London.

Look Ahead Care and Support, for example, had the highest costs per unit at £27,980, which was up just over six per cent on the previous year, following major works on its buildings.

But 95 per cent of its stock was classed as supported housing (it provides support services for people with a range of needs, including mental health, learning disabilities, homelessness and young people/carers), with a large proportion of its unit cost made up from management (£4,310) and service charges (£4,650). It operates in London and the South East.

East Midlands-based Framework followed, with a headline cost per unit of £24,450, which was up seven per cent on the previous year. This included a £7,240 service charge and £4,510 in management fees. Maintenance costs stood at £3,020, and it had no major repairs costs. Its stock is also almost all supported housing (84 per cent), which is more expensive to staff and maintain than general needs homes.

In its company accounts for the year, the organisation said it has 22 sites – two more than last year – where daily 24-hour staffing is required. Additionally, its participation in the Everyone In programme to house people who slept rough during the pandemic increased staffing requirements temporarily. Its ‘move-on’ units also required more visiting staff than general needs housing.

A higher turnover of residents, contract conditions that artificially increase the levels of voids, and greater need for repairs in these types of housing also added to costs, it said.

The Abbeyfield Society had a total headline cost per unit of £24,260, following a nine per cent decrease in costs. A large chunk of that was made up of service fees, which totalled £16,980.

In its accounts, the group put its “higher than sector averages” in relation to unit costs down to the fact that it is concentrated in the provision of supported housing for older people.

It said: “The RSH has identified some factors which explain higher unit costs across the sector and these include: the provision of supported housing operating in regions with higher wages, the provision of older persons’ housing and the proportion of properties requiring investment to maintain quality service both within the society and to member societies.”

St Mungo’s, which came fourth in this list, had a headline unit cost of £21,030, which was down 5.5 per cent on the previous year. Nearly 97 per cent of the group’s stock is classed as supported housing. In its accounts, the group said the decrease was a result of a £1.6m saving in management and service charges.

In contrast to those with higher costs, most of the HAs with the lowest costs had small amounts of supported housing and homes for older people and were largely based in the North and the Midlands.

Sage Rented had the lowest per-unit cost of £800, which was 86 per cent down on last year. Most of this was management costs of £690. Its properties are new builds, which can have lower repairs costs than older homes.

Other HAs that saw big decreases in their costs for the year included North East-based Railway Housing Association, which recorded a 62 per cent drop in its costs per unit to £3,160, including £1,210 in maintenance fees. That decrease was despite having a third supported housing and 27 per cent of its stock being homes for older people.

Places for People, which had the most units out of the HAs in this group, had total headline costs of £212,344, which equated to £2,920 per unit. This was down on last year by 58 per cent. Its largest outlays were from maintenance (£840) and management (£780). It said it planned to increase its repairs and improvements spending by 10 per cent in 2022, including investment in fire safety measures.

LSVTs over 12 years

The total headline social housing costs per unit for LSVTs that had their largest stock transfer more than 12 years ago was £3,380. 

This group was also spilt into those with high and low costs per unit. Poplar Harca had the highest per-unit cost at £6,300. This was following a near five per cent rise in costs on last year. In its accounts, it said cost per unit had risen as a result of spending on fire safety measures and external wall system remediation.

Progress Housing Group had the largest number of units and as such had the higher total headline cost of £50,991. This translated to a cost of £5,370 per unit, which was up just over two per cent on the previous year. 

Ocean Housing had the largest drop in costs of 53 per cent. Its total headline costs stood at £11,423 with a cost per unit of £2,460. 

Empowering People Inspiring Communities followed with the second-largest decrease of 46 per cent to a per-unit cost of £2,220.

LSVTs 7-12 years

Total headline costs for HAs in this group were £317,841, with an average unit cost of £3,600, which was down 5.5 per cent on last year. 

Seven out of the nine LSVTs in this group recorded decreases in their costs. The biggest of those came from Byker Community Trust with a 12.7 per cent decrease – although the organisation did have the highest cost per unit at £5,770. 

Red Kite Community Housing was the only HA in this group to see a significant increase in costs. These jumped just over 20 per cent to £4,410. 

In its accounts, the group said: “Historically Red Kite had very high costs per home, due to a high level of capital investment in our homes during the early years as we completed the promises made to our tenants at stock transfer. In the last four years, cost per home has decreased significantly and for maintenance and service charge costs we are at median or below.”

LSVTs under seven years

Salix Homes drove this group’s 21 per cent decrease in costs, which on a per-unit basis averaged £3,520. 

The HA recorded a decrease in its costs of 38.3 per cent to £4,420 per unit, with its two largest costs coming from management (£1,380) and maintenance (£1,330).

In its accounts, the group said the decline in costs per unit was a result of its major repairs investments reducing. 

There were only two other HAs in this group: Gloucester City Homes, which had costs per unit of £4,010, and Believe Housing with a cost of £3,000 per unit. They also saw decreases in their costs of six and nine per cent respectively.

Social Housing has looked at the consolidated group-level unit cost data published by the RSH and broken it down into the provider types set out by the regulator. These are LSVTs, and traditional associations where none of the group is a stock transfer. 

Additionally, the LSVTs are divided into organisations that transferred fewer than seven years ago, those that transferred between seven and 12 years ago, and those that transferred more than 12 years previously, in order to reflect their differing costs as they mature. 

This report has not grouped organisations by the percentage of supported or older people’s housing they possess, as the RSH found no threshold below which the additional costs of these types of housing cease to be significant. However, this report includes the percentages.