Achieving an Energy Performance Certificate (EPC) rating of SAP C across all homes by 2030 and committing to net-zero emissions by 2050 will make a vital impact. Demand is growing for more sustainable housing solutions, and for effective asset management strategies to evaluate existing buildings that are hard to decarbonise. Asset management strategies are actively evolving to monitor asset performance and outcomes. Strategies must factor in sustainability and performance analytics, as well as justifying the interventions that do not drive the social purpose too far away.

The unprecedented scale of challenges

The housing sector is currently in a period of rapid change, with updated regulations regarding fire and building safety, fitness standard (with growing focus on damp and mould) and retrofitting requirements, to bring the stock up to what is expected as a minimum standard in coming years. These updated regulations were mostly introduced as reactions toward some unfortunate and tragic events rather than the usual process of change with defined planning, thorough reviews, and impact assessments. The changes have also impacted reinvestment jobs, classification of essential works, and added limitations in the form of strict borrowing agreements and covenants. The demand means that housing associations must make some difficult decisions to bolster sustainability or face the threat of regulatory action. Carrying out the essential works for building safety and the well-being of residents, while at the same time managing expectations around things like kitchen and bathroom replacements is a lot to think about. And, on top of this the challenging economic outlook with rising costs within the supply chain and rent caps prescribed by the government. Tenants are facing the cost-of-living crunch with higher energy and food bills, a severe shortage of new homes, and increased frustration dealing with landlords who are struggling to meet their needs.

Assembling the stronger-ever alliances

Smaller and medium-sized housing associations in particular are affected by these mounting challenges, with many merging or taking radical action to remodel their income streams. Bigger housing associations are merging on such a level that the premium G15 club has not been able to keep up with its core membership number of '15' in the last few years. Mergers may sound like an opportunity for the development of more affordable homes, but this also presents challenges. Especially as the dust is yet to fully settle with some of the mergers that took place in the last few years. In fact, most of the bigger housing providers have slowed down or paused development programmes and have focused their efforts on improving existing stock. Despite the mergers, the ambition is not to be the biggest but the best in terms of financial sustainability and geographical optimisation.

Grant funding

Social housing grants were substantial enough in the 90s to cover two thirds of development costs, which dropped as low as 14% in the 2010s. According to the NHF, to meet housing needs in England over the decade, it will be necessary to build 145,000 social homes each year, including 90,000 for social rent. This target will require an average of £14.6bn in Capital grants each year. The government has recently awarded £778m through the latest wave of the Social Housing Decarbonisation Fund for providers to improve the energy efficiency of homes. It is assumed that landlords will be dedicating 50% or more towards the funding of works. Some providers may have lacked the anticipated contribution of funds or higher level of data analysis to make the bid, so they have decided to sit out from Wave 2.1 funding round. As grants are subject to such strict qualification and reporting criteria, the process has become very stringent. Interestingly, we are also seeing the new housing provider entrants, some of which have clearly defined their ambition to be ‘for-profit providers'.

Information based decision making

Disposals are becoming a popular choice to fund the spending gaps, but this approach is not as simple as it sounds. Managing performance and grading of strategically important legacy stock, listed buildings, buildings in conservation areas, recycling of grant, repayment of any charges, and maintaining the expectations of the key stakeholders that includes residents are top of the list. It is becoming difficult to operate in an increasingly scrutinised environment with the expectation to do more but with limitations. It is also tough to make decisions when the situation is too complex to justify the decision to be ethical or threatens the existence of the service provider. Many landlords are constantly reviewing their approach to remodelling their stock by temporarily disposing properties through the tenure of market or intermediate rents. Disposals may look different in every scenario, but you can justify the call for appraisal by having quality information that backs up the decision as an ethical one. Whether it is to sell a high value asset to release reasonable funds, sell a poor performing asset as you cannot afford to improve it, or remodelling it to make it profitable. It can sometimes take many years to break even, and is reliant on there being no significant regulatory changes that will derail your business plans. There is a requirement for data efficiency and developing a golden thread for better management of assets. While the changes in dynamics appear to be mercurial, there is a huge opportunity in the ruse.

Building information modelling (BIM) has not been mandated but is strongly recommended by recent reviews of regulations. It can help to manage the assets efficiently, identify areas for improvement, and track progress toward long-term sustainability goals. Apart from the highly efficient lifecycle management of assets, one of the main benefits of BIM is that it can help to develop the golden thread and identify the most cost-effective retrofitting solutions. Asset managers can create a digital twin of a building, which enables them to simulate different retrofitting scenarios and evaluate their impact on energy efficiency and carbon emissions. This information can then inform decisions on which retrofitting solutions to implement and when.

Information exchange

There should not be any doubt that data plays a crucial role in strategic asset management for sustainable social housing. We as housing providers are already collecting and analysing data on a building's energy performance, carbon emissions, and maintenance requirements but also picking on performance trends, NPV, sustainability, and reviewing long-term return, which has now become vital for effective asset management. Asset data requirements can be unique due to the diverse archetypes but once they are defined, you can make informed decisions on future investments, identify areas for cost savings, and help to identify the right measures as well as track progress towards environmental sustainability and net-zero targets. Asset data is not just about the condition of the stock and simple decent homes forecasting. It can be used to monitor the performance of energy-saving measures and renewable energy. For example, smart meters and IOT sensors can be installed in social housing units to track energy consumption, pick trends in usage to identify areas where energy usage can be optimised as well as monitor the humidity levels to tackle damp and mould. Asset managers need to automate validation routines to ensure that their data is accurate, up to date, and accessible to all stakeholders including the residents who are the focal point of the regulatory changes. Ethical asset management is a robust management of systems that includes clear data governance protocols, regular data audits, and data sharing agreements.

In conclusion, social housing providers cannot deny their crucial role in creating a sustainable future. Achieving net zero carbon targets requires flexible asset management strategies, and long term planning for data requirement and management. This way, the right interventions can be introduced before an asset requires an options appraisal. By so implementing these measures, social housing providers can create homes that are not only affordable and safe but also sustainable and future proof.