The challenges of managing large social and affordable housing portfolios

In considering how we solve the challenges faced by the social and affordable housing sector, it is important we don’t forget the existing 440,000 homes in Australia and 80,000 in New Zealand. Investment in new stock shouldn’t be at the expense of the existing portfolio.

BGIS Chief Commercial Officer, Richard Gee said the management, maintenance, and refurbishment phase of a portfolio’s lifecycle can get overlooked, maybe undervalued. “But it’s important because it has a significant impact on supply, financial outcomes, and most importantly the residents. It’s their experience, their home, and their community,” Richard said.

In this essay Richard covers some of the key challenges and attributes of managing large social and affordable housing portfolios, focussing on four key areas – safety and compliance, condition and maintenance, capital asset planning and management, and the customer.

Safety and Compliance

Ensuring social and affordable housing portfolios are compliant is the most important aspect of any portfolio management activity because homes must be safe to live in.

Richard said compliance management is foundational and when compliance and safety are mismanaged, the impacts on residents and communities can be devastating. “There is also an associated breakdown in trust between landlords/owners and their customers, and in large affordable and social housing portfolios this relationship is central to all aspects of service delivery,” he said.

For large portfolios of social and affordable housing, compliance must be centrally managed and coordinated, given dedicated focus, and be underpinned by a systematic approach with appropriate controls, supported by appropriate technology. “Systems, information and records must be auditable,” Richard said.

In New Zealand, BGIS provides annual Building Warranty of Fitness Management for several large portfolios. This building warranty is a building owner’s annual statement confirming that specified systems in the compliance schedule have been inspected and maintained in accordance with the schedule. “As the compliance manager we coordinate, manage, report, and provide record collection relating to the inspection and maintenance for all those specified systems including fire systems, emergency warning systems, emergency lighting, lifts, air conditioning systems, automatic doors, back flow preventers, outside BMUs and assisted listening systems,” he said.

Condition and Maintenance

In addition to being safe, social and affordable housing portfolios need to be maintained to ensure homes remain warm, dry, comfortable, and healthy.

Richard said we also need to provide a service that delivers a value for money outcome for our clients and those services need to be timely. “We need to maintain properties to a certain standard, to minimise the accumulation of any backlog maintenance liability. I think it’s fair to say that the industry has not consistently met all these objectives.”

“The scale of portfolios under management, their unique characteristics, and the specific needs of the customer base make delivery quite unique and complex, always interesting and rewarding for our teams,” he said.

In New Zealand BGIS has several portfolios under management including social and disability housing. In large portfolios there can be up to eight categories of maintenance and hundreds of maintenance tasks, each with a predetermined charge code and cost.

In terms of trends, we are seeing the adoption of technology to enhance the efficiency and effectiveness of service delivery. Richard said this is not surprising when you consider the nature of works. “We are talking about a largely homogenous asset type with significant volumes of works across large portfolios,” he said.

Capital Asset Planning and Management

Even well-maintained properties and assets slowly deteriorate, become obsolete, no longer reflect the standards of society in terms of function, form and materials, and environmental performance. They may be the wrong size, given the profile and the customer’s demand, or in the wrong location to meet that demand.

Richard said this is why we need to adopt an asset management framework. The objective of capital asset planning is to create a long-term strategy for the assets and portfolio that aligns demand for social and affordable housing with supply of assets. “It is a process owned by the portfolio manager, but as a maintenance provider and asset management advisor we have significant input, particularly when it comes to the technical analysis of the existing portfolio,” he said.

Richard said there is no silver bullet. “Just adopting a framework will not solve the supply/demand mismatch, the financing/funding conundrum. In addition, for portfolios over a certain size, the complexity of the task requires technology and there are a small number of strong technology solutions out there. But execution is difficult.”

“Adopting the framework and process should be seen as a journey and there will be incremental benefits along the way. At a practical level, as a maintenance service provider and asset management consultant, we typically assess existing properties to make sure asset registers are accurate and up-to-date, existing condition and remaining life is assessed, together with an assessment of future refurbishment expenditure. We would then create a “living” lifecycle plan. In assessing supply, we may also extend the analysis to look at existing sustainability performance and assess against certain functionality, safety criteria,” he said.

“This can then be overlayed with a detailed demand analysis to start to develop an overarching plan. Ultimately, we would have associated rolling programs including a routine refurbishment program, a modernisation/upgrade program, a disposal program, and an acquisition/redevelopment program.” Richard said.

Effective maintenance that delivers safe, healthy, appropriate housing requires the cooperation of customers, and the effective communication to customers. Critical safety processes need to be communicated and understood. Properties and property portfolios need to reflect the changing needs of the customer.