by Dan Oehlman, Service Charge Lead at Ad Esse Consulting
How to solve the age old problem of Housing Association service charges
For many years, service charges have been a challenge for housing providers.
Grappling with the changing demands of customers, interpreting leases, meeting legislative requirements, and maximising recovery all require very different skills.
Understandably, organisations have struggled to tackle the problem, which means that it often gets put in the ‘too hard to do’ box.
Yet the scale of the problem – and the potentials rewards of tackling it – is colossal.
The service charge shortfall for 2020/2021 in social rented stock across all Private Registered Providers with over 1,000 units was 21%. Even reflecting costs which would be covered by the rental element due to tenure, this works out to be a £280 million annual shortfall. Enough to cover the cost of building over 2,400 homes a year.
In leasehold and shared ownership, the issue is often far worse. Data, lease and legislation challenges are amplified, while customers increasingly challenge costs through enquiries, complaints, and First-tier Tribunals.
Yet many providers continue to use spreadsheets as a solution at some point in the process, with the consequent risk of calculation errors, and few controls in place to intervene.
When you consider that, on average, 78% of a housing providers turnover comes from rent and service charge income, you can see how a lack of controls can have a significant impact on your ability to deliver your purpose.
Software solutions, such as BlueBox from Trace Solutions, are becoming increasingly popular, since they integrate easily with existing housing systems. Software like BlueBox will help with automation and reporting, remove errors and standardise practice across your teams.
However, while there is a strong need for a software solution, it is not a complete panacea for solving service charges. Even the best technology is at the mercy of the quality of your processes, your data and your implementation.
Below, I outline the key steps you should take to prepare yourself for a new service charge system and ensure that you maximise the benefit from your investment.
- Redesign your processes
- Sort your data
- Skill your team
- Plan your implementation
- Test, test, test
- Iterate and improve
- One final thing
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1. Redesign your processes
It is vital that you use the opportunity of a new system to look at your processes. Clearly documented processes are invaluable to a system provider such as Trace Solutions, to ensure that the technology works for you.
Even more critically, the system will inevitably provide opportunities to think differently about the way you work. Depending on how well defined your current processes are, it’s an opportunity to standardise across a team.
Spreadsheets, by contrast, often promote a myriad of ways to complete a single task, with varying degrees of success.
It’s also important that you review all processes ‘end to end’. A service charge team is often a ‘customer’ of the organisation when it comes to the information you use to generate service charges. This is an opportunity to streamline the way you receive that information which should not be missed.