Agenda item

This report provides the Committee with an update on First Wave Housing Limited’s (FWH) business plan, recent performance, risk register, and audit arrangements.

This report provided the Audit and Standards Advisory Committee with an update on First Wave Housing Limited’s (FWH) business plan, recent performance, risk register, and audit arrangements.  Martin Smith (Chair of FWH) provided the key highlights of the FWH report as follows:

·             FWH’s primary purpose was to manage, maintain, and improve its stock of 329 properties and to contribute to Brent’s Housing Strategy by providing good quality, affordable, secure, and well managed homes to Brent residents. It currently had 329 tenanted properties: 89 at social rent, 25 at intermediate rent, and 45 at PRS/market rent and had 170 Settled Homes, which were a form of temporary accommodation, let on assured short hold tenancies, with rent levels slightly below LHA rates.

·             The performance of FWH, measured against the Company’s Key Performance Indicators was reported to the Board monthly. The annual rent roll was £4.2m.

·             As of March 2020, the year to date (YTD) cumulative performance outturn for rent collection was 98.96% against an annual target of 98.5%. YTD rent income collection for August 2019 was 97.29%. Total loss for the year had come in as £120k. Previous in-year projections were in line with this loss for the year.

·             On performance, there was a variance of circa £750k to the original budget driven mainly by repair costs but the main reason for the scale of the variance related to the original budget set and calculation of costs.  Costs for 2019/20 costs were in line with those for 2018/19.

·             A benchmarking exercise undertaken in February 2020 demonstrated that FWH’s operating costs were in line with other providers of similar size and found that FWH had a strong performance in operating margin, placing it within the upper quartile in all peer groups.

·             For minor voids, FWH’s target was 21 days. For major voids, FWH’s target was 76 days. The YTD performance as of March 2020 for voids was as follows:

·             General Market Rent (Minor Void) – 35.9 days.

·             Settled Homes (Minor Void) – 33.65 days.

·             Settled Homes (Major Void) – 94.2 days.

The YTD performance for major voids had increased notably as a result of works being delayed on one Settled Home property, which had been caused by a roof leak within a block managed by a registered provider. Once remedied, the void works commenced and the property was let in 34 days.

·             While not a priority, FWH retained the ability to purchase new build accommodation, through working with the Council and on the open market, using a proportion of the loan facilities of up to £110.5m agreed by the Cabinet to be made available to i4B Holdings and FWH. As opportunities developed, FWH would continuously review its financial model and potential grant funding opportunities to ensure schemes secured optimum value for Brent.

The Chair thanked Martin Smith for the in-depth update of FWH performance and invited comments and questions from Members.  The following issues were raised and responses submitted were noted:

(a)    In response to specific questions about the rising Service Level Agreement (SLA) and other costs and whether FWH would replace properties it had sold, Martin Smith reiterated that the benchmarking exercise in February 2020 showed that FWH’s operating costs were in line with other providers of similar size and found that FWH had a strong performance in operating margin, placing it within the upper quartile in all peer groups.

(b)        Members raised a query on the operating loss regarding the variance of circa £750k to the original budget.  Martin Smith informed the Committee that the actual costs were higher because of poor housing stock condition that required good maintenance, the process of untangling costs from Brent Housing Partnership and payment of leasehold charges to landlords. He reiterated that financial performance was being reported to the Board each month. Carolyn Downs (Chief Executive) added that matters of concern could also be reported to the Community & Wellbeing scrutiny Committee.

(c)        In response to questions about the impact of falling property values on the finances of the FWH and therefore the Council, Martin Smith assured Members that FWH’s rental income was well insulated.  He added that subject to any radical and detrimental change to the benefit regime, FWH did not envisage such problems.

The Chair thanked Martin and the Chief Executive for the comprehensive report and updates as there were no further issues raised and it was RESOLVED that the Committee note the following:

(1)        The update on FWH performance and risk register.

(2)        The update on recent FWH audits.

(3)        The impact of Covid-19 on FWH’s operations and business objectives.