Blog: Rising to the challenges and seizing the opportunities in active asset management
Experienced housing practitioner Jim Rooney has been working in asset management for the past 25 years and this year will chair HouseMark Scotland’s new Active Asset Management Specialist Club. He considers the main challenges currently facing registered social landlords in asset management and the key ingredients for success.
I originally trained as an accountant but I guess my asset management journey really began in 1991 when I joined a Glasgow RSL. Since then I have worked almost exclusively in asset related organisations, dealing with everything from houses to vehicles and equipment. Over the past 14 years, I have worked as a consultant to the housing sector, during which time asset management has become one of my key specialisms.
All of this experience has taught me that there are big risks for organisations that fail to manage their assets effectively. Assets and their effective use tend to be the financial and operational focus of any organisation. Both in the private and public sector, a rate of return on assets is always a requirement whether it be in financial terms or in terms of maintaining a sustainable service. In housing, good asset management and sustainability are interlinked. If you don’t manage your assets effectively then whatever service you deliver will not be sustainable in the longer-term.
Registered social landlords currently face a number of key challenges when it comes to managing their assets effectively. Crucially, money is getting tighter and will continue to get tighter over the next few years as reductions in public sector funding filter through to the third and voluntary sectors and to local government. The temptation is always there to cut back on current and longer term maintenance programs. This is a false economy. As a sector, we need to avoid repeating the mistakes of the past.
Past experience equally shows that a strategic approach to asset management strategies can act as a catalyst for transformation within an organisation. Good asset management strategies generate ideas and income. In terms of existing stock, this means having fully occupied properties with consistent repair spends and low turnover levels. The full income generated as a result helps maintain the cycle of success while providing the bedrock and confidence for new stock supply, be that the development of new tenure types or innovations in procurement. Transformation is driven by confidence and this confidence comes from doing what you do already – but in doing it exceptionally well.
An ongoing drive for tenure diversification has important implications for the future of asset management in the housing sector. Harking back to the theme of money getting tighter, it is inevitable that Government will continue to press for more “bang for buck.” Finding new ways of developing value for money housing will only become more pressing. In that context, it’s important that we explore different ways of providing rented housing even if that means importing new thinking from elsewhere in the public and private sectors.
From ensuring the long term sustainability of services to grappling with the ongoing challenge of tightening budgets, from driving innovation to adapting to the demands of tenure diversification, an active approach to asset management is crucial. With the right strategy in place, social landlords should be equipped to rise to the challenges – and to take full advantage of the many opportunities.
Jim Rooney is an independent housing consultant and chair of HouseMark Scotland’s 2017 Active Asset Management Specialist Club.