Social Housing in UK – An FM Perspective

What is social housing?

Social housing in the UK is low cost housing allocated on the basis of need. Local authorities are obliged to provide housing for those in need; they set out procedures and priorities by which social housing will be allocated with a ‘reasonable preference’ given to people who are classed as homeless or live in unsanitary, overcrowded housing conditions, or have to move for medical or welfare reasons.

 

Who provides it

Social housing is provided by either housing associations (not-for-profit organisations that own, let, and manage rented housing or the local council. As a social tenant, you rent your home from the housing association or council, who act as the landlord. Applications for social housing can be made to the local council or to housing associations direct. Most local authorities operate a ‘points-based’ system to rank applications in a list which is commonly referred to as ‘housing waiting list’; however, there is no guarantee to be allocated a property. Some councils operate a choice-based lettings scheme; under this process prospective tenants identify properties that they would be interested in and apply for a tenancy. The council will assess applications against a defined set of criteria and allocate available properties accordingly.

 

Its value

Social housing aims to be:

  • more affordable than private renting
  • provide a more secure, long-term tenancy

How does it work:

Being affordable

Social homes are the only type of housing where rents are linked to local incomes, making these the most affordable homes in most areas across the country. Rents for social homes are significantly lower than private rents. Rent increases are also limited by the government, which means homes should stay affordable long-term so people aren’t priced out of their communities by rising rents. While the way social rents are set isn’t perfect, they should always be affordable to local people, including people on low incomes.

 

Be stable

People in social housing usually have secure tenancies, giving them greater protection from eviction and enhanced rights compared to those renting privately. They provide the foundation people need to get on in life, meaning families can put down roots, plan for the future and make their house a home.

 

Be there for people who need it

Social housing should be there for anyone who needs it. At present, the law states who is entitled to social housing and should get preference on the waiting list. But councils have lots of flexibility on who qualifies locally and social landlords can refuse to let to people if they so choose.

 

Social Housing – FM Perspective

The housing sector which is predominantly owned by public sector entities including Local & Central Government and Housing associations run by Not-for-Profit organizations in the UK provides a large opportunity for FM suppliers. Its size is estimated to be in excess of £7.3 billion in Total contract value as per the available contracts information. The bulk of outsourcing in this sector is done by the Housing Associations primarily for upkeep, maintenance and construction works apart from other services. Through this article, we will have a detailed look at the type of services that are availed by these associations and delve into specific specialized services which are most sought after from these buyers.

Service Type Segregation

  • A look at the service segregation shows Hard FM services are the most in demand by the Housing associations with 79% share of overall outsourcing business.
  • Hard FMservice buyers have outsourced contracts to the tune of £7 billion from the Social Housing sector.
  • Soft FMservices are the 2nd largest with £18 billion worth of contracts and a share of 16% of the overall outsourcing pie with Integrated FM contributing with 5% share.

Specialized Services Dissection

  • Among the specialized services Repair & Maintenancewere the most sought after services by the Housing associations. These constituted around 40% of all the services outsourced and had a total contract value in excess of £2.9 billion.
  • Integrated FMwhich combines all outsourcing needs to a single supplier for sheer convenience commanded 14% share with contracts worth £993 Million from this sector.
  • HVAC/Energy/Gascombined together fetched £813 Million to the suppliers of these services with an 11% share in the overall outsourcing deals from Social Housing Sector.
  • Other Soft FM Services which included Security, Waste Management and combined soft FM services corners £673 Million worth of contracts.

In the near term, the Social housing sector is going to remain in limelight for the business deals that it will offer to Suppliers of this sector. From our contracts database, it is clear that next few years will be full of action, with the remainder of this year offering deals worth in excess of £650 Million. The sector will be keenly watched by FM suppliers in general and Hard FM suppliers in particular in the times to come.

Apart from Social Housing, the overall FM market in UK is one of the largest markets in Europe in terms of maturity and sophistication. The market is highly competitive owing to the presence of several organized players and strong presence of top global companies, such as Mitie, ISS, Sodexo, CBRE, JLL among others. It is a large market with some estimates putting the annual revenues in the vicinity of 40-45 Billion USD. As per Baachu Database, however, the total contract value remains in the range of £100 Billion for Contracts with terms ranging from one to 10 Years on an average. To have a detailed view of the UK FM Market with complete sector & services breakdown , please download our comprehensive report here. This report is unique for its treatment of the growth aspect being based on the real contracts and their value. The report complements similar report from Frost & Sullivan as that report gives a glimpse of future growth based on revenues while Baachu has used Total Contract Value as the basis.

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