A Housing Forum Good Practice Guide Sustainable Leasehold and Long-term Asset Management 13 Getting best value ASSET Quantitative NPVs APPRAISAL VALUE Qualitative Strategic Values necessary if you intend to offer different forms of tenure and need curb appeal to help attract prospective residents. Financial measures The estimated 30-year NPV of the net rental stream is a crucial metric. Put simply, this is a financial measure of income and expenditure related to the specific asset over time. Assets with a positive NPV indicate that they can add financial value to the business plan. This is a very good proxy for the long-term financial value being brought to the social landlord and can be calculated from mainstream information on rents, voids, management and maintenance costs and planned investment. Measuring the performance of assets We are clear that in the social housing sector, assets should not be appraised purely in financial terms. A limitation of NPV-only models is their disregard of the strategic value, past investment, legacy and social value. An effective approach may be one that highlights the long-term value that different groups and types of stock are bringing to the business plan. A good way for a social landlord to do this is to look at value in a way that brings together both financial and non-financial factors. This can provide a rounded assessment of the value homes are generating. Quality measures Qualitative measures of housing and neighbourhood performance are also good indicators of housing success. The best ones to use will depend on the individual landlord and its context, but good examples include turnover, demand, resident satisfaction, energy performance, incidences of anti-social behaviour and neighbourhood deprivation. Assets that display positive results on the chosen measures are likely to indicate value to the organisation. Often the broad assessment criteria chosen to evaluate asset performances are similar but the detailed measures and scoring methodology vary according to the specific drivers, objectives and values of the individual businesses.
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