A Housing Forum Good Practice Guide Sustainable Leasehold and Long-term Asset Management 9 Adopting a systematic and proportionate approach Landlords should have an active and dynamic approach to asset management that identifies and responds to stock that could be adding more value, or whose future may be unclear. As part of their basic strategic approach, landlords should be alert to such issues and should have a systematic and proportionate way of responding and reacting. There can be many causes for concern and degrees of seriousness. There may be fundamental factors such as high investment costs, high running costs or low demand due to unsatisfactory design or very poor location. In extreme cases, these factors may combine to produce a very low or even negative net present value (NPV)1 and a social housing value assessment that suggests the stock is and will remain a liability rather than an asset. But most cause-for-concern stock is not in such an extreme position, and the best response is likely to be much less easy to identify than in the worst performing cases. It may be that an analysis has shown that apparently good stock is producing surprisingly poor value. Or some local issues may have caused a sudden increase in voids and a worrying reputational dip, for example a rise in anti-social behaviour. Good strategic asset management Parkside phase 3, Lewisham, south London. New homes for Family Mosaic by architect bptw partnership involves being aware of these issues, considering what to do and making brave decisions. Housing associations have to consider what investment is required to maintain the portfolio in good condition and offer the amenities to meet residents’ ever-increasing expectations. Some buildings can only achieve modern standards with high levels of investment, and the investment required may not offer good value. In addition, there is pressure on housing associations to assess whether they could obtain better value by selling a high-value property and using the funds to support a new development, which will offer contemporary levels of quality, amenity and energy efficiency. 1 Net present value is the measure used to assess the value of assets in the future. It compares the amount invested today against the present value of the future cash receipts from the investment. In other words, the amount invested is compared to the future cash amounts after they are discounted by a specified rate of return.
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