What is this?
i4H have developed a polynomial forecasting module to predict future performance of key financial and management indicators. This method has been used as it is the most appropriate method given the range of data available. Going forward as more data is available detailed time series forecasting will be developed. We would recommend this forecasting is used as a starting point to help set targets and improve performance. 5 years data has been used for financial years 2014 to 2017. A forecast has then been provided for 2018, 2019 and 2020 for 300 social housing registered providers. Global accounts and data statistical return data has been used for the following indicators.
• Headline Social Housing Costs Per Unit
• Management Cost Per Unit
• Service Charge Cost Per Unit
• Major Repairs Cost Per Unit
• Maintenance Cost Per Unit
• Other Social Housing Cost Per Unit
• Operating Margin%
• SHL Operating Margin%
• Interest Cover(times)
• Social Lettings Interest Cover(times)
• Return on Assets (ROA)%
• Return on Capital Employed (ROCE)
• Evictions for Arrears-Total
• Evictions for Anti-Social Behaviour-Total
Key Findings
• Average headline cost per unit, repairs & maintenance and major works costs will increase for all providers from 2017 to 2020.
• Average social housing cost per unit is forecast to increase from £4.08k in 2017 to £4.88k in 2020 for all providers.
• Large providers will see a large forecast increase in headline cost per unit from 2017 to 2018. This could be due to the impact of mergers and increase in fire safety repairs in particular.
• Average operating margin forecast for all providers is set to increase from 31% in 2017 to 35% in 2020. Medium sized organisations will see the highest average increase to 2020 at 38%.
• Average ROA for all providers is forecast to increase from 3.35% in 2018 to 4.32% in 2020.
• Large landlords have a significantly higher average then any other grouping for rent arrears evictions. Average evictions will increase from 70 in 2018 to 85 in 2020.
•Medium sized provider perform better then the national average and then larger and smaller providers for headline cost per unit, operating margin, ROA and ROCE. The optimum size based on the forecasting analysis is between 5001 to 15,000 units.
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