Welcome to the latest Chair’s blog providing the recent achievements from MTHA from a business and board perspective. In a world that can appear to have its own language I will try and translate it into a format that we can all understand.
The main decision headlines from the last Board meeting at the end of January included:
It was exciting to be presented with two new development opportunities for the community of Merthyr Tydfil and the Board agreed to enter into contracts for 31 new homes at Bryniau Road which is on the western fringe of Pant and a further 10 at East Street in the Dowlais area.
Both developments are in partnership with Holbrook Homes Ltd who are a local construction company. As always, MTHA need approval from Welsh Government and ensure that all planning requirements are met.
The development team have liaised with the housing team and the local authority to ensure the homes built meets the local demand and there has been a lot of scrutiny to ensure that the cost of these new homes for MTHA are value for the money that we will invest.
The 31 new homes at Bryniau Road will include:
12 x 2-bedroom houses
15 x 1-bedroom flats
2 x 3-bedroom houses
2 x 2-bedroom bungalows
The 10 new homes at East Street will include:
4 x 2-bedroom houses
6 x 1-bedroom flats
- Quarter 3 Management Accounts
The management accounts are basically a financial report used by the Board and senior staff of MTHA for day to day strategic decision making. They are produced by the finance team on a quarterly basis and provide an insight into the current financial health of MTHA by tracking various key performance indicators, such as the income from rent and how much we are spending on maintaining properties against the budgets that had been set for the current financial year.
It was reported to Board and positive to hear, that in this financial year to date, MTHA has a surplus of £346,000 where our budget was expecting a surplus of £300,000. MTHA needs to make a surplus even though we are non-profit making, not to pay shareholders or to spend on higher salaries or even locked away in a bank vault, it is used as working capital to reduce the amount that we need to borrow to build new homes for the people of Merthyr Tydfil and to maintain the current homes that we provide.
There are several reasons why the actual surplus can differ from a level that was expected in the budget and they can include:
- Delays in development – rental income is then also delayed and additional costs may result due to the delay or unforeseen problems
- Planned maintenance programs can easily slip in that they don’t start or finish as planned for many reasons, or they may cost more due to unforeseen reasons or there could even be savings
- Reactive maintenance is also difficult to predict as by the very nature we react and undertake the repairs reported and needed by our tenants and the cost and numbers of the different repairs undertaken won’t be known when setting the original budget
- Income from rent may change – we plan for a certain level of arrears due to people finding it difficult at times with changes in welfare benefits such as universal credit but MTHA works to help our tenants so that hopefully this isn’t the case. It is difficult to budget for or guess how many people may struggle to pay their rent as a result.
- Financial planning – when planning the spend for the year the key dates when we expect money to be paid out or money to be paid in can change, although it is important that this balances at the end of the budget year, if it doesn’t, Board will expect to be informed why.
- Appointment of Internal Auditors
The Audit and Risk Committee (ARC) who had met just before out board meeting had met with three companies who were tendering to be the MTHA internal auditors. The role of internal auditors is to provide independent assurance that an organisation’s risk management, governance, systems and internal control processes are operating effectively.
ARC recommended to Board that the company Mazars be reappointed and we look forward to continuing to work with them.
- Rent Setting
The Welsh Government have introduced a new rent setting policy for Housing Associations in Wales which will apply for the next five years with rents due to be set for one financial year at a time. The policy stipulates that Housing Associations can only increase their rent at a rate of CPI + 1%. CPI is the Consumer Price Index which measures the average prices of a basket of consumer goods and services that is a fixed basket of goods that we buy and averaging them to identify if costs have increased or decreased and at what level. So, for example the CPI level in September 2019 was 1.7% so MTHA can only increase rents by a maximum of 1.7% + 1% = 2.7%.
The Board did agree to the 2.7% increase proposed to ensure financial sustainability for the Association and to support the amount of new homes we intend to develop and the increase was discussed with our Tenants Service Standards Group (TSSG) at an away day. Interestingly and something that I personally support is that from next year all housing associations including MTHA will have to consider with any proposed rent increase and evidence affordability and value for money. The rent increase allowed by Welsh Government is a maximum and not a target and it will be interesting how the consideration of affordability and value for money will be approached sector wide and the impact on rent increases .
- New Staff members
We have had some new staff members join us recently who I look forward to working with.
Jeremy Wilcox – Finance Business Partner
Jayne Lewis – Governance Manager
Iain Graham – Finance Business Analyst
Katrina Minney – Finance Assistant
Gary Jennings – Building Surveyor
You can meet the whole staff team here. https://www.mtha.org.uk/about-us/meet-the-team/
- Other news
Recruitment of Tenant board members is a difficult one for a lot of Associations and we currently have one board member who is a tenant – Rebecca Little. Rebecca has made an amazing contribution so far since joining as she really does give a tenants perspective in our decision making but has also suggested that if we want to attract more tenants then we need to look at our own application process as she feels it is unnecessarily and overly difficult. We will therefore be reviewing the process and the link between the different tenant groups that we already have in place and the Board.