Stock rationalisation involves the transfer, from one landlord to another, of tenanted properties along with their associated assets and the business of managing those properties.
Registered Providers are charged by the HCA with optimising the return generated by their assets. By undertaking an asset management review an RP will be able to identify those properties it holds which are:
- underperforming financially (with running costs disproportionate to the income being generated);
- a type of stock that doesn’t sit well with the RP’s core strategy (an RP may wish, for example, to divest itself of care homes requiring specialist resources if its strategy is to maximise general needs supply);
- worth a lot of money and which, if sold, could provide cash to be used in other areas (the sale of a town house in a posh part of Westminster might fund the construction of 3 new houses in Brent); and/or
- located outside the RP’s principal geographical area (an RP with 90% of its stock within Newcastle may not wish to be responsible for an estate in Plymouth acquired as a result of a merger).
A stock rationalisation programme can raise funds to be invested in new stock or reinvested in improvements to current stock. There may also be a positive effect on service delivery to the residents affected. The RPs involved can concentrate on resourcing and infrastructure to deliver outstanding customer service within a smaller more logical geographical area. They can also concentrate on, and so be better at, the management of a narrower range of housing types.
Click here to read Devonshires full briefing.
For further information, please contact Neil Toner, partner at Devonshires.