Sub-sector analysis
The impact of cost and size factors on new supply (social), reinvestment and headline social housing cost.
Applies to England
Documents
Details
Contents
- Cost factors explained
- Size factor explained
- Size of providers
- Reinvestment by cost factor and size
- New supply (social) by cost factor and size
- Headline social housing cost by cost factor and size
- Headline social housing cost variation by size of provider
In 2017, we published analysis to explain the relationship between each of the 7 VFM metrics and the identifiable explanations for the variation across the sector. The analysis found 4 cost factors that had the greatest ability to explain variations in performance across the sector and were associated with higher costs. They include large scale voluntary transfer organisations, providers based in London, supported housing or housing for older people providers.
The analysis in this section provides some helpful insights into the differences in VFM metrics between types of providers driven by the cost factors outlined above and size of provider. The influence of size on reported performance is complex. Certain size bands exhibit significant deviations from sector averages, which can partly be attributed to the varying prevalence of providers with specific characteristics.
The impact of cost and size factors on new supply (social), reinvestment and headline social housing cost. are considered in this section.
Cost factors explained
-
Registered providers of supported housing defined as registered providers with 30% of their owned social units that are classified as supported housing.
-
Registered providers of housing for older people defined as registered providers with 30% of their owned social units that are classified as housing for older people.
-
LSVTs that are less than 12 years old - LSVT organisations are contractually obliged to undertake major improvement programmes and regeneration works to homes transferred within a certain period, normally five years.
-
Registered providers based in London, defined as providers with greater than 50% of their owned social units based in London.
Size factor explained
Provider size has been categorised into six discrete size bands based on a provider’s social owned units:
- Less than 2,500
- 2,500 – 4,999
- 5,000 – 9,999
- 10,000 – 19,999
- 20,000 – 29,999
- More than 30,000
Size of providers
The percentage of homes owned by providers with over 30,000 homes increased by two percentage points to 53% between 2022 and 2023 due to mergers and transfers of engagement undertaken in the year. As a result, the percentage of homes owned by providers with between 20,000 – 29,999 homes fell from 12% in 2022 to 10% in 2023.
The number of providers in all other size bands has remained relatively stable.
Percentage of total sector homes owned by size
Size of providers accessible data table
Reinvestment by cost factor and size
Size factor
The median reinvestment metric for the size band with over 30,000 units increased by 1.7 percentage points in the year, linked to the specialist provider as set out in the cost factor section.
In comparison to previous years, the median reinvestment metric for providers with over 10,000 social housing units increased by 1.2 percentage points, while the size bands with less than 10,000 units experienced a 0.4 percentage point decrease.
Cost factor
LSVT organisations incur higher than average costs compared to the rest of the sector due to reinvestment obligations agreed with newly transferred tenants at the time of transition. The median reinvestment as a proportion of the value of existing homes for this group of providers has remained relatively constant over the past two years, averaging around 12.3%.
The median reinvestment metric for the HOP group of providers increased from 4.5% to 7.7% in the year and is higher than the sector median of 6.7%. This is attributed to a large specialist provider acquiring several new care homes.
Reinvestment by cost factor and size (median)
Reinvestment by cost factor and size accessible data table
New supply (social) by cost factor and size
Size factor
On aggregate, providers in the size band with greater than 30,000 social housing units delivered 59% of new social homes in the sector. The median new supply social as a percentage of existing social units owned for this size band is 2%. Around a third of providers in this size band also fall within the new supply (social) upper quartile of 2.2%.
Cost factor
The median new supply (social), as a percentage of total social units fell across each cost factor group, albeit it was less pronounced in London. The new supply outturn for the LSVT group and supported housing group fell by 0.5 percentage points, while for the outturn for the HOP group fell by 0.7 percentage points compared to previous years. Overall, this has been the most significant dip in performance across all cost factors since 2018.
New supply (social) by cost factor and size (median)
New supply (social) by cost factor and size accessible data table
Headline social housing cost by cost factor and size
Size factor
Providers in the size band with fewer than 2,500 units have the highest headline cost of £5,720 per unit. Around a quarter of providers in this size band are specialist providers which is high compared to all other size bands.
Cost factor
The median headline cost per unit for supported housing and HOP providers is £9,220 and £6,550 respectively and is higher than the sector median of £4,586 per unit. As set out earlier in the report, these groups of providers have significantly higher than average costs due to the specialist services they provide to their tenants. Headline costs are also higher than average in London partially due to relatively higher labour costs* and the presence of supported housing providers who operate in the region.
*ONS, 2023, Annual estimates of paid hours worked and earnings for UK employees. Annual gross pay for Full Time Employees in ‘Skilled trades occupation’, ‘Skilled construction and build trades’ and ‘Elementary trades and related occupations’
Headline social housing cost per unit (£k) by cost factor and size (median)
Headline social housing cost by cost factor and size accessible data table
Headline social housing cost variation by size of provider
There is significant variation around the headline social housing cost median which in part can be explained by measurable factors including LSVTs, supported housing, HOP and providers that are based in the London region. However, not all variation can be explained by measurable factors and much of the variation will stem from strategic decisions taken by boards.
Around 20% of providers’ headline cost per unit increased by over 20% in the year. Of this 20%, the headline cost of four providers increased by over 50%.
Headline social housing costs per unit by total social homes owned
Headline social housing cost variation by size of provider accessible data table