b2: rent setting and housing association business plans
DESCRIPTION
B2: Rent setting and housing association business plans. Speakers:Derek Joseph Director Altair Consultancy and Advisory Services Susan Kane Partner Altair Consultancy and Advisory Services Chair:Deepak Chandra Head of Treasury bpha. - PowerPoint PPT PresentationTRANSCRIPT
Housing Treasury – Financing Risk
B2: Rent setting and housing association business plansSpeakers: Derek Joseph
Director Altair Consultancy and Advisory Services
Susan KanePartnerAltair Consultancy and Advisory Services
Chair: Deepak ChandraHead of Treasury
bpha
NHF Conference – 23rd October 2013Treasury – Financing Risk
Session B2Rent Setting and HA Business Planning
Speakers:Derek Joseph and Susan KaneDirectors, Altair Ltd
Rents - Overview
Grant Planning No Subsidy
Social X X
Target X X
Affordable X (?%) X (?%) X (?%)
Market X
Residual Equity X X X
Increase Cap [CPI+1%} Market
CPI and RPI rates over time
CPI +1% and RPI + 0.5% rates over time
Scheme Appraisal - Capital£m
Land 0.7Build 3.0 12 affordable rent
3 shared ownership5 outright sale2 commercial units
Fees 0.3
Overheads 0.1Finance Charges 0.1Contingency 0.3
4.5Outright sale (1.8) Net of selling cost
First tranche (0.3) 40% of 3 @ £250k
Ground rents (0.0) 10 @ £200 p.a. @ 10%
Commercial leases (0.2) 2 @ £10k p.a. @ 10%
To be funded 2.2
Scheme Appraisal - Funding£m
To be funded 2.2Grant (0.7) 12 @ £50k and 3 @ £25k
Cross Subsidy (0.6) 12 @ £40k and 3 @ £20k
Debt to be Supported 0.9
Note: Cross-Subsidy Options Fixed sum Residual computation Loan to scheme (interest rate)?
Scheme Appraisal – Revenue Summary
£kYear 1
£kYear 2
£kYear 3
Affordable rents - 12 @ £90 pw = 56.0
Shared ownership - 3 @ 2.5% of £150k = 11.0
Losses = (2.0)
Management = (8.0)
Repairs = (8.0)
Depreciation = (15.0)
Reinvest = (5.0)
Revenue (net) 29.0
Cash flow
Supportable debt @ 6%
Revenue = £483kCash flow = £733k
44.0
Viability Graph
Security Requirements
Interest Cover Requirements
Gearing Requirements
The Crucial Debate
• What is the limiting constraint?• Set the constraint to allow for target programme
including risk buffers• Models to measure long term sustainability e.g. Brixx• Needed for submissions to HCA, lenders, board etc.• Complex scenario planning
1 - £900k @ 3% (Libor 1%) all variable2 - £900k (50% variable, 50% fixed)3 - £900k @ 6% all fixed
Strategic Treasury Overview 1
Inflation doubles at year 5 to year 3% and Libor doubles so variable cost is 5%
Strategic Treasury Overview 2
Leadership, quality, insight
www.altairltd.co.uk