The importance of good data for debt management

To understand the importance of data for debt management in social housing you need to consider the perspective from different stakeholders.  The lenders are a key stakeholder that is often overlooked and they assume the risk of lending and are willing to lend and manage that arrangement, but they ultimately care about one question being answered.

              “Will I get my money back?”

It would be naive to suggest that there isn’t the occasional element of gamesmanship in respect of some of the secured assets, whereby mothballed assets are secured against debt despite having little recoverable value, but this is generally insignificant to the overall securitisation and inevitable when the decisions to mothball reside in the Asset Management department.

What is important to note is that Lenders price the risk into a transaction based on the quality of information provided, the quality of the assets that they sample and the covenants that are agreed to manage the risk.

Data in itself is important for demonstrating compliance, operational control and governance framework within your organisation.  Above all else is to meet the first principle of social housing “to provide safe, secure, and genuinely affordable homes for people whose needs are not met by the private market”.

Data issues, data gaps and delays in dissemination of data provide indicators about your organisations readiness to take on debt.  Good quality, complete data, provided swiftly offers assurances to Lenders and their legal representatives about the organisational capabilities to manage and maintain the assets to an appropriate standard and assure Lenders that the debt is truly recoverable and not just recoverable on paper.

It might not seem like much, but if a 0.1% increment is priced into a facility because your organisation presented data poorly then on a fifty-million-pound facility this broadly equates to an extra fifty thousand pounds in annual interest (obviously the maths has been simplified for presentational purposes).  Put another way the cost of building a new house every two to three years is effectively wasted.  I’m certain this is better invested in housing stock than being paid out in dividends to bank shareholders.

There is a subtle distinction that needs to be made between adequate data management and good data management.  Adequate data management ensures the decision making is broadly appropriate, customers expectations are largely met and funding is present when you need it.  Good data management allows advanced and more complicated decision making to take place moving from reactive to proactive decision-making, customer satisfaction improves, your housing stock quality improves and your funding capability is significantly enhanced.  Each organisation can decide for themselves as to which camp they fall into in reality!

Good data management is the cornerstone of success and should not be met with contempt or disdain.  The phrase that comes to mind is ‘don’t treat the symptoms, treat the cause’ and it’s as true here as it is in the medical profession.  It may require some brave decisions, but that is what the Executives are paid for.

There are solutions out there that genuinely seek to address these concerns, none more so than AssetCore.  And now the note of caution.  The technology in isolation is not the fix.  It requires staff to want to improve and processes to be aligned to that improvement and be connected with the technology.  This is the panacea we should strive for and although change can be scary, it is also necessary and we can help you with this!

Placing Property Data under the microscope

How Can Housing Associations (HAs) Plug their Data Loss

If we take a moment to visualise the life cycle of a property, we can see Housing Associations, regardless of their size, are data rich organisations which is under continuous review by staff and professional advisors, summarising their findings, creating legal documents and commissioning valuations.

With this in mind it feels a very realistic and achievable goal for a Housing Association to hold a comprehensive data suite for all their properties.

Each phase in the lifecycle is critical for the next and the documents and data support: 

• Retain vs Dispose decisions
• Management of a property
• Acceptability of securitisation for finance agreements
• Meet 3^rd party due diligence requirements.

Alongside good data management there are other instruments that facilitate strong decision making such as: 

• Internal and External Focus Group
• Requirement mapping for all stakeholders
• Independent assessment around business maturity
• Process Re-engineering
• Cultural change

There is no silver bullet nor a one-size-fits-all solution, however there are consistent themes that allow for a blueprint, which we can support your organisation of the journey to good quality data.