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The Business Plan

The Estate transfer is based on, and backed up by, a business plan. Without a satisfactory business plan, the ODPM will not approve the transfer of an estate, regardless of the opinions of residents or anyone else.

Although THCH has an overall business plan, each estate which is transferred has its own business plan, to enure that it can be independently financed. Mansford will not end up subsidising other estates, or having to wait in line for improvements.

The business plan identifies, for the first 30 years after the estate is taken over, the amount of money which will be available, and what it will be spent on.

A satisfactory business plan is one which takes account of all the known constraints on income and expenditure, and in which the amount of money available is equal to or less than the amount of money required. Excess money is not profit in the normal commercial sense: it all has to be used in pursuit of the aims and objectives of the RSL, for example, funding community development, or providing a contingency fund.

Estates are transferred without any debts which may still be being paid off on them. Effectively, they have a clean slate.

The income side of the business plan comes from four sources:

  1. Tenants, through Rents and Service Charges
  2. Leaseholders, through Service Charges and Recharges for major works
  3. Commercial Borrowing
  4. Sale of propertes, including right-to-buy sales.
  5. Other income, including grants from the government and a dowry payment if the estate were in such poor condition that its upgrade to Decent Homes standard and subsequent maintenance could not be funded otherwise. Mansford is not expected to be in this position. 

Although money from leaseholders is included in the business plan, the money derived from leaseholders will be exactly balanced by expenditure on their behalf. THCH is not allowed to make a surplus from its dealings with leaseholders.

The same applies to money derived from Service Charges from Tenants.

The amount of income from rents is fixed by factors which are largely or wholly beyond the control of THCH. Government policy is to increase the rents of social housing according to a set formula which ensures that the same rent is charged for similar properties eventually. So rental income can be worked out now for the forseeable future.

Income from borrowing has a catch - it has to be paid back, and it has to be paid for. All borrowing therefore creates expenditure, and the most important factor in developing a business plan is to ensure that, at the end of 30 years, nothing is owed.

Expenditure comes under the following headings

  1. Expenditure on capital works to homes - the money required to bring them, internally and externally, up to at least the "Decent Homes" standard. This happens right at the beginning of the process, and accounts for the need to borrow money.
  2. Expenditure on capital works to the environment generally
  3. On-going expenditure to keep them in this state
  4. Costs of staff directly employed by THCH and other administration.
  5. Repayment of loans and interest.
  6. Other expenditure

It is to be noted that the total amount which leaseholders will have to pay for the upgrade to their properties is effectively capped by the business plan: buildings cannot be upgraded to an extent which could not be paid for by what is left over out of the total available once internal renovations to tenants' flats, and the on-going costs of maintenance over the 30 year period. 

A reassuring feature of the business plan is that what is proposed is all funded from known sources. Thus residents can be sure that the work will be carried out, and the estate maintained.

While the council has a statutory duty to do this as well, in reality it delivers its services only if it has the resources to do so. It has already been told that these resources will not be made available.

What can be negotiated?

Given the above factors, the space for negotiation, though restricted, is still important. The negotiation is generally about establishing the priorites for spending money which is not otherwise accounted for by the demands of the Decent Homes Standard, that is, any improvements for which there is money, but which are deirable, rather than necessary.

We are also acutely aware of the potential consequences of the capital works for leaseholders.

Can I have any input?

Yes. In addition to the on-going consultation events, see the timetable of meetings, and which you are welcome to attend, you can put your point of view forward on the Forums, and as soon as there is a draft business plan, it will be put on the site in a form which allows you to comment on it.


Mansford Forums:

Call Mike or Roman at First Call on
0500 295 999




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