“30 YEAR INVESTMENT” Delivering a customer focussed , viable investment programme

2. “30 YEAR INVESTMENT”Delivering a customerfocussed, viable investmentprogramme 24 October 2013

3. Background • Meeting Business Objectives – maximising strategic opportunities • Delivering Outcomes • Board Aspirations • Options for Investment • An Equity Standard • Next Steps Content

4. Service Review • Refreshed investment data • Revised “Sinners” identified • Outline 30 year investment plan • Excellence Group • Strategic Away Day Background

5. Balancing the creation of new products and services with maximising the value of existing products and services for Equity and its customers Achieving service and product excellence whilst balancing it with competitive prices 6. NEW - Maintaining and strengthening organsiational viability and sustainability Meeting Business Objectives –strategicopportunities

6. Outcome measures: Financial perspective • Contribution to Surplus - ratio new: existing products • Average yield of existing products • Average NPV of existing stock • Average NPV of existing stock • Note: more than one process contributes to achieving outcomes assessed through outcome measures DeliveringOutcomes

7. Outcome measures: Customer perspective • Tenancy turnover • Customer Satisfaction • Average length of tenancy • % customers satisfied that Equity delivers good value for money DeliveringOutcomes

8. Influenced by several things around: • What we do • How we do it • For example: • Type and level of investment • Providing choice • Communication and understanding priorities • Engagement and Involvement • Quality and frequency of component replacement Customersatisfaction

9. Further customer consultation planned • Priorities and measures to monitor these – agreed with customers • Leading measures monitor the “how” as well as the “what” • Eg% customer investment plans published on time Customersatisfaction

10. Board Aspirations

11. OptionsforInvestment • Decent Homes and Decent Homes Plus • Lifecycle driving first replacement date • Condition driving first replacement date

12. It meets the current statutory minimum standard for housing – HHSRS • It is in a reasonable state of repair - one or more of the key building components are old and, because of their condition, need replacing or major repair; or two or more of the other building components are old and, because of their condition, need replacing or major repair. DecentHomes - definition

13. It has reasonably modern facilities and services -lack three or more of the following: • a reasonably modern kitchen (20 years old or less); • a kitchen with adequate space and layout; • a reasonably modern bathroom (30 years old or less); • an appropriately located bathroom and WC; • adequate insulation against external noise (where external noise is a problem); and • adequate size and layout of common areas for blocks of flats. DecentHomes - definition

14. 30 year costs £59,406,193m • Annual smoothed cost £1,980,205m DecentHomescosts

15. DecentHomes Plus • Replacing and with or • Properties would fail due to components rather than the whole asset • Doesn’t extend beyond the front door

16. DecentHomes Plus Costs • 30 year costs £75,220,176 • Annual smoothed costs £2,507,399

17. Lifecycle replacement where all components inside and outside the property are replaced at the end of their lifecycle • 30 Year Costs £110,832,548 • Annual smoothed costs £3,694,418 • Catch up investment £21,921,576 • 5 year costs £29,570,671 • Net Present Value £10,962 LifecycleInvestment

18. Lifecycle Investment with bathroom lifecycle reduced from 25 years to 15 years and kitchens reduced from 15 years to 10 years • 30 Year Costs £118,939,940 • Annual smoothed costs £3,964,664 • Catch up investment £21,921,576 • 5 year costs £29,570,671 • Net Present Value £ not modelled LifecycleInvestment

19. Lifecycle investment with negative net present value stock excluded from investment • 30 year costs £93.937,247 • Annual smoothed costs £3.131,241 • Catch up investment £17,496,000 • 5 year costs £23,779,429 • Net Present Value £18,278 LifecycleInvestment

20. LifecycleInvestment

21. Replacement where all components inside and outside the property are replaced based on their condition • 30 Year Costs £113,517,856 • Annual smoothed costs £3,783,928 • Catch up investment £9,728,564 • 5 year costs £20,823,578 • Net Present Value £14,887 ConditionInvestment

22. Replacement where all components inside and outside the property are replaced based on their condition with bathroom lifecycle reduced from 25 years to 15 years and kitchens reduced from 15 years to 10 years • 30 Year Costs £127,160,476 • Annual smoothed costs £4,238,682 • Catch up investment £9,728,564 • 5 year costs £20,823,578 • Net Present Value £13,432 ConditionInvestment

23. Replacement where all components inside and outside the property are replaced based on their condition with negative net present value stock excluded from investment • 30 Year Costs £103,337,228 • Annual smoothed costs £3,444,574 • Catch up investment £8,580,284 • 5 year costs £18,428,200 • Net Present Value £20,279 ConditionInvestment

24. ConditionInvestment

25. Balancing; • Net Present Value • Customer satisfaction, inside and outside the home • Business plan capacity • Opportunity to develop new homes through capital receipts • To ensure; safe, efficient homes which meet customer aspirations. TheEquity Home Standard

26. Mapping investment with growth • Understanding what customers want • Reviewing our options appraisal tool for negative NPV stock within growth areas • Mapping investment requirements with aspiration fro growth and new homes Nextsteps