Abbeyfield societies
Local housing charities that provide accommodation for older people in small schemes. A few Abbeyfields are affiliated to the National Housing Federation, but almost all are affiliated to their own national organisation. Abbeyfield UK is itself a Federation member.
Abortive fees
Any fees chargeable by valuers, consultants, or a planning authority, for work carried out on a project which is abandoned/aborted.
Accountability
The responsibility to account for resources or actions. Local authorities are accountable to their electorate. Housing associations are accountable in various ways. They have a direct accountability to the Regulator of Social Housing (RSH) for the provision of services to specified standards, and to Homes England for the provision of new homes. They are also accountable to the local authorities in whose areas they work, to their tenants and in a more general way to the wider community.
Accounting direction or determination
The relevant accounting requirements direction or determination issued by the RSH in England or the equivalent body elsewhere.
Accounting Order
The statutory instrument that still provides the legal format for housing association accounts in Scotland and Northern Ireland.
Accounts Commission
The body responsible for the audit of local authorities in Scotland and for helping them to achieve best value in their activities. It also has powers to hold public hearings into the conduct of local authorities, councillors and officers.
Accrued interest
Interest already earned but not yet due or payable.
Acquisition and works
A method of procurement in which a housing association purchases land and undertakes a building contract directly with a house builder or contractor.
Adaptations
Works to make existing dwellings more suitable for people with physical disabilities. Tenants may be eligible for a disabled facilities grant to fund works.
Affordability ratio
The ratio of rent to income. Several versions exist, according to whether income is calculated before or after taxes and benefits. The National Housing Federation version is the ratio of rent (including any service charge) to net disposable income (including any entitlement to housing benefit).
Affordable Homes Programme
Homes England’s investment programme for capital expenditure on various types of project. This was previously known as the Approved Development Programme or the National Affordable Housing Programme.
Affordable rent
A form of rent, set at up to 80% of local market rents. It was introduced under the Affordable Homes Programme 2011–15 and the majority of grant-funded new build homes in England are now at affordable rent rather than social rent.
All-in cost
The total cost of a financial transaction, including interest cost, periodic charges and all fees, etc.
Allocations (by a social landlord)
The identification of a particular property to be offered to a person who will become a tenant.
Allowances
In Scotland, development allowances and management and maintenance allowances are used in the calculation of grant, to cover the assumed costs of housing associations.
Amortisation
The gradual reduction of a premium over a period of time. Repaying a loan by instalments that include both interest and capital.
Annual returns
The RSH requires the FVA, a summary of the annual accounts, to be submitted within six months of the financial year-end and the Financial Forecast Return (FFR), a static return used to gather medium to long-term planning data in a common format, by 30 June or whenever it is updated. The FFR requires housing associations to provide five or 30 years of data from their business plan, depending upon their development assumptions. A quarterly financial survey is also required.
Annuity
A fixed sum of money paid each year for a specified number of years. (When used in referring to loans the sum paid is made up of interest and capital repayment.)
Arm’s length management organisation (ALMO)
Company set up and owned by a local authority to manage housing stock, initially as a way of accessing Decent Homes funding.
Asset
Anything that is owned which can be given a monetary value, eg buildings, land, cars, machinery, cash, investments, etc. Assets are always considered in comparison with liabilities in an organisation’s accounts.
Asset management
Prudent manipulation and control of assets in the best interests of an organisation.
Assured shorthold tenancy
A variant of the assured tenancy under the Housing Act 1988 to encourage private letting. The tenancy must run for at least six months, or for its fixed term if longer. After that period the landlord is guaranteed possession of the property, subject to two months’ notice. Though not generally used by housing associations, shortholds are now the most common form of new letting in the private sector. Possession can be sought on the same grounds as for any other assured tenancy (see below).
Assured tenancy
A form of tenancy introduced by the Housing Act 1988 which became the norm for new lettings by housing associations. Such tenancies are outside the provisions of the Rent Act 1977 and the Tenants’ Charter provisions of the Housing Act 1985. The landlord is free to set market rents but housing associations are expected to set affordable rents and give additional contractual rights to tenants, as required by the RSH. An assured tenancy cannot be ended by a landlord’s notice to quit. A landlord wishing to end an assured tenancy must serve a notice seeking possession and go to court. Schedule 2 to the Housing Act 1988 sets out the grounds on which the courts can, or in some cases must, grant possession.
Base rate
The interest rate used by financial institutions as a benchmark for pricing some loans.
Basis points
A term used by financial institutions to describe one hundredth of one per cent, so 1% is equal to 100 basis points.
Benchmarks (also benchmarking)
Established norms for judging performance against performance indicators.
Benefits cap
The cap on the total welfare benefits that an individual or a family can receive. It was introduced through the Welfare Reform Act 2012 and is administered through deductions from housing benefit payments, or a cap on universal credit.
Board
The managing body of a social landlord.
Bond
A certificate of debt for a form of long-term loan that normally carries a fixed rate of interest and whose principal is repaid after a fixed period. Bonds can be bought and sold during their life.
Business plan
A document which sets out an organisation’s plans for its future operations and development. It can help management committees to plan strategically and may also be of use to demonstrate to the regulator or Homes England and to lenders that the association has clear aims and objectives and sound development and finance strategies.
Cap (on interest)
A limit to the highest rate of interest which may be paid on a variable interest loan.
Capital
The financial basis of a business that gives it its trading strength. There are various forms of capital, eg working capital for day-to-day transactions, capital invested in assets, and so on.
Capital adequacy
A test of whether or not an organisation has the minimum value of reserves to run its business safely.
Capital appreciation
Growth in the value of an asset.
Capital expenditure
Most importantly, the cost of providing new homes – the term covers investment in permanent assets such as land, buildings, roads, equipment and so on.
Capital Funding Guide
Homes England’s guide containing the rules and procedures for social landlords that have received grant funding through its funding programmes.
Capitalised
The conversion of revenue expenditure into a capital sum. An example would be where the costs of a loan are added to the amount of the loan outstanding rather than being paid from another source.
Cashflow
The amount of money flowing into and out of an organisation in a specified period, and out of which routine expenses, such as loan repayments, are met. An organisation can have solid reserves and valuable assets but still experience problems if the money coming in is not sufficient to cover cash commitments.
Charitable housing associations
The majority of housing associations are charities. They may be either charitable trusts or companies, or co-operative and community benefit societies whose rules limit their objectives to charitable purposes. Charitable status confers certain privileges, including exemption from corporation tax, but limits activities that can be carried out. See also non-charitable housing association.
Component accounting
Component accounting requires significant components of an asset that have different useful lives to be identified and depreciated separately.
Co-operative and community benefit societies
A society registered under the Co-operative and Community Benefit Societies Act 2014. They have replaced industrial and provident societies.
Co-regulation
The principle underpinning the RSH’s approach, whereby the regulator focuses on the economic standards and housing associations are expected to put in place their own scrutiny arrangements to ensure that they comply with the consumer standards.
Corporation tax
The tax levied on profits made by a company through its trading; charities are exempt from corporation tax in respect of surpluses made on charitable activities.
Cost floor
The figure for the original cost of provision of a property which is used in connection with the right to buy. The discount for which a tenant is eligible cannot reduce the purchase price below the cost floor, but only costs incurred in the eight years prior to the right to buy purchase are reckonable.
Covenant
A loan covenant is an agreement by a borrower that is legally binding on the borrower over the life of a loan to perform certain acts, eg timely provision of financial statements, or to refrain from certain acts such as borrowing from another lender without prior approval. Financial covenants are ratios relating to accounts and/or cashflows.
Comprehensive performance assessment (CPA)
See Comprehensive Area Assessment (CAA).
Cyclical maintenance
Maintenance planned in advance and carried out at regular intervals, eg external redecoration and redecoration of internal common parts, renewal of major items of equipment, maintenance of central heating plants, roof repairs etc to keep a dwelling weather tight.
Decent Homes Standard
The measure set by the government that assesses whether a home is of sufficiently high standard (in respect of condition).
Defects liability period
The contractual period after the completion of a housing project in which the client can identify any faults or omissions which it is the contractor’s responsibility to remedy. Normally the defects liability period is six months.
Defects period
The period after the completion of a contract during which contractors are required to make good, at their own expense, any work which needs repair.
Department for Levelling Up, Housing and Communities (DLUHC)
The government department responsible for social housing.
Depreciation
An accounting term which describes the systematic write-off of the reduction in value of a fixed asset due to wear and tear, passing of time and technological changes over its economic useful life.
Design and build contract
Agreement with a building contractor whereby all or most of the design work is organised by the contractor. The contract includes the cost of this design work.
Design and Quality Standards
Standards that must be met for all new homes funded from SHG in the 2008–11 or 2011–15 programmes. These replaced Scheme Development Standards from 2008.
Designated reserves
See Reserves.
Development (development programme)
The processes for buying, building or improving property, whether for rent or sale.
Directors’ and officers’ insurance
A form of insurance to cover wrongful acts (but not the consequences of acting on bad professional advice) of the directors and officers of a company, or the voluntary board members and senior staff of a housing association.
Discounted cashflow
A technique which can be used to value housing association projects. It gives the net present value of all the expected cash inflows and outflows from the projects. A practical example of its use is in determining the price to be paid for a voluntary transfer of housing stock to a new housing association.
Disposal Proceeds Fund (DPF)
The restricted fund into which housing associations must place the net proceeds from sales of their homes (to tenants) under voluntary and statutory purchase grant schemes. This fund is controlled by the regulator of social housing. Any refunds of Disposal Proceeds Fund would be paid to the regulator. From 6 April 2017 registered providers do not have to pay new proceeds from relevant disposals into a DPF but existing DPF funds had to be managed and spent in accordance with the previous requirements until April 2020.
District valuer
A government official employed by HMRC. If required, the district valuer can provide a valuation on properties and sites to be acquired by a housing association with funding from Homes England.
Disturbance payments
Payments made under the Land Compensation Act 1973 to recompense tenants for costs actually incurred in moving as a result of the activities of a housing association.