Scottish social landlords keeping costs down while increasing turnover

The provider of social housing data’s figures show that landlords north of the border have reduced costs in real terms across all areas of their business over the last five years.

However, on average direct revenue costs (i.e. the costs associated with frontline service delivery) have decreased more sharply than overheads (sometimes referred to as ‘back-office costs’) over this period. The analysis includes a sample of Scottish social landlords which reflects the headline results across the UK as a whole.

On average, overheads as a proportion of turnover and costs are lower for larger landlords, suggesting some economies of scale. However, significant variation in the dataset shows smaller landlords can still achieve low overhead costs.

This conclusion is reinforced by the findings of a recent pilot benchmarking survey of small housing associations in Scotland, which found some economies of scale in larger organisations in the areas of finance and central overheads, more limited economies of scale in premises costs but none at all for IT and communications.

While actual costs are higher in London, in terms of overhead costs relative to other costs, there are no significant regional variations.

Head of HouseMark Scotland Kirsty Wells said: “This research charts the efficiencies social landlords in Scotland and throughout the UK have made over the last five years. Not only have they made real savings in the back office, they have reduced front-line costs while increasing real turnover. There is some evidence of back office economies of scale for larger landlords, but the variations we found show that organisations of all sizes are making real progress in improving their efficiency.”

An interactive version of the analysis is publicly available on HouseMark’s website alongside a static infographic.

Jonathan Cox, head of data services at HouseMark, will give a presentation on the results of the new data analysis on overheads at a HouseMark Scotland event on “Getting better value for money through business planning” in Glasgow next Thursday, 16th June.