Thirteen Selects BlueBox
Housing Association Thirteen has chosen Trace's BlueBox system to manage service charges and rental calculations in its 34,000 properties.
23rd September 2022
Service charges & social housing
by Dan Oehlman, Service Charge Lead at Ad Esse Consulting
How to solve the age old problem of Housing Association service charges
For many years, service charges have been a challenge for housing providers.
Grappling with the changing demands of customers, interpreting leases, meeting legislative requirements, and maximising recovery all require very different skills.
Understandably, organisations have struggled to tackle the problem, which means that it often gets put in the ‘too hard to do’ box.
Yet the scale of the problem is colossal – as are the potential rewards in tackling it.
The service charge shortfall for 2021/2022 in social rented stock across all Private Registered Providers with over 1,000 units was 23%. Even reflecting costs covered by the rental element due to tenure, this is half a £billion annual shortfall: enough to cover the cost of building more than 5,800 homes a year.
In leasehold and shared ownership, the issue is often far worse. Data, lease and legislation challenges are amplified, while customers increasingly challenge costs through enquiries, complaints, and First-tier Tribunals.
Yet many providers continue to use spreadsheets as a solution at some point in the process, with the consequent risk of calculation errors, and few controls in place to intervene.
When you consider that, on average, 78% of a housing providers turnover comes from rent and service charge income, you can see how a lack of controls can have a significant impact on your ability to deliver your purpose.
Software solutions, such as BlueBox from Trace Solutions, are becoming increasingly popular, since they integrate easily with existing housing systems. Software like BlueBox will help with automation and reporting, remove errors and standardise practice across your teams.
However, while there is a strong need for a software solution, it is not a complete panacea for solving service charges. Even the best technology is at the mercy of the quality of your processes, your data and your implementation.
Below, I outline the key steps you should take to prepare yourself for a new service charge system and ensure that you maximise the benefit from your investment.
- Redesign your processes
- Sort your data
- Skill your team
- Plan your implementation
- Test, test, test
- Iterate and improve
- One final thing
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1. Redesign your processes
It is vital that you use the opportunity of a new system to look at your processes. Clearly documented processes are invaluable to a system provider such as Trace Solutions, to ensure that the technology works for you.
Even more critically, the system will inevitably provide opportunities to think differently about the way you work. Depending on how well defined your current processes are, it’s an opportunity to standardise across a team.
Spreadsheets, by contrast, often promote a myriad of ways to complete a single task, with varying degrees of success.
It’s also important that you review all processes ‘end to end’. A service charge team is often a ‘customer’ of the organisation when it comes to the information you use to generate service charges. This is an opportunity to streamline the way you receive that information which should not be missed.
"The system will inevitably provide opportunities to think differently about the way you work"
Dan Oehlman, Service Charge Lead at Ad Esse Consulting
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2. Sort your data
This is the thing that scares people the most!
Indeed, I’ve seen the challenge of data quality and data structure stop implementations in their tracks.
So it’s best to get ahead of the challenge as early as possible.
Here are a few key things to remember when you are looking at your data:
- Don’t go into this with the idea of fixing all data. It’s likely to be outside of your control to achieve this
- If your data structures (for example, the property hierarchy) do not fit with the way service charges should be managed, consider alternative options such as schedules
- You don’t need any data beyond that which a good housing provider should already have
Firstly, don’t let perfect get in the way of improvement. Housing providers have (in some cases) billions of data points, and much of the data is unstructured. It’s simply not possible for you to ‘fix’ all data as part of your system implementation, no matter how much the quality of the service charges relies upon it, and in the vast majority of cases you will not ‘own’ that data.
The quality of your data will, however, drive the quality of your outcomes with any system, so focus on what makes the biggest difference and improve that data. Use the opportunity to look at ways that data quality can be addressed regularly, not as a one-off exercise.
Where you do own the data, you need to make sure that it is as high-quality as possible. Service Charge teams should see themselves as stewards of data around apportionment, for example. Take the opportunity to improve and validate that data ahead of putting it into your new system.
Second, consider your data structures and how these can be improved. Again, you may have limited ability to resolve these at an organisation level.
While you want your property data to mirror the reality of a development, competing requirements often lead to data structures which aren’t supportive to accurate service charges. In some cases, the issue of property hierarchy is the very reason spreadsheets continue to have a place in the process.
We should however consider other ways to achieve the same objective. The mapping of two different structures can allow data to flow seamlessly between each other.
Perhaps a better alternative is to use an overlaying structure such as ‘schedules’, which is the method used by Trace’s BlueBox software. Schedules can provide you with the flexibility to resolve the challenges of problematic property hierarchies.
Finally, do remember that when you’re meeting challenges around organisation data, you are only asking for data that any good organisation would hold as standard.
"Take the opportunity to improve and validate that data ahead of putting it into your new system"
Dan Oehlman, Service Charge Lead at Ad Esse Consulting
3. Skill your team
While your system will help to ensure that the process is followed, system investment shouldn’t mean that you do not invest in your team.
While many of the complicated elements of a service charge can be assisted by a new system, it won’t read a lease for you, apply case law or manage challenging customer relations. So continue to invest in your team, including detailed training on how to use the new system. That way they can hit the ground running from day one.
You should also prepare your team for the change. Any change is challenging and it’s always important to take those impacted by the change on the journey with you.
If your team believes in the change, they will be much more invested in learning new ways of working and focused on achieving the right outcomes for your organisation.
"If your team believes in the change, they will be much more invested in learning new ways of working."
Dan Oehlman, Service Charge Lead at Ad Esse Consulting
4. Plan your implementation
It may seem like an obvious thing to say, but any system implementation requires detailed planning.
When you’re itching to get going on an exciting project, it’s hard to take the necessary time up front. But with so many elements to get right, you need a plan.
You may find it helpful to break your implementation into sections, delivering just the basic functionality first (sometimes referred to as minimum viable product or MVP) and then running quick cycles of improvement, often referred to as ‘sprints’
This can be a great way to deliver your implementation and can get your colleagues using the system sooner.
If you think this will work for you, think about what functionality is required first, prioritising that for the early phases. The ‘nice to have’ parts of a system can often be the exciting, flashy bits. Don’t get seduced into prioritising the wrong things!
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"don’t get seduced into prioritising the wrong things!"
Dan Oehlman, Service Charge Lead at Ad Esse Consulting
5. Test, test, test
This point cannot be stressed often enough.
You are implementing complicated systems that deal with lots of data. This data has a financial implication for your organisation, and more importantly has the ability to deliver on your social purpose – the system’s very reason for existence.
While it’s important to test the system itself, if you’ve done your due diligence, you shouldn’t be buying a system which has errors within it.
What you are really testing is the quality of your implementation.
Is the data pulling through correctly? Are your integrations working and updating as expected? Have you correctly mapped your fields? Is there a problem with speed? Does the system slow when dealing with volume? Do your controls work? How about user accounts? Do your standard accounts allow you to do too much? How does their level of access differ from admins or users with read-only access?
All these things and much more will need to be tested.
Your aim should be to check as many variables as possible. It’s worth trying to find records within your data that allow you to test as many variations in as few records as possible. How does it handle different accounting years, frequencies, expenditure types, tenures? All may have an impact.
You don’t want to find out that everything works great for those with monthly charges, only to find those charged weekly are accidentally charged a weekly amount every month!
"What you are really testing is the quality of your implementation"
Dan Oehlman, Service Charge Lead at Ad Esse Consulting
6. Iterate and improve
A new system is just the start of the journey. Use your new solution as a springboard for further improvements and efficiencies.
What sub-processes can be addressed next? Can you systemise rent increases? How about your Section 20 process?
All these things are already available within BlueBox, for example.
Always be on the lookout for ways you can improve what you do for your customers and the organisation.
"You should always be on the lookout for ways you can improve"
Dan Oehlman, Service Charge Lead at Ad Esse Consulting
7. One final thing…
While system implementations are challenging, I always focus on the positives.
If you’re a service charge professional reading this, you fundamentally understand how to run time-sensitive projects. You understand how systems work (very similarly to the formulae you create in your spreadsheets).
And if you’re an IT professional, know that you have a very knowledgeable customer!
About Dan Oehlman
Dan Oehlman is the lead Service Charge consultant at Ad Esse Consulting. He has more than 15 years’ experience in the housing sector, delivering large-scale transformation projects alongside specific service charge system implementations. Dan helped develop Trace’s BlueBox product for Housing Associations and local authorities, and has spoken at a number of National Housing Federation and Chartered Institute of Housing conferences on how to successfully implement technology that assists with service charge management.
About Trace Solutions
Trace Solutions has been developing software for the British property management industry since 1974: they are, in effect, the original British PropTech company.
Based on the edge of the City of London, their software is used by the majority of large managing agents. They value its ability to manage complex service charges accurately and effortlessly, as well as providing a reliable property database and specialist property accounts.
In recent years a growing number of housing associations and others in social housing have drawn on Trace’s specialist service charge expertise to implement their own service charge solutions. Trace’s BlueBox software is now in use at many housing associations in the UK, including Thirteen Group, Peabody and One Housing.
If you’d like to know more about Trace’s solution for housing association service charges, or see a demo, please call us on +44 (0)20 7825 1299, or email us at hello@tracesolutions.co.uk. For a PDF copy of this article, use the contact form below.