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AHAsset Management Strategies and Sustaina
AHAsset Management Strategies and Sustaina
Nico Nieboer
OTB Research Institute for Housing, Urban and Mobility Studies,
Delft University of Technology,
PO Box 5030, NL – 2600 GA Delft, the Netherlands
E-mail: n.e.t.nieboer@tudelft.nl
Abstract
With 35% of the total housing stock in the Netherlands (Ministry of VROM, 2004), the social
rented sector plays an important role in Dutch housing, and its management can be of great im-
portance to the success or failure of sustainability programs. Although sustainable building has
been high on the national political agenda, and although this was in a period of intensive policy
developments in the Dutch social sector, there are indications that sustainability plays only a
minor role in housing management decisions (Sunikka and Boon, 2002 and 2003). This paper is
about recent strategic innovations in housing stock policy and investment decisions of social
landlords, and the role of sustainability in these innovations. The paper deals with several case
studies on this subject, and also goes into a recent survey among social landlords on investment
policy and technical management, which gives a more comprehensive picture of the sector. We
compare the results with those of an earlier, similar survey, held in 1997 (Straub, 1997). We
conclude this paper with some recommendations for enlarging the role of sustainability in hous-
ing management.
1 Introduction
In the last ten to twenty years, sustainable building is an important issue in the environmental
policy of the Dutch national government. A substantial step forward was taken in 1995 with the
introduction of the first national action plan on sustainable building. A National Package Sus-
tainable Building, containing voluntary measures to improve environmental quality, has been
introduced and is, up to now, regularly updated with new or modified items. In 1998, a start was
made to include several measures from this action plan in mandatory building regulations (Van
Hal, 1999). By now, many policy instruments have been implemented, including tax measures
on green investments and a national centre for Sustainable Building.
Naturally, cooperation with the building sector is necessary for policy measures on sustain-
ability to be effective. Thus, the attitude of this sector to measurements and instruments for sus-
tainable building is very important. In this paper, we deal with the attitude of social landlords in
the Netherlands towards the sustainable management of their housing stock. This group of land-
lords is dominated by housing associations, being private associations with a number of manda-
tory, public rights and obligations, mostly formulated in the Social-Rented Sector Management
1
Decree (BBSH – Besluit Beheer Sociale Huursector), which is based on the Housing Act. Hous-
ing associations manage 99% of all homes in the social housing sector; the remaining 1% be-
longs to local authorities. In the Netherlands, 35% of the total number of homes is in the hands
of social landlords (Ministry of VROM, 2004). Because of this, the attitude of the social land-
lords can be a powerful factor in the effectivity of government measures towards sustainable
building.
The development of government policies on sustainability have more or less coincided with
large changes in the political context of social housing. Since the late 1980s, after decades of
strong central government intervention in the housing market, the Dutch national government
policy embraces the reinforcement of market principles in social housing. As part of this policy,
housing associations have gained much more administrative freedom. In the 1990s, direct finan-
cial support for new building and refurbishment was completely withdrawn, which is unique in
Western Europe (e.g. Boelhouwer, 1997, 1999; Dieleman, 1999).
The new policy context has set considerable challenges for the asset management of Dutch
social landlords. Being transformed from operational, task-oriented organisations towards ‘so-
cial entrepreneurs’, they have to operate in a more strategic, market-oriented way. As a result,
the sector is, more than in the past, responsive to innovations to support management decisions.
This might create a favourable climate for the development of strategies on relatively new is-
sues, and sustainable housing management can be seen as one of these.
This paper deals with the question, in which way social landlords have used this climate to
develop a more systematic and structured investment policy. We concentrate on strategies of
landlords concerning the development of their housing portfolio. We focus on strategies that
aim to support decisions about refurbishment, regular maintenance, sale or demolition, or about
the choice between these investment options. We look for the role of sustainability in these
strategies. It is evident that there are competing interests, such as market position, costs, af-
fordability and technical possibilities. These interests may not always in favour of sustainable
housing management. So, the main questions are:
- Which methods do Dutch social landlords use to systematise and structure their stock in-
vestment decisions?
- What is the role of sustainability in these methods?
- What is the relative importance of sustainability in investment decisions of Dutch social
landlords?
Sustainability can have different meanings, such as: long-lasting, durable, stable, inexhaustible
(mostly in relation to energy sources) and environment-friendly. It can also have a social aspect,
for instance in ‘sustainable neighbourhoods’ and ‘sustainable communities’. In relation to urban
regeneration, even indicators on land use, community benefits and employment are used (e.g.
Hemphill et al., 2004). This paper is about the environmental aspects of sustainability, notably
the consumption of energy and materials.
In this paper, we present the results of two recent researches of the OTB Research Institute
for Housing that focus on housing asset management and the development of strategies in this
territory. The studies take into account the various fields that landlords find relevant in their
housing management (environment, finance, affordability, market position, market develop-
ments etc.) and, thus, are not strictly directed to sustainability or any other field of interest. But
although sustainability has only a marginal role in these researches, both studies contain evi-
dence on the relative importance of this subject. The first research consists of case studies, car-
ried out in 2003, on strategy development in housing asset management of nine social landlords.
This research concentrates on methods and instruments for systematic development and struc-
turing of investment decisions. The second research is a survey on housing asset management,
held this year. This research gives a more representative picture of the relative importance of
several subjects in housing management, among which environmental quality.
2
In the following section, we deal with the way in which the researches have been carried
out. Next, we present the results of the research on strategy development in housing asset man-
agement. After that, we present the results of the survey as far as the development of asset man-
agement strategies is concerned. We also compare these results with the outcome of a similar
survey that was held seven years ago (Straub, 1997). We conclude with remarks on the relative
position of sustainability in housing asset management, and some recommendations to improve
the relative position of sustainability in housing projects.
2 Research method
The dynamics in the social housing sector has led to a range of methods for the development of
asset management. These methods are so different from each other, that they can hardly be
compared. Despite this lack of comparability we can divide these methods into three categories,
which cover the large majority of the methods found at the organisations in the research. These
categories are:
1. specification of certain aspects of housing supply or housing demand;
2. systematic weighing of different (sometimes opposing) goals and interests;
3
3. procedures for development of asset management strategies.
These categories do not exclude each other. For instance, a social landlord can develop an inter-
nal procedure for policy development, and employs within this procedure a method to weigh
different interests.
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Next to a classification of (potential) tenants, there are also new classifications of the housing
stock. While traditionally technical management was driven mostly by a regular maintenance
planning cycle, diversification of the physical quality of the dwellings is used more and more as
an instrument to adapt the stock to the large variety of individual housing preferences. The
housing association of AWV has developed a classification related to convenience of the dwell-
ing, like floor area and amenities (e.g. size of kitchen unit, number of wash basins, wall tiles in
the bathroom, central heating). Using this classification, the AWV has assessed the present
situation of its estates and has formulated the desired situation. In doing so, the AWV tries to
structure its efforts to raise the average standard of its housing portfolio, which is one of its
most important objectives.
4
Table 1Quality classification of housing association AWV (partial overview)
Floor area
floor area according to (no requirements) Inner city Outskirts Inner city Outskirts
national Housing Quality 1r >= 25 m² 1r >= 30 m² 1r >= 30 m² 1r >= 35 m²
Rate (specified by 2r >= 35 m² 2r >= 40 m² 2r >= 41 m² 2r >= 46 m²
number of rooms) 3r >= 45 m² 3r >= 50 m² 3r >= 52 m² 3r >= 57 m²
4r >= 55 m² 4r >= 60 m² 4r >= 63 m² 4r >= 68 m²
5r >= 65 m² 5r >= 70 m² 5r >= 74 m² 5r >= 79 m²
6+r >=75 m² 6+r>= 80 m² 6+r >=85 m² 6+r >= 90 m²
Kitchen
length of kitchen unit (no requirements) at least 170 cm at least 220 cm
top cupboards (no requirements) at least 2 at least 4
space for household at least 60 cm for refrigerator (with at least 120 cm in total for refrigerator at least 180 cm for refrigerator, gas
appliances gas cooker on it) and gas cooker/furnace cooker/furnace and dishwasher (or
washing machine) (homes with 1 or 2
rooms: at least 120 cm)
connections gas, water, sewer, gas, water, sewer, gas, water, sewer,
3 rim-earth sockets 3 rim-earth sockets, if space available 4 rim-earth sockets, connection for
also connection for washing machine dishwasher and/or washing machine
tiling (no requirements) near gas cooker and kitchen unit near gas cooker and kitchen unit
source: housing association AWV, Amsterdam
5
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Four of the nine housing associations in the research have used the method of portfolio analysis
at least once in their stock policy. Strictly speaking, they each use a variant of the method, be-
cause the portfolio analyses that we have found differ from the classical form, in which financial
aspects such as return and risk or market aspects such as market share and market growth are
the central variables.
Another method to support the weighing of different interests is a decision tree. This
method is similar to a portfolio analysis in content, for it also makes use of a limited number of
indicators to define a strategy for a group of homes. The main difference is the form and the fact
that more than two factors can be included in the model. Two housing associations (WBA and
Delftwonen) use a decision tree as part of their asset management strategies. In both cases, the
decision tree contains elements of a classical portfolio analysis, such as market share and market
expectation (WBA, 2002; Gruis and Van Sprundel, 2003).
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The WBA uses its decision tree for strategies on the neighbourhood level instead of the estate
level. These strategies are defined on the basis of market share (retreat if this is too low),
neighbourhood potential (market expectations), lettability, liveability and technical condition of
the stock. The combination of these factors determines the general strategy to be followed in the
respective neighbourhood (e.g. more variety in the stock, disposition, additional rent increase,
consolidation or a combination of these strategies).
Figure 1 General outline of existing models for developing asset management strategies
Two landlords in the research, namely the AWV and Delftwonen, have used a process model to
develop their asset management strategies. It must be said, however, that both models have been
7
introduced in cooperation with external advisors. They were used for the ‘first time’
development of a strategic asset management plan. Because of this, it is doubtful if the landlords
will use this model repeatedly when a change or a further development of strategies will be felt
necessary. It is more likely that the plans resulting from the procedural models will evolve over
time and that perhaps, after a number of years, a wholly new plan will be developed along the
lines of a similar model. Figure 2 depicts the model that has been used with the AWV. The
model for Delftwonen contains different phases, but the general outline is similar.
Figure 2 Process model of the AWV for developing asset management strategies
1.
PROCESS AGREEMENTS
ANALYSIS OF PRESENT
SITUATION
3.
WEIGHING OF FACTORS AND
INTERESTS
DEFINING
4. CLASSIFICATION
POLICY OPTIONS PER ESTATE OF POLICY
OPTIONS
5.
APPRAISAL OF POLICY OPTIONS
6.
ESTATE MANAGEMENT PLANS
7.
IMPLEMENTATION
An important element in the process model of the AWV is the classification of policy options.
This classification is useful to structure the great variety of investments. So, more general, pre-
structured policy options are chosen in the beginning. These options are specified later, particu-
larly in phase 6, when estate management plans are drawn up. The more general options in
phase 4 indicate either the type of dwelling after the eventual investment (result) or the type of
investment itself (process). The options are classified on the basis of the main relevant factors
for investment decisions, like hold/disposition, remaining exploitation period and target group.
As we stated earlier in this paper, the AWV also uses a classification related to physical quality
standards like technical condition, floor area, and amenities.
Following Van den Broeke (1995, p. 20), strategic asset management can be described as all
activities of a landlord in order to adapt its housing stock to both its objectives and the devel-
opments in housing demand. 71 % of the social landlords have documented this kind of policy
in current investment plans. With 72% of these landlords (that is 65% of all respondents), the
stock policy is based on a written corporate mission and (possibly quantified) corporate objec-
tives for the entire stock. 19% of these landlords (have also formulated a corporate mission and
8
objectives, but for only a part of the stock (e.g. in a district plan). The other 9% have not based
their stock policy on a written corporate mission and corporate objectives.1
An indication of the relative position of sustainability can be obtained by comparing the in-
fluence of different factors in asset management. We have asked the social landlords that have a
current investment plan based on their strategic asset management, to which extent the follow-
ing aspects and considerations play a role in defining the stock policy and the investment and
exploitation decisions based on it. The following table states the results.
The table shows that environmental quality is, generally speaking, not an important factor in the
stock policy of Dutch social landlords. Only 16,7% of the landlords have indicated that this
factor plays a considerable or very considerable role in decision-making. Of all the aspects men-
tioned in the table, only ‘availability of subsidies’ scores less. The most important considera-
tions are related to convenience quality (floor space, amenities in the dwelling etc.) and market
perspective (lettability).
As we stated in the introduction, the survey is compared to the findings of a similar survey
in 1997. That survey was held under social landlords that owned at least 2,000 homes on 31st
December 1996. In the following table the results of the two surveys are compared, as far as the
influence of environmental quality is concerned.
%
In the earlier version of this survey, held in 1997, the respective questions were not posed. Consequently, no compa-
rable results are available for that year.
9
Table 3 Percentages of social landlords according to the perceived influence of envi-
ronmental quality, as for 2004 and 1997
population No influ- Some Considerable Very con- n
ence influence influence siderable
influence
all social landlords in 2004 25,6 57,8 16,7 0,0 90
social landlords > 2,000 homes in 2004 21,9 59,4 18,8 0,0 64
social landlords > 2,000 homes in 1997 27,1 55,8 17,1 0,0 129
The modest role of environmental quality in stock policy and investment decisions is also true
of social landlords owning more than 2,000 homes: only 18,8% of the landlords have indicated
that this factor plays a considerable or very considerable role. This percentage is almost the
same as in 1997 (17,1%). The, relatively speaking, largest shift is in the percentage of landlords
where environmental quality does not play a role in investment decisions. As for landlords with
more than 2,000 homes, this percentage has dropped from 27,1% in 1997 to 21,9% in 2004.
Conclusions
The social housing sector in the Netherlands has undergone a remarkable shift from a govern-
ment-driven sector towards a much more market-oriented sector. This has led to a variety of
innovations. In this paper, we have considered innovations applied by nine social landlords,
which we expect to be relatively advanced compared to the ‘average’ social landlord in the sec-
tor. We have confined ourselves to methods that offer a systematic procedure for decision-
making about stock investments.
In our research, we have found several new ways of working. These innovations are so dif-
ferent from each other, that they are hardly comparable, although they share the common objec-
tive of supporting asset management. From this variety of ‘apples and oranges’ one might con-
clude that the Dutch social housing sector, or at last the nine landlords in the research, appears
to be receptive to innovations as far as new ways of decision-making in asset management is
concerned. However, the number of innovations is modest and, in addition, unevenly spread.
With four of the nine landlords we have not found one innovation, some of the other five land-
lords show several innovations. In addition, a further research into the effect of these innova-
tions on investment decisions has shown that this influence is modest and sometimes hard to
recognise.
Sustainability does not play a role in the methods outlined above, at least not in the way in
which these methods are applied. The results of the recent OTB survey confirm the minor role
of sustainability in asset management, and show little increase in this respect compared to 1997.
This, in turn, is in line with the findings of Sunikka and Boon (2002), although they have ob-
served some ‘progress’ since 1993, when another research on sustainability in housing man-
agement was held (Quist and Van den Broeke, 1994).
These results are rather contradictory to the outcome of a survey, held in 2001 (SBR, 2001),
in which 78% of the interviewed housing associations have indicated to take measures in the
field of sustainable building (choice of materials, covenant with other parties, requirements for
contractors etc.) (p. 30). Although 36% of the housing associations that take sustainable meas-
ures have said to take sustainable building measures in the initial phase of the building process
(p. 43), the results of our research show that most measures, if they are any, are not taken in the
earlier stages of investment decision-making. The examples given in the study of Sunikka and
Boon (2002) indicate that environmental efforts in the housing sector are mostly related to the
way in which the investments are carried out, and not to the choice of the type of investment.
For example, sustainability may play role in the way in which refurbishment and demolition
take place, but it is largely ignored in the choice between refurbishment and demolition.
10
Recommendations
This paper does not go into the reasons for this, as we suppose, sad conclusion. But insofar the
reason is in the lack of tools that landlords easily can apply, the methods mentioned in this pa-
per can be helpful. We explain this for two of the methods mentioned earlier.
First, it is not only possible to specify the housing stock on the basis of conveniences or tar-
get group, but also on the basis of environmental quality and environmental performance. In this
respect, we can think of requirements concerning energy and water consumption, such as en-
ergy-saving amenities and insulation. We can also think of categories related to the EU energy
labelling that must be implemented in national regulations by 2006.
Second, aspects of sustainability can easily be fit in portfolio analyses and decision trees.
The indicators that we have found in our research are mostly related to market position, but
indicators about sustainability (or an other field) can be used as well. For instance, we can imag-
ine that homes performing badly in terms of energy consumption require another type of in-
vestment (or more investment or earlier investment) than homes that perform well in that re-
spect. Thus, the methods that we have found in our research are not designed for sustainability
purposes, but offer opportunities for (further) development of a sustainable housing manage-
ment.
Acknowledgement
We thank Geert Vijverberg at OTB Research institute, Delft University of Technology, for pro-
viding the survey data from his recent and yet unpublished research.
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