Is small (still) beautiful? Social housing lessons from the Netherlands

How much does size matter when it comes to social housing? As the social housing sector in the UK looks to consolidate and refocus, we explore lessons from the experience of the Netherlands.  

The social housing sector in the Netherlands is not dissimilar to the UK in size overall, with around 2.5 million homes managed by associations.  However, in terms of individual organisations, the drive for efficiency and growth in the UK means that there are likely to be a significantly larger number of housing associations with more than 40,000 units by 2020 (compared to eight today), and four or five ‘mega’ associations with more than 100,000 units. 

For the last two years, PwC in the Netherlands has managed a national programme of multi-dimensional benchmarking for social landlords to evaluate and understand performance across the social housing sector. The programme is supported by over 300 landlords, representing 97.5% of the Dutch social housing stock, and its output is used to inform policy and strategy for the sector as a whole by government.  In addition the programme captures feedback directly from customers.  Last year 193,000 tenants contributed to the study which gives it some considerable weight in terms of social engagement. 

The programme uses an intricate system of data, weightings and calculation but, at a high-level, associations are ranked in three areas – customer experience, public value (measured from an employee perspective) and operating costs – and given a rank – A, B or C. An organisation in the top third on each area of assessment is therefore a leading ‘AAA’ landlord.   Last year two dimensions (customer experience and operating costs) were fully operational allowing comprehensive and consistent comparison.

Given the number of mutual or mandated mergers beginning to take place in the UK, the results of the Dutch benchmarking programme are fascinating when it comes to considering organisational size. 

Last year 26 out of 271 landlords participating in all elements of the benchmarking received the ‘AA’ rating, ‘the leaders’. A further 81 followed on with a ‘B’ under either cost or customer satisfaction.  By far the best performing group of landlords by size are in the 1,000 to 5,000 unit category and only 17% of the 63 landlords greater than 10,000 units were in the AA or AB group.  No organisation of more than 25,000 units was in the leading group of 26.

The qualitative data supporting the metrics is highly informative in setting out the reasons for the smaller organisations doing so well relative to their larger peers:

  • In smaller organisations, employees feel that they deliver better value to customers and are a more powerful and influential link between corporate strategy and front-line delivery.
  • Smaller organisations have responded with much greater ease to the digital challenge being to invest in and adapt systems to support channel shift and more modern customer experience.
  • The overheads of the larger organisations are disproportionate to their size increasing the average unit cost of management. This has led to a focus on these cost areas amongst larger organisations, and, as a result, the sector average has started to reduce.

Does this mean that small is beautiful and big is bad? No. But what it does suggest is that as housing associations in the UK look to grow through merger or acquisition, so organisational culture, customer experience and cost control must remain key areas of focus. The trend in increasing the development capacity in the sector through consolidation and scale will present a new set of challenges which will need to be carefully worked through to maintain operational excellence and service.

Matthew Williams | Social housing sector lead
Email  | +44 (0)7730 733790

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