The social housing sector is not immune from the effects of the credit crunch, and those challenges and opportunities can bring their particular issues. Senior executives must therefore take a structured rather than knee jerk approach.

In the light of the findings of our 2010 social housing survey we have updated our credit crunch action plan to help Associations take account of the developing market.

Focus on the now

• Increase emphasis on credit control – the timely collection of rents will increase cash flow and reduce likelihood of bad debts.
• Examine discretionary spend – taking actions now to identify discretionary spend will allow more flexibility in the future.
• Cost reduction – review cost reduction targets and accelerate strategies.
• Review tax and VAT opportunities – implementing alternative strategies are likely to lead to changes in the
• treatment of tax and VAT. Ensure your tax position is maximised.
• Review covenant compliance – confirm and monitor all covenants. Review in the light of revised forecasts
• and sensitivities and if covenants appear tight, explore options now. Be prepared.
• Confirm banking arrangements – avoid surprises and act promptly. Involve lenders at an early stage. Do expect pricing adjustments for new loans and build into your plan. Review property valuations to assess bank cover.
• Asset strategy – review asset strategy and business appraisal techniques in the light of the changing environment, for example property sales v alternative uses, updating valuations, etc.
• Management and Board Skills – does the management team and board have appropriate skills to deal with current issues? Is training and external advice needed?
• Avoid complacency – Complacency is not an option as the sector is not immune to economic pressures.
• Circumstances are changing fast and the political environment looks likely to change over the next 12 months. Plans and strategy should be considered now.

Focus on the future

• Review financial forecasts – remember this is an ongoing process. Reassess assumptions and sensitivity to take account of changing circumstances.
• Review risk maps – regularly review and update risk strategy in line with changing environment and conditions.
• Review business plan – this is a working document, review and update actions to meet changing conditions.
• Opportunities – be proactive and not simply reactive in identifying opportunities. Ensure you evaluate them
• carefully as choosing the wrong one can tie up valuable cash resources and prevent more appropriate opportunities being undertaken. Be ready now for future opportunities.