Posted: December 5th, 2023 3:03pm +00:00

Diversification of revenues within the Housing Sector

The Social Housing Regulator Sector Review

The Social Housing Regulator has released it’s 2023 review of the most significant sources of risk. This is a useful document for those not only working within the sector but also those that supply to it.

There are already a number of organisations that provide further analysis on the report but I thought that one specific topic, that of diversification, was worthwhile looking at further.

Successful diversifications

There are some great examples of businesses that have successfully diversified from their core offering, for example starting with just the letter A, we have Apple & Amazon. Apple of course started in computers and now provide, mobile phones, tablets and media services, whilst Amazon started selling books and now, well…..sell everything!

When complimentary to the original product and service, diversification can work tremendously well. Customers understand the link and hopefully have a positive view on the business so trust the diversifications. People who bought Apple computers appreciate the build quality and reliability so are willing to pay a premium to obtain this same quality in their phones & watches etc.

25% of income predicted to be from diversification in the housing sector

Housing providers forecast that 25% of income over the next five years will be accounted for by activity other than social housing lettings. Diversifications can include market sales, student housing, portfolios of commercial property, specialist care, and many other activities.

Importance of managing risk in these new fields

These new activities have the potential to increase revenues and supplement rental income. However, the regulator warns that failure to manage the additional risks that come along with such new ventures can be financially detrimental and damage reputation. After all, they may be in line with a provider’s core purpose, but they still bring a different profile of risk which needs to be successfully managed.

From a strategic perspective;

  • Boards must ensure that they have the required skills, information and appropriately assess any move into a new business stream.
  • Boards must understand the full range of risks that diverse activity can expose them to. Do these align with core strategies?
  • Boards must ensure that such activity provides value for money and aligns with appetite.
  • Finally, none of these activities should jeopardise the core business function

JCAD have a number of housing sector clients who have chosen to work with us to improve upon how risk is managed within the business.

To request a demo visit: Claims handling software – Risk management solution – Demo request – JCAD

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