Salixrent - Detailed Product Description  

Preparatory Analysis: The first urgent task is to review the association's stock : how many rents are above target, and to what extent, similarly where rents are below. Important also to identify those properties which will not be able to achieve target because their rent is either too high, or too low.  

The initial import would be made (see below). It is then possible to see a data browse window showing which properties require DECREASES, and a second window showing properties which require INCREASES.  

The properties would then be processed :  

A - Using method No Rent Restructuring  

B - Using method 10Norm  

C - Using method Maxrent  

Review of results: After processing, future rental income streams can be seen, showing income which would have been achieved if no rent restructuring legislation was in place (in fact an organisation's financial structure will have been built up on this basis). This can then be compared with the results from 10Norm. The difference is the immediate financial impact of Rent restructuring. The effect of this can be seen for each of the 10 years, as well as the overall effect. The adoption of the Maxrent method would lessen this financial effect.  

DECREASE properties have the major financial impact on an organisation.  

INCREASE properties may provide greater income compared with No Rent restructuring.  

It is of course important to have detailed information of these effects, in order to be able to set policies, and plan ahead for the eventual outcome of rent restructuring.  

Fine-tuning Maxrent: The Maxrent method sets rents at the highest level without contravening the legislation. Within the progam, for every increase, for every year, the % increase on each property can be seen. Subject to overall financial policy and rent policy, it may be required to do several "What If's" to find the best financial result, but at lower % increase levels. This can be done by reducing the parameters Maximum Increase/Maximum Decrease (default value £2.00).  

Restrict decreases to same as Tenth method: By reducing the max increase/decrease parameters it is possible to produce less income than would have been produced by the Tenth method. Using special parameters this can be set not to happen, thereby guaranteeing the same income level as would have been produced using the Tenth method.  

Auditing of Rent restructuring: No doubt there will be pressure on an association to be able to show what policies it has in place to manage effectively the whole business of rent restructuring. This program produces data for every property, showing base target rents, actual rents, rent increases, increase dates, target rents, method used, cap rents, valuations etc. FOR EACH MONTH OF EACH YEAR PROCESSED.  

The SalixRent program offers 5 different methods (6 including September 2004 review) for dealing with rent increases, the main method being method 1 (MaxRent), which offers a significant financial advantage compared to using other methods. (However the point of the exercise is to achieve precise control of the way in which the (structural) change to a different level of rental income is achieved, and to be able to plan for this change.) <br />eg small/medium sized North West association (over 3000 properties) : Maxrent produced over £2.5 million more than the Tenth/Normal method, over the 8 years to 2012.  

The Program  

Importing Data : The Rent Restructuring program (SalixRent) is based upon an input of property data from the host housing system, containing such information as : unit ref., scheme ref., rent and service charges now, rent increase date, tenancy type, valuation, number of beds. Input data should be in ASCII format.  

Processing : This data is processed as follows : If there are 8 years to run the first year processed is year 3, and the program calculates rent and service charges, for each financial period of the first year (year 3) , for each property, then for each subsequent year through to year 10, using the method selected, and RPI %'s as entered. It is also possible to set different increase %'s for Service Charges, as well as individual % increases for different schemes.  

Financial Budget and administration of increases:  

Settings and Parameters: The resulting data is visible in Excel, and financial information is easily available for upload into the main financial system, once a particular scenario has been accepted. Usually information will be at scheme level, for financial budgeting, but the information is also at individual property level.  

As each year is processed, a record (at property level) is added to the Rent Increases file - this file can be uploaded into the host Rent Increase module (increase dates and the actual rent increase).  

This approach ensures that the increases as set out in the financial budget, will actually be applied, right down to individual property level.  

Settings and Parameters:</strong> There are 4 classes of settings:  

1. Details of Financial periods in the current year
2. %'s for RPI + ½ - including number of years Rent Restructuring remaining
3. Parameters - discretion %, max. increase/decrease, national values etc
4. Average County Earnings

Importing: Hit the Import button and enter the name of the import file. The import routine :-  

1. Calculates the property's Base Target rent, and target rent as at the start year.
2. If Void, sets the increase date as the first day of the last financial period of the current year.

By choosing the Data button, full details of all the properties imported, can be seen : Rent now, Service charges, Target rent, beds, Let or Void, valuation, increase date, tenancy type.  

Processing:  

You can process ALL properties imported, OR a sub-set of them, based upon Schemes, beds, tenancy type, decreases only, increases only, failed decreases (to achieve target). To select a sub-set of schemes, choose the Select button, and in the twin pick list dialog, select all,and de-select some, or select individual schemes. This allows a great deal of flexibility in choosing which schemes to process.  

Whether ALL schemes, or a sub-set have been selected, you next choose the Process button (please note that if different % increases are required on Service Charges choose the Services button, and complete details accordingly).  

Note also that different selections can be consolidated together to produce one set of data for upload into budget and rent increase module : Choose the Global button - a check for any duplicate properties will be made, with a warning prompt if there are.  

Processing Methods: You will be presented with a radio button dialog, displaying 6 methods :-  

1. Maxrent (see later note)
2. Tenth (this will be a straight line decrease each year, subject to the £2 limit)
3. Normal (ie RPI +/- £2)
4. No RR (No Rent Restructuring - allows a % increase and a lump sum)
5. Tenth/Normal (if an increase : Normal, if decrease : Tenth)
6. Decreases/Break rule (September 2004 review)

You then get an option to process Straight Through, or one year at a time. As processing takes place a dialog appears displaying which year is being processed, and progress bars.  

On completion it is possible to see the results in many different displays :-  

Under Reports menu option:  

• Company Totals
• Scheme Monthly Totals
• Scheme Annual Totals
• Unit Monthly Totals
• Reached Target?

Choose the Increases button:  

• See details of rents and services each year, for each property, and whether Target rent is achieved

Choose the Reports button :  

• See details at the highest level, showing each year, each run, which method was used.

Changing methods mid-stream: It is also possible to change methods 'mid-stream' eg process 3 years under Maxrent, and the remaining years using, for example, 10Norm. You can also change parameters each year, including discretion factor, and RPIs.  

SPREADSHEET MODEL: The progam contains a link to the spreadsheet model, to see the effect of how income can be maximised, over the period of Rent Re-structuring. Also note that the program ensures that rents do not change by more than £2 a week in any year, above the normal increase for inflation.  

• Compare spreadsheet details with results produced by the program :
• Main tab shows 10 year profile - methods maxrent, tenth, normal
• Chart tab displays the same data in graph form.
• Workings shows % changes per annum
• Gaps shows details of various gaps.

DATA FILES: As each year is processed a data file is produced, named as follows ( based upon the name of the import file) :-  

Example : import file SAMPLE137.ASC results in SAMPLE137Y3M1.DBF  

• "Y" + year number (2004 is Year 3 of Rent Restructuring)
• "M" + Method number

Note that these files are .DBF files, and can be read with Excel 2000  

Rent Increases - Current Year through to Year 10  

As each year is processed, records are added to "incdec.dbf" - this file records each years rent increase, showing the increase date, and the type of increase/decrease, and the % increase. An ASCII file is easily produced from this file (filtered on current year), to provide the basis for an upload into your main system's Rent Increase module. This then ensures that the Rent policy set at Company level, and incorporated into Financial budgets, is actually applied on a week to week basis.  

Types of increase/decrease are categorised.  

FINANCIAL BUDGETS  

Use the appropriate .dbf file to get financial data, for uploading into your Financial software eg SAMPLE137Y3M1.DBF. By applying data filters data can be obtained at Company Scheme or Property level. Note also how these financial figures correspond with the results shown in Reports  

Reference Data  

Choosing menu option Produce Sample Reference Data, results in a data file of properties for all Counties, for bedsizes 0 to 6 (or just one of these), for a range of valuations. The actual rent will be a Maxrent i.e. the highest rent that can be charged, but you can reduce this by either a fixed amount, or by a percentage. That data can then be processed using different methods, parameters etc.  

Summary  

Rental Income  

Rental Income is at the heart of a housing association's financial health. Once an organisation has been set up, and has grown into an ongoing concern, its finances have to be managed like any other business. In today's climate, everything is about quality of service, and the efficiency with which this is delivered, and if it is focused in the right areas.  

Using this program allows the Finance Director to review the total repercussions of rent restructuring, within different ranges of RPIs, using differing discretion factors, even allowing variation of valuations (in the context of "What If"). This then leads to the inevitable question that if rental income streams have to reduce because of rent restructuring, in what way is that impact going to be managed in terms of expenditure.  

SalixRent software enables precision and control over future rental income streams, resulting in realistic budget data, where budgeted increases will actually be applied, subject of course to future RPI levels. It allows running many "What If" scenarios, even after budget data has been produced, to cope with changing RPIs, and allows more generous outcomes for tenants (in future years) where the financial situation permits.  

Furthermore it contributes greatly to providing audit trails of events, and enables scarce resources in Finance and other teams to be used in the most appropriate areas.  

Advantages  

The major advantages therefore of using this software are :  

1. It allows What If analysis to ensure that the best financial strategy is achieved.
2. That strategy can be uploaded into your financial system.
3. The details down to individual property level, can be uploaded into your Rent Increase module.
4. This ensures that policy and action are strongly tied together.
5. It saves time and confusion within the finance and rents function, and contributes greatly to their efficiency.
6. A clear policy on how rent restructuring is being administered and delivered can be seen.
7. It allows import of data for different companies.
8. Furthermore it allows processing of each company according to its own criteria (e.g. discretion factors, rate of decrease, free weeks) and then allows a consolidation of all companies into one financial plan/forecast.
9. It identifies which properties are not able to achieve target rent (because their rents are either too high, or too low)... AND allows the calculation of the impact of adopting the Government directive to "break the rule" in order to achieve target rent.
10. It enables dealing with supporting people companies, and mainstream companies, within the same financial profile/monitoring