Guinness Partnership mulls cost-sharing model

The 60,000-home landlord has taken legal advice on whether it can establish a cost-sharing model, which would bring other landlords into a shared company, for its existing City Response subsidiary, which has a
£35 million turnover.

Under new legislation, not-for-profit organisations sharing services are entitled to an exemption for VAT charges. The change, introduced in the Finance Act last year, could save millions of pounds across the sector on services such as repairs and maintenance.

Simon Dow, chief executive of Guinness Partnership, said any new company would have to produce enough savings to allow it to offset the legal and administrative set-up costs.

‘The clear message is that they can be made to work although they need to be of a decent size,’ he said. ‘It would be a big boost in terms of providing better value than other contractors.’

Mr Dow added that City Response has already provided services for a number of other landlords in the north west, which could join forces with it in a cost-sharing vehicle.

Another subsidiary, Guinness Hermitage, which operates in the south of England, is also exploring the option of establishing a cost-sharing vehicle for maintenance operations with Westward Housing Group.

Last month, two south east housing associations - Watford Community Housing Trust and Thrive Homes - set up a joint apprenticeship scheme to take advantage of the VAT exemption, becoming some of the first social landlords to do so.

However, no major housing associations have so far established similar models. Orbit Group is understood to be considering using shared services. Its executive director of services, Afzal Islam, said he was looking to develop a model involving up to 30 housing associations, potentially generating tens of millions of pounds of savings.