Midland Heart’s DLO to expand by 8,000 homes

The 32,000-home housing association, with a head office in Birmingham but homes in 54 council areas, launched its 3,500-home Property Care DLO in April last year. The service covered the Handsworth and Lozells areas of Birmingham and its staff included employees transferred from Lovell – the former contractor for those areas.

The surplus achieved in the first year of operation of the 32-employee service, persuaded the landlord to look at expanding its size and reach – specifically at taking over an 8,000-home contract, currently held by Mears, for its properties in Birmingham that expires at the end of March 2014.

The business case for expanding the service to cover 11,500 homes was approved by the landlord’s board last month and the move means all day-to-day repairs within a seven-mile radius of central Birmingham will be undertaken by the in-house maintenance team. The £7 million contract will take the overall value of contracts managed by Property Care up to £10 million.

The move is part of a growing trend in the sector – over the past 12 to 18 months, between 30 and 40 housing providers across the UK have opted to manage at least some of their repairs and maintenance work themselves, according to consultancy the Housing Quality Network, which runs an accreditation service for DLOs.

Carl Larter, director of assets at Midland Heart, took responsibility for the landlord’s repairs and maintenance service last year following a structural change. He said he had initial reservations about DLOs because of a historic reputation for underperformance, but that Property Care ‘proved the case in terms of the figures’.

‘I clearly had to be convinced that this was the right approach,’ he stated.

‘Every contract I have worked on as a development director has been done externally. But as part of my thinking I went to visit a number of existing DLOs. There’s some great inspiration. You realise that, actually, some of these work – and they work really well.’

One of the advantages of the change is that landlords which employ operatives through a DLO avoid paying VAT on labour costs. Midland Heart estimates that, along with efficiency savings, this will save £4 million – based on the 11,500-home repairs contract – over the next 10 years.The DLO’s tradespeople work to an incentive system, with earnings increasing depending on productivity and if there are a low number of call-backs from residents who have had repair work.