Page 55 - Housing Solutions Annual Report

2.13 Housing Properties
Housing properties are properties held for the provision of social housing or to otherwise provide social
benefit. Housing properties are principally properties available for rent and are stated at existing use
valuation for social housing (EUV-SH) for general needs and shared ownership.
Completed housing and shared ownership properties are stated at fair value at the date of valuation,
and accumulated impairment losses. Revaluations are made with sufficient regularity to ensure that the
carrying amount does not materially differ from the fair value of the properties as at the year end.
Housing properties under construction are stated at cost less related social housing and other capital
grants. Cost includes the cost of acquiring land and buildings, development costs, interest charges
incurred during the development period and expenditure incurred in respect of improvements.

Works to existing properties, which replace a component that has been treated separately for
depreciation purposes, along with those works that result in an increase in net rental income over
the lives of the properties, thereby enhancing the economic benefits of the assets, are capitalised as
improvements.
Depreciation of housing properties
The Group separately identifies the major components, which comprise its housing properties, and
charges depreciation, so as to write-down the cost of each component to its estimated residual value,
on a straight-line basis, over its estimated useful economic life.
The Group depreciates the major components of its housing properties at the following
annual rates:
% pa Number of years
Structure 1.0 100
Roofs 1.3 75
Bathrooms 3.3 30
Kitchens 5.0 20
Windows and doors 3.3 30
Heating source 6.7 15
Heating distribution 3.3 30
Rewiring 3.3 30
Lifts 4.0 25

Impairment
Annually, housing properties are assessed for impairment indicators. Where indicators are identified
an assessment for impairment is undertaken comparing the asset’s carrying amount to its recoverable
amount. Where the carrying amount of an asset is deemed to exceed its recoverable amount, the asset
is written down to its recoverable amount. This is likely to be the value in use of the asset based on its
service potential. The resulting impairment loss is recognised as expenditure in income and expenditure.
Where an asset is currently deemed not to be providing service potential to the Association, its
recoverable amount is its fair value less costs to sell.
Completed properties are valued annually by an independent valuer.

Government grants
Government grants include grants receivable from Homes England, local authorities, and other
government organisations. A grant which does not impose specified future performance conditions is
recognised as revenue when the grant proceeds are received or receivable.
A grant that imposes specified future performance-related conditions on the Association is recognised
only when these conditions are met. A grant received before the revenue recognition criteria are
satisfied is recognised as a liability. For Social Housing Grant this means that the grant is recognised as
revenue on completion of the property.

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