ALMOs forecast £700m building materials spending bonanza in 2009

A new report by construction industry specialists MTW Research forecasts that Arms Length Management Organisations (ALMOs) will spend more than £700m on building products and materials this year. ALMOs face a substantial backlog of repairs to dwelling stock which must be completed before 2010 if the Decent Homes initiative target is to be achieved. The resultant increase in housing renovation and repair activity likely within the next couple of years provides a real opportunity for building product suppliers.

MTW Research's report Social Housing ALMOs Market Rank And Profile Report 2009 identifies the ALMOs market as a key growth area for building product suppliers, both within the refurbishment and new-build social housing sectors. It suggests that ALMOs are likely to adopt a similar role to housing associations in the medium term, and that their activities within the UK housing market will grow.

Arms Length Management Organisations are not-for-profit companies set up by UK local authorities to maintain and improve public housing stock. Ownership of the housing itself normally stays with the local authority. As of July 2008 over half of all UK council housing – more than a million properties – were managed by just 70 ALMOs. ALMOs themselves are managed by an (often unpaid) board of directors made up of tenants, local authority nominees and independent members. In most cases tenants make up a third of board members.

The report states that while increased competition is likely to put pressure on pricing, the higher standards required on social housing projects ensures that quality will remain a significant factor in the decision making process. Contracts are typically awarded on a procurement criteria split of 50 per cent cost, 50 per cent quality. MTW Research also notes that assessment processes generally within the sector are becoming more rigorous.

Ian Chapman, Head of Specification Content at NBS says, "I'm obviously pleased for building product and service suppliers generally, but absolutely delighted at the implications for those who subscribe to NBS Plus. This is a fast-growing market with a commitment to quality and innovation. Our penetration among local authorities and housing associations is already high. That puts our manufacturer clients in pole position when it comes to influencing specifiers."

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