Arms Length Management Organisation
Encyclopedia
Arms Length Management Organisations or arm's length management organisations (ALMOs) are UK not-for-profit companies
set up by a local authorities primarily to manage and improve all or part of their housing stock. Ownership of the housing stock itself normally stays with the local authority. , 70 ALMOs were managing over half of all UK council housing, consisting of more than a million properties.
, Councils can transfer management of their housing to an ALMO without holding a ballot, although many councils undertake a ballot in any case.
Through the ALMO Programme, Communities and Local Government (CLG) offer additional resources towards the cost of achieving the Decent Homes Standard
to councils who set up ALMOs that are assessed as 2* (good) or 3* (excellent) on inspection by the Housing Inspectorate (which is part of the Audit Commission
).
A number of ALMOs are considering whether to proceed with the construction of new housing which would be owned and managed by the ALMO. The ability of ALMOs to undertake new build projects is considered by the Government to be a way for ALMOs to develop and be financially viable post 2010, i.e. after the Decent Homes target date.
Critics of the ALMO system, such as Defend Council Housing (DCH), have characterised ALMOs as a stepping stone to stock transfer, in areas where this would have previously been politically unacceptable.
for much of the country's housing stock.
In 2009 the Government diverted money from ALMOs to building new homes. Councils that had promoted ALMOs in order to access the extra funding, and the tenants who had got involved, felt betrayed at the decision.
, HM Revenue & Customs have published guidance which states that provided certain conditions are met they will view activities between the ALMO and the local authority as a non-trading activity and so any profit arising will not be taxable.
Company
A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...
set up by a local authorities primarily to manage and improve all or part of their housing stock. Ownership of the housing stock itself normally stays with the local authority. , 70 ALMOs were managing over half of all UK council housing, consisting of more than a million properties.
Ownership
ALMOs are owned by local authorities and operate under the terms of a management agreement between the authority and the ALMO. An ALMO is managed by an (often unpaid) board of directors which includes tenants, local authority nominees, and independent members. At least a third of an ALMO board is normally made up of tenants.Purpose
Establishment of an ALMO separates the day to day housing management role of the landlord from the wider strategic housing role of the local authority. However, the local authority normally retains ownership of the housing and tenants remain secure tenants of the local authority. Ministers do not give consent to the establishment of a new ALMO without clear evidence that the council has consulted its tenants and leaseholders and can demonstrate a balance of support from them for the ALMO proposal. Unlike a stock transfer to a Housing AssociationHousing association
Housing associations in the United Kingdom are independent not-for-profit bodies that provide low-cost "social housing" for people in housing need. Any trading surplus is used to maintain existing homes and to help finance new ones...
, Councils can transfer management of their housing to an ALMO without holding a ballot, although many councils undertake a ballot in any case.
Through the ALMO Programme, Communities and Local Government (CLG) offer additional resources towards the cost of achieving the Decent Homes Standard
Decent Homes Standard
The Decent Homes Standard is a technical standard for public housing introduced by the United Kingdom government. It underpinned the Decent Homes Programme brought in by the Blair-Brown government which aimed to provide a minimum standard of housing conditions for all those who are housed in the...
to councils who set up ALMOs that are assessed as 2* (good) or 3* (excellent) on inspection by the Housing Inspectorate (which is part of the Audit Commission
Audit Commission
The Audit Commission is a public corporation in the United Kingdom.The Commission’s primary objective is to improve economy, efficiency and effectiveness in local government, housing and the health service, directly through the audit and inspection process and also through value for money...
).
A number of ALMOs are considering whether to proceed with the construction of new housing which would be owned and managed by the ALMO. The ability of ALMOs to undertake new build projects is considered by the Government to be a way for ALMOs to develop and be financially viable post 2010, i.e. after the Decent Homes target date.
Criticisms
Since ALMOs are non-profit organisations which can receive extra funding from the government, dependent on performance, it can be argued that cost cuts are inevitable. Some say that as a result, the conditions and pay for their staff (except the management) is much lower than in the private sector, leading to a high level of staff turnover.Critics of the ALMO system, such as Defend Council Housing (DCH), have characterised ALMOs as a stepping stone to stock transfer, in areas where this would have previously been politically unacceptable.
Level of success
The National Federation of ALMOs stated that as at March 2008, 77% of tenants reported satisfaction with ALMO housing management. They also stated that 90% of ALMOs which have been inspected achieved a 2 or 3 star rating, therefore being eligible for extra funding. They also report significant efficiency savings and an enhanced timetable for reaching the Decent Homes StandardDecent Homes Standard
The Decent Homes Standard is a technical standard for public housing introduced by the United Kingdom government. It underpinned the Decent Homes Programme brought in by the Blair-Brown government which aimed to provide a minimum standard of housing conditions for all those who are housed in the...
for much of the country's housing stock.
In 2009 the Government diverted money from ALMOs to building new homes. Councils that had promoted ALMOs in order to access the extra funding, and the tenants who had got involved, felt betrayed at the decision.
Tax status
An ALMO cannot benefit from the same tax exemptions as a local authority. As a result, after discussions with KPMGKPMG
KPMG is one of the largest professional services networks in the world and one of the Big Four auditors, along with Deloitte, Ernst & Young and PwC. Its global headquarters is located in Amstelveen, Netherlands....
, HM Revenue & Customs have published guidance which states that provided certain conditions are met they will view activities between the ALMO and the local authority as a non-trading activity and so any profit arising will not be taxable.