Arms Length Management Organisation Totally Explained

Everything about Arms Length Management Organisation totally explained

Arms 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. As at March 2008, 67 ALMOs were managing over half of all UK council housing, comprising of just under 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 don't 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 Association, Councils can transfer 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 target 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).

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 Standard for much of the country's housing stock.

Tax Status

An ALMO can not benefit from the same tax exemptions as a local authority. As a result, after discussions with KPMG, HM Revenue & Customs have published guidance which states that provided certain conditions are met that'll view activities between the ALMO and the local authority as a non-trading activity and so any profit arising won't be taxable.

List of ALMOs

A list of ALMOs can be found on the website for the National Federation of ALMOs, together with copies of inspection reports and the number of stars achieved upon inspection.

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