Value for Money metrics – Technical note guidance
Source: gov.uk (2025-06-17)

This note includes the value for money metrics that providers must report on as part of their Annual Accounts reporting and also explains how to calculate the metrics.

June 2025

Contents

1. Introduction (#introduction)

2. Reporting expectations (#expectations)

3. Value for Money metrics (#vfmmetrics)

Metric 1 – Reinvestment % (#metric1) Metric 2 – New supply delivered % (#metric2) Metric 3 – Gearing % (#metric3) Metric 4 – EBITDA MRI Interest Cover % (#metric4) Metric 5 – Headline social housing cost per unit (#metric5) Metric 6 – Operating margin % (#metric6) Metric 7 – Return on capital employed % (#metric7)

Annex A: Reference lines to FVA 2024 (#annexa)

Annex B: Guidance note on the Value for Money metrics reporting for small providers (#annexb)

1 - Introduction

The Value for Money Standard (https://www.gov.uk/government/publications/value-for-money-standard) requires all private registered providers to annually report on their performance against a suite of measures defined by the regulator along with their own value for money (VFM) measures and targets, with which to measure economy, efficiency, and effectiveness.

This technical note document sets out the details of the range of VFM metrics and how these metrics are defined including the calculation of each measure drawn from the Electronic Annual Accounts (FVA) 2025 footnote 1 (#ftn1). The latest submission date for the FVA return is six months after a provider’s year end. For most of the sector this will be 30th September 2025.

A key change set out in this Note, requires providers to recognise capitalised major repairs grant received when calculating the EBITDA MRI Interest Cover metric. This is to ensure the calculation reflects both the cost of undertaking capitalised major repairs and any grant funding that is associated with meeting those costs. The recognition of grant income relating to capitalised major repairs is highlighted in Annex A and Annex B.

One of the key objectives in defining a set of standard VFM metrics was to support transparency and allow providers to analyse their performance alongside that of their peers on a comparable basis. To support this objective, we publish providers’ performance on the range of VFM metrics to help organisations benchmark their performance more easily and allow interested stakeholders to understand how providers perform when compared to the rest of sector.

The benchmarking tool offers flexibility when comparing organisations with similar characteristics based on providers’ own knowledge of their peers, in particular, the location of the homes that they own and manage. In the latest update to the Tool, we have included additional statistically significant factors which influence providers’ VFM performance (https://www.gov.uk/government/publications/summary-regression-report-2024) such as stock height and the percentage of non-Social Housing Lettings (SHL) income.

The VFM benchmarking tool can be found on the RSH website. (https://www.gov.uk/government/publications/value-for-money-2024-benchmarking-tool)

Small registered providers footnote 2 (#ftn2), should refer to Annex B which sets out how the VFM metrics are calculated, using designated lines from provider’s annual accounts (Financial statements).

Back to top (#top)

2 - Reporting expectations

The VFM metrics have been selected on the basis that they work for the majority of the sector. However, we acknowledge that any metric, however calculated, may be more appropriate for some providers than others, and there may be a minority of cases where reporting on a particular basis is difficult, or inappropriate, given the unusual nature of a given organisation’s business or differences in accounting practice.

We cannot change the required VFM metrics for individual providers because this would undermine comparability of results across the sector. However, where a provider’s reported data is affected by a factor particular to that organisation, they should clarify this in the commentary accompanying the publication of their data.

It is essential that the metrics are calculated on the precise basis required. Inconsistent or inaccurate reporting undermines transparency to tenants and other stakeholders and could affect the reputation of an organisation.

We will continue to seek assurance that providers make best use of their resources and have on-going plans in place to make improvements to the value for money in their organisations. As a part of our assurance work, relating to the outcomes of the VFM Standard, we will also use the VFM metrics to support our understanding of providers overall strategic delivery performance. We may follow up with a provider where there are gaps or conflicting evidence and will come to a view regarding the level of assurance we have about the provider in the delivery of the outcomes of the VFM Standard.

Further detail of the regulator’s approach to Value for Money regulation is set out in Regulating the Standards (https://www.gov.uk/government/publications/regulating-the-standards).

Back to top (#top)

3 - The Value for Money metrics

Metric 1 – Reinvestment %

The Reinvestment metric looks at the investment in properties (Existing stock and New supply) as a percentage of the value of total properties held footnote 3 (#ftn3).

Metric 2 – New supply delivered %

The New supply metric sets out the number of new social housing and non-social housing units that have been newly constructed (acquired or developed) in the year as a proportion of total social housing units and non-social housing units owned at period end.

Registered providers will report on two New supply delivered ratios:

A. New supply delivered (Social housing units)

B. New supply delivered (Non-social housing units).

Measurement of VFM cost chain – effectiveness

Measurement of VFM cost chain – effectiveness

Metric 3 – Gearing %

The gearing metric assesses how much of the adjusted assets are made up of debt and the degree of dependence on debt finance. It is often a key indicator of a registered provider’s appetite for growth.

Note:

Registered providers can be restricted by lenders’ covenants and therefore may not have the ability in which to increase the loan portfolio despite showing a relatively average gearing result.

Metric 4 – Earnings Before Interest, Tax, Depreciation, Amortisation, Major Repairs Included (EBITDA MRI) Interest Cover %

The EBITDA MRI Interest Cover measure is a key indicator for liquidity and investment capacity. It seeks to measure the level of surplus that a registered provider generates compared to interest payable; the measure avoids any distortions stemming from the depreciation charge.

Note: Where applicable, capitalised major repairs grant received should be recognised when calculating the EBITDA MRI Interest Cover metric.

Metric 5 – Headline social housing cost per unit

The Headline social housing cost per unit metric assesses the headline social housing cost per unit as defined by the regulator. It is a proxy cash measure of a social housing cost per unit. This means it excludes non-cash items such as depreciation, amortisation and write downs.

Note:

Grant related to capitalised major repairs expenditure must be excluded.

Metric 6 – Operating margin %

The Operating margin demonstrates the profitability of operating assets before exceptional expenses are taken into account. Increasing margins are one way to improve the financial efficiency of a business. In assessing this ratio, it is important that consideration is given to registered providers’ purpose and objectives (including their social objectives). Further consideration should also be given to specialist providers who tend to have lower margins than average.

Registered providers will report on two Operating margin ratios:

A. Operating margin (social housing lettings only)

B. Operating margin (overall).

Measurement of VFM cost chain – efficiency

Measurement of VFM cost chain – efficiency

Metric 7 – Return on capital employed %

The Return on capital employed (ROCE) compares the operating surplus to total assets less current liabilities and is a common measure in the commercial sector to assess the efficient investment of capital resources. The ROCE metric supports registered providers with a wide range of capital investment programmes.

Back to top (#top)

Annex A: Reference lines to FVA 2025

Metric: 1. Reinvestment %

Metric: 2. New supply delivered % (social housing and non-social housing)

Metric: 3. Gearing %

Metric: 4. EBITDA MRI Interest Cover %

Metric: 5. Headline social housing cost per unit

Metric: 6. Operating margin %

Metric: 7. Return on capital employed %

Back to top (#top)

Annex B: Guidance note on the Value for Money metrics reporting for small providers

(Registered providers with fewer than 1,000 units)

This part of the guidance should be used by registered providers with a stock holding of fewer than 1,000 units, (those providers that are not required to submit an electronic copy of the annual accounts, to the regulator).

This guidance note is intended to help small providers calculate the VFM metrics from their Annual Accounts (Financial statements).

The regulator is aware that not all the VFM metrics will be applicable to every small provider given the diversity of business models across the sector. In the spirit of transparency and accountability, where the value of a VFM metric is calculated as zero, this should be reported as so.

A key change set out in this Note, requires providers to recognise capitalised major repairs grant received when calculating the EBITDA MRI Interest Cover metric which is highlighted in orange below.

The Value for Money Standard requires providers to report on the VFM metrics, including the two sub-metrics, within their annual accounts (Financial statements). For reporting purposes, providers should discuss and agree the format of their annual accounts with their auditor or their accountant.

Key

Note:

Units in Management may have different names including Accommodation in Management

Where the location of data differs between the Charity SORP and the Housing SORP, this is shown like this: SOCI / [SOFA].

Back to top (#top)

Value for Money metrics calculations

Metric 1: Reinvestment %

Metric 2a: New supply (Social housing units) %

Metric 2b: New supply (Non-social housing units) %

Metric 3: Gearing %

The metric result for the gearing ratio may be negative where for example a registered provider has no loan agreements in place.

Metric 4: EBITDA MRI Interest Cover %

Metric 5: Headline social housing cost £

Metric 6a: Operating margin (Social housing lettings) %

Metric 6b: Operating margin (Overall) %

Metric 7: Return on capital employed %

Back to top (#top)

1: Providers should also refer to the FVA guidance note which is available on our data collection website NROSH+ (https://nroshplus.regulatorofsocialhousing.org.uk). return ⬆ (#note1)

2: Providers who own and or manage fewer than 1,000 low-cost rental accommodation and low-cost home ownership units combined (for providers in a group, units are measured at a registered group level). Such providers are termed ‘small providers’ for the purposes of the requirements in this document. return ⬆ (#note2)

3: This metric is not based on cashflow data given the limitations on data collected as part of the FVA return. return ⬆ (#note3)

4: Providers should use the measure agreed in their Statement of Financial Position / Balance Sheet. The figure should be either historic cost or valuation. return ⬆ (#note4)

5: Providers should use the measure agreed in their Statement of Financial Position / Balance Sheet. The figure should be either historic cost or valuation. return ⬆ (#note5)

6: Leasehold units, which for example include Right to Buy and fully stair-cased shared ownership units where the provider retains the freehold, are excluded from the denominator of this metric. return ⬆ (#note6)

7: Gain/(loss) on disposal of fixed assets must be excluded. return ⬆ (#note7)