The Board regularly reviews the geographic distribution and use of its stock and agrees a rational footprint that is aligned with the organisation's strategic direction.  This consists of set of core local authorities in which it wishes to invest for the long term, where services can be delivered efficiently, effectively, and in an environmentally friendly way, enabling the organisation to maintain a strong relationship with each local authority in which it operates.  Limits on the location of future development schemes are in place to support this strategy.

In its pursuit of greater efficiency and improved customer satisfaction, the organisation has considered pursuing a strategy of stock rationalisation to maximise the proportion of its stock that is in this core area.  This may involve:

• Putting together groups of properties in peripheral locations for transfer to other providers who can manage and maintain them more efficiently
• Bidding for such portfolios from other providers that wish to withdraw from the organisation's core area to support growth
• Exchanging units with other RPs (including, potentially, for-profit providers).  

The process has some or all of the following objectives:

• Reducing the organisation’s involvement in areas that are distant from its base and where it has a low concentration of stock
• Increasing the concentration of homes in the organisation’s core areas, where higher quality and more responsive services can be delivered to residents at a lower unit cost 
• Generating economies of scale through a step change in the size of the portfolio for smaller RPs.

Once the organisation has decided to dispose of a particular set of properties, it may either enter into an open process of inviting tenders to purchase the portfolio or seek to identify the organisation that would be most suitable to own the homes and enter into a negotiation with that entity for the transfer.  The stock to be disposed may be broken down into a number of lots, as agreed by the Board, with each lot containing a mix of stock of different qualities.  Trades are typically made at a premium to existing use value (EUV-SH).

Any bid to purchase a portfolio from another provider is based on prudent assumptions on future management and maintenance costs, including the need for decarbonisation.  A detailed appraisal of the costs and benefits of these transactions, taking into account independent advice on the value of the homes proposed for sale or purchase, is undertaken prior to final approval by the Board.  Progress with stock rationalisation programmes is also monitored by the Board.  

Where stock rationalisation exercises are being considered, an effective process is in place to gather the views of tenants on a possible change of landlord and to ensure that these are taken into account in the decision-making process.  An appropriate plan for managing the HR aspects of stock rationalisation has also been established, including providing regular information with staff who may be affected and providing incentives to retain staff during the run-up to the disposal.