Learning from RSH downgrades must be followed by meeting new requirements

Landlords must learn from regulatory downgrades and adapt to the new requirements of the Social Housing White Paper, Phil Morgan writes.
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I’ve just published the eighth edition of Learning from Regulatory Downgrades, which captures learning from governance downgrades by the Regulator of Social Housing.

Despite COVID-19, this year has been one of continued active regulation, including lease based/exempt providers, which have dominated much of the Regulator’s enforcement work. The Regulator has now taken the strongest action available to it by removing Green Park as a registered provider. This follows the decision of Birmingham City Council to remove its exempt status, and an earlier regulatory notice in 2019.

This may have further significance given that other landlords have also had their exempt status questioned by the Regulator. Another provider, Prospect Housing, which has had two Governance downgrades this year, has signaled that it will cease trading in the summer.

In total, action was taken or being considered this year against 12 lease-based/exempt providers including three downgrades, five regulatory notices (all against providers with existing downgrades/notices in place) and four gradings under review. One provider, Larch HA, entered (and exited) the Regulators Insolvency procedure. Others are already either downgraded or with notices in place. I expect more, not less, regulatory action in the forthcoming year in this area.

Both for these providers and for others featured in this report, there remain consistent themes around the robustness or otherwise of internal controls, risk management and stress testing. Likewise health and safety, the one area of consumer regulation consistently included in previous reports, continues to feature with failures this year including solid fuel appliances checks, electrical checks for communal areas, overdue asbestos surveys, electrical, gas and asbestos checks. One new health and safety area not previously covered is safeguarding, where there had been weaknesses in controls over third party agents.

Data featured with One Housing, which highlights the importance of quality data to support decision making. There were also issues around the limited range of targets with Southern Housing, and the failure of their audit committee to have sufficient oversight of the implementation of their external and internal audit recommendations. Limited targets and governance concerns also featured in the last downgrade of the year at WATMOS where the (tenant-led) board will need to operate more strategically, and consider its capacity and skills mix on its board.

There were two instances where landlords (Housing 21 and Wandle HA) had overcharged rent to tenants (£3 million and £320,000 respectively), although this is being repaid to tenants.

In all of this, there remains hope. For Housing responded well to whistleblowing, and Incommunities, Golding HA, Shepherds Bush, South Kesteven DC and Prospect Housing all self-referred to the Regulator. Hightown HA returned to G1 within nine months. One Housing has been open about the challenges that face it (and others too). I worked with one of these landlords, and have worked with another previously, and expect them and others to return to G1 status in the future. I recall a recent conversation with a downgraded landlord where they praised the Regulator’s approach. Certainly, recognising, accepting and working to address the issues behind the downgrade are essential to not just resolving those issues, but also achieving an upgrade.

However, change is on the way. The Social Housing White Paper has set out ambitions for consumer regulation covering all social landlords, although much will require legislation. The Regulator has quite rightly tasked landlords with preparing to meet those ambitions in advance. All landlords will be wanting to take steps to consider tenant satisfaction measures, appointing people with responsibility for consumer compliance and fire safety, and seek compliance with the Complaint Handling Code. There is learning from regulatory downgrades, but also new requirements to anticipate to avoid joining future editions.

Phil Morgan is a social housing consultant. He served as executive director of tenants services at the Regulator of Social Housing between 2008 and 2010.

This article is republished with permission from Phil’s blog. To read the latest edition of Learning from Regulatory Downgrades please visit https://philmorganblog.com/2021/04/12/learning-from-regulatory-downgrades-2020-21/.

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