RSH downgrades two housing associations in latest regulatory judgements

Habinteg and South Liverpool Homes have been downgraded for governance from G1 to G2 following in-depth assessments.
A brown gavel.

The Regulator of Social Housing has downgraded two housing associations for governance in its latest round of regulatory judgements.

Releasing its latest round of nine regulatory judgements, the regulator has downgraded 3,400-home landlord Habinteg and 3,800-home landlord South Liverpool Homes following in-depth assessments (IDAs).

Both housing associations remain compliant after the RSH lowered Habinteg and SLH’s governance gradings from G1 to G2 while confirming their existing V1 grades for viability.

The regulator said after completing IDAs, it has concluded that both housing associations need to “improve some aspects of [their] governance arrangements to support continued compliance”.

The RSH commented that Habinteg needs to “strengthen elements of its risk management and internal controls assurance framework, its stress testing, and its delivery of value for money”.

Concerns raised by the RSH about Habinteg include a lack of adequate assurance on the management of health and safety risks, unaddressed data weaknesses, and “under-developed” recovery planning.

The regulator added that Habinteg’s delivery of value for money requires improvement as it “cannot evidence that it has used its financial capacity effectively over a number of years to deliver its strategic objectives” and it has under-performed against its strategic targets in some important areas, including development and customer satisfaction.

Regarding SLH, the regulator said the landlord “needs to strengthen board oversight of the business and improve its risk management and internal controls assurance framework to ensure it is managing its affairs with sufficient effectiveness and diligence”.

It added that “control weaknesses have presented in SLH’s approach to development, rent setting and property allocations” and that the housing association “needs to review its strategic approach to delivering value for money to make more effective use of its financial resources”.

The RSH confirmed that SLH is engaging with it to address the areas of weakness identified through the IDA, having commissioned a review of its governance. The landlord is also developing a new strategic plan.

Habinteg’s board chair Manny Lewis and its CEO Nick Apetroaie, commented on the RSH’s judgement: “Habinteg accepts today’s regulatory judgement that we continue to meet the governance standard and that there are areas we need to improve on. The feedback we have received recognised the changes that are already underway and pointed us towards where we need to do more.

“We welcome the regulator’s judgement that Habinteg has the financial capacity to address these challenges, having retained our top grading for viability. Our long-term business plan is supported by strong liquidity and low gearing. We will use our financial strength as a platform to accelerate change and deliver the best possible services to Habinteg tenants.

“We will now work with the regulator, the board, our staff and customers in order to further strengthen our governance arrangements.

“The need for affordable, safe and accessible homes has never been greater. We will continue to provide accessible homes and promote independence for disabled people and their families, which will always remain at the very heart of our mission.”

SLH’s chief executive Julie Fadden and the chair of SLH’s board David Jepson said: “We always aim to achieve the highest standards in everything we do and whilst we are very disappointed with the revised grade on governance, we remain a compliant organisation with the highest grade for financial viability.

“We will work positively with the regulator to recover our G1 rating as soon as possible, helping us to continually improve services for our tenants.”

Elsewhere in this latest round of judgements, the RSH confirmed Rochdale Boroughwide Housing (RBH)’s G1/V2 grading but changed the basis for its viability grade following an IDA.

The regulator has expressed concern about a large-scale regeneration project being delivered by the 12,700-home mutual landlord, commenting: “The investment expenditure and additional debt required for the project are significant, weakening RBH’s financial profile in the medium term.

“During this period, loan covenant compliance is put under pressure. These exposures give rise to material risks that RBH needs to continue to manage and which reduce its capacity to respond to adverse events.”

However, the RBH added that it “has assurance that RBH’s governance arrangements enable it to adequately control the organisation and to continue meeting its objectives”.

Gareth Swarbrick, chief executive of RBH, said: “The regulator has recognised the investment we are making to improve the quality and the mix of homes for current and future generations, including our regeneration plans in Rochdale town centre.

“The judgement acknowledges that delivering the quality of homes that town centre residents deserve, especially in our high-rise blocks, requires a significant level of investment, and that until this element of the regeneration is complete, some financial pressures will remain.”

Six other social landlords have had their G1/V1 grades maintained following IDAs. The six landlords to receive G1/V1 grades, the highest possible grades from the RSH, were Sovereign, Home Group, Together Housing, Curo, Plymouth Community Homes and Community Gateway.

Image credit: Pixabay.

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