HCA plans regulatory fees at around £5 per social unit

The news came alongside the view that there is ‘no sense of any great mood to change the way in which [the Homes and Community Agency] regulates’, or to amend its statutory objectives.

Speaking at the Social Housing Annual Conference yesterday (10 November 2016), Julian Ashby, chair of the regulation committee at the HCA, said he could not yet comment on the specifics about the future of the regulator, which has been subject to a government review. But he said ‘we still think there’s room for improvement and there are further changes we want to make.’

Mr Ashby said the regulator has ‘made no secret of our wish to charge fees for our routine regulation and registration’, which was raised in its discussion paper in February 2014 and underpinned by the position of the government’s finances and downward pressure on administration costs.

He said regulatory resources were cut by 50 per cent when the Tenant Services Authority was abolished and transferred into the HCA, and that there is a further 40 per cent savings target facing the organisation and Department for Communities and Local Government at a time when the social housing sector is getting riskier.

While the in-depth assessment (IDA) approach has proven effective, it is also resource-intensive, he said, adding that fees are an ‘essential ingredient in the continuation of effective regulation’.

As such, Mr Ashby said registered providers are likely to be charged about £5 for each social unit they own, ‘so at least you know what to budget for’.

A central benefit of regulation - particularly in spotting emerging problem cases and dealing with those that would ‘otherwise prove terminal’ - is lender confidence, which is reflected in pricing and availability of funds, he said.

‘We reckon that the costs of regulation is about 2.5 basis points in relation to the total of the sector’s debt,’ said Mr Ashby.

‘We consider that the benefits you get in terms of lower funding costs and the availability of funds is far in excess of that.’

Mr Ashby said fees are subject to statutory consultation and while a start-date is ‘not for us to determine’, the regulator stands ‘ready to go when we get the green light’.

There have been suggestions of a commencement date of April 2017, but Mr Ashby said it could be delayed to October 2017 or even April 2018.

But he said he is confident it will come, and urged the conference audience to support it.

Asked how the HCA would show that it is offering value for money itself, Mr Ashby said he expects the current culture of openness to carry on, and that a budget would be set out so the sector can see the different components of expenditure, and the areas that they will not be asking the sector to contribute to - such as intervention work, which it would be more ‘appropriate’ to fund by grant in aid.

He pointed out that they will continue to work to ensure that the regulatory framework remains fit for purpose, with efforts to anticipate what the sector will look like two or three years from now, rather than trying to ‘play catch up’.

While there are fewer examples now of plans to create associations of over 100,000 homes via merger, he said they still expect this to be a growing group and are thinking about how they could be regulated.

Mr Ashby said he finds it odd that people use the phrase ‘too big to fail’, adding that ‘no one is too big to fail’ though they may be too large to be ‘swallowed whole’.

That is where there would be plans for break ups and details on housing administration.

The fees plan was criticised by the National Housing Federation (NHF) today (11 November 2016).

John Bryant, policy officer at the NHF, said: ‘The housing association sector operates on a non-profit basis; it should not be subject to the same regulation as profit-making sectors like finance or utilities. The introduction of fees will simply take away from housing associations’ capacity to build and provide other services of public benefit.

‘Furthermore, commencement in 2017 should be out of the question – there will not be enough time to consult or for organisation to prepare; budgets for the next financial year are already in train.

‘We welcome the HCA’s commitment to consulting on this and, after gathering the views of our members, the Federation will participate fully in this process.’

The HCA has also concluded plans for registration criteria and is ready with its notifications regime, Mr Ashby told the conference.

It means the regulator is ready to act on the elements included in the Housing and Planning Act as part of deregulatory measures aimed at loosening regulatory controls and moving the housing association sector back off the public sector balance sheet.

However, it remains unclear as to when the measures will come into force.

Mr Ashby said the HCA hopes to be in a position to consult on its value for money and consumer standards early in the new year.