For-profit found non-compliant with homes at risk after parent company becomes insolvent

It added: “The administrators, whose general duties include acting in the best interest of the creditors of the insolvent companies, support the process.

“The regulator currently lacks assurance that Rosewood can remain viable, and that social housing and tenants’ homes may not be lost to the sector should a sale not transpire, or values not be achieved.

“Furthermore, Rosewood is currently only able to continue to operate with the support of the administrators and the regulator has limited assurance that this support will continue.

“It is a serious failing that there could be a potential loss of social housing assets, a loss of the benefits of being within a regulated sector and/or tenants losing their home, due to the insolvency of unregistered elements of the group.”

According to the 2023 SDR, Rosewood held nine affordable rent and 13 shared ownership properties, with a pipeline of a further 11 affordable rent and 29 shared ownership properties in development, due for completion in December 2023 and early 2024.

The RSH also identified weaknesses in financial governance, including weaknesses in financial reporting. These meant that Rosewood had a “short-term reliance on several planned transactions over which it had little or no control of timing”. When planned sales of properties fell through, this left Rosewood reliant on funding from group entities, which are now in administration, to meet its liabilities.

“Rosewood has failed to demonstrate that it has an appropriate, robust and prudent risk and control framework in place that ensures access to sufficient liquidity at all times,” it added. 

The regulator also referred to its expectations around the governance arrangements registered providers should have in place when they have unregistered parents. Back in 2019, the RSH warned in an interview with Social Housing that providers could risk regulatory action if an unregistered parent was put in place “without good governance around the decision”. 

In its notice on Rosewood, the RSH emphasised that it expects a provider with an unregistered parent to ensure its ability to meet the regulatory standards “is not and cannot be prejudiced by the activities or influence of the parent company” or another part of the group.

Rosewood’s governance arrangements and mechanisms have not demonstrated this effectiveness, the RSH said, adding that it lacks assurance that these are sufficiently robust to ensure that the value of the social housing assets is not lost in the circumstances.

Furthermore, the regulator said following delays in the completion of the audit of Inland Homes’ annual report and accounts for the year ended 30 September 2022, Rosewood’s accounts are now “significantly overdue”.

“We have concluded that Rosewood has not been able to demonstrate that it has managed its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence and foresight,” the RSH said.

The regulator said it continues to engage “intensively” with Rosewood.

Since being added to the gradings under review list, Rosewood has taken steps to initiate several planned remedial actions to address the issues identified, and is in discussions with administrators to try to protect its viability in the longer term, the notice added.

The landlord intends to file the 2022 audited accounts by January 2024.

The regulator said it is considering what further action should be taken, including whether to exercise any more of its powers.

Rosewood has been contacted for comment.

A spokesperson from Thrive Homes said: “Thrive Homes is working closely with Rosewood Housing as their managing agent and will continue to do so, providing continuity to their residents for the foreseeable future.”