Incommunities’ surplus exceeds target despite increasing stock investment

It is also working towards returning to the highest governance grading of G1.

The landlord has been graded G2/V1 since being downgraded by the Regulator of Social Housing (RSH) in October 2020. At the time, the regulator said that Incommunities needed to “strengthen its risk management and control framework to ensure that it is managing key risks with an appropriate degree of effectiveness”.

The provider discovered in May 2020 that it had not implemented rule changes correctly for two of its subsidiaries in April 2018. Over that two-year period, the provider had refinanced and issued a bond and, as a result, these two subsidiaries made incorrect certifications about their rules to lenders.

Then, in July 2022, the RSH issued a regulatory judgement, revealing that Incommunities had breached the Rent Standard after incorrectly calculating rent for thousands of properties.

Incommunities found the issues after its new leadership commissioned a review of its approach to rent-setting following the governance downgrade. The RSH said that, after discovering the issues, the landlord reported the matter to the regulator and developed a “wide-ranging action plan”.

This included engaging external advice, commissioning an independent review, compensating and reimbursing tenants for housing benefit and Universal Credit where there had been overcharging, and improving audit and validation of rent-setting and annual rent changes.

In its half-year update, Incommunities said it is “committed to putting customers at the heart” of what it does.

In addition, the social landlord invested £22.7m in the first half of 2023-24 and said in the second half of the year that it expects to deliver 218 new homes with a spend of £56m.

“We have continued to enhance the visibility and management performance across the business in support of the journey back to G1,” Incommunities said in its results.

“The figures presented demonstrate a real turning point for us as we look to ramp up investment across our stock portfolio (underpinned by stock condition surveys and associated strategies) whilst continuing to deliver on our development ambition,” the trading update said.

Elsewhere, the provider reported “strong” liquidity, with £16.7m in cash as of 30 September, and further undrawn facilities of £112m.

Incommunities said: “As with previous years, we continue to monitor all potential risks the group could face. Risk management is a core component of our wider governance and internal control framework.

“We continue to operate under challenging market conditions with the potential to impact sales and prices and we are seeing emerging themes not too dissimilar to those impacting the housing sector and industry more widely, including cyber threats and pressures on the supply chain.

“The board continue to monitor the potential impact and remains well-placed to navigate the current economic volatility through regular stress-testing of the business plan and relevant mitigation plans.”