Regulator issues first regulatory notice on basis of rent-setting
The Regulator of Social Housing (RSH) has issued its first regulatory notice on the basis of its rents work, after its rents-focused report in April outlined a new approach to communicating non-compliance on rents.
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In the notice today, the RSH concluded that 6,227-home Wandle Housing Association did not comply with the requirements of the Welfare Reform and Work Act 2016 with regard to required social rent reductions, for approximately 1,000 of its general needs properties.
It added that this was because the London-based provider “did not fully implement the one per cent rent reductions” required by government legislation in the years 2016 to 2020.
The notice comes after Social Housing reported in August that the RSH had written to 18 per cent of large registered providers about rent-setting in the 2019/20 financial year.
In March this year, a month ahead of the new Rent Standard coming into effect, the regulator released a rents-focused addendum to its 2019 Sector Risk Profile.
This flagged poor-quality data and incorrect calculations among key issues it encounters, as well as incorrect calculations of affordable rent and/or service charges, and incorrectly treating properties as exempt from elements of rent rules.
The regulator consequently announced a new approach to communicating non-compliance on rents, including issuing regulatory notices.
In its first such notice today, the regulator said that its review of data submitted by Wandle in its 2018/19 statistical data return had identified an increase in the average rent being charged for general needs properties at a time when providers were required to reduce rents by one per cent.
In response to the regulator’s enquiries, Wandle then undertook a series of investigations which concluded that approximately £320,000 had been overcharged between 2016 and 2020 as a result of incorrect rent-setting, the notice said.
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The majority of the incorrect rents were due to either “misclassification of properties – units were mistakenly classified as secure tenancies and subject to the Rent Act 1977 exemption”, or “failure to implement the one per cent reduction in the first 12 months on some new tenancies”.
Wandle has now considered its approach and has developed an action plan, the regulator said, adding that completing the plan would support the RP’s compliance with the Rent Standard 2020.
These include: reimbursing tenants who were overcharged, and taking specific actions to meet regulatory actions for different kinds of rents; the correction of data errors stemming from tenancy classifications impacting on annual rent-setting; a policy and procedure review to clarify lines of accountability, strengthen knowledge and skills, and improve assurance on rent-setting; and improving audit and validation of rent-setting and annual rent changes.
“The Wandle board has accepted the regulatory findings and is engaging positively with the regulator, with support from external advisers, to take the steps necessary to resolve these issues,” the regulator added.
In a statement responding to the notice today, Wandle said that it had self-referred to the regulator after it uncovered a historic issue that meant it did not comply with the requirements of the Welfare Reform and Work Act. The association discovered this while dealing with a query from the regulator.
It said that the errors were identified in late 2019 and were all corrected by April 2020, adding: “All overcharges have now been returned, with credits applied to customer accounts and refunds processed where they have been requested. We have refunded the majority of overpayments to our partners and are working with them on the remaining cases to process these as quickly as possible.
Tracey Lees, chief executive of Wandle, said: “I am sorry that we failed to fully comply with the requirements of the Welfare Reform and Work Act 2016, and apologise to affected tenants and our local authority partners for the errors.
“We have been working hard with external advisors to establish how and why the mistakes happened, and putting in place safeguards and improvements to procedures to make sure they do not happen again.”
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