Regulator’s new insolvency powers come into play

The new powers apply to RPs in England and Wales and were part of the 2016 Housing and Planning Act.

The rules are the same as the 2016 Insolvency Rules, differing “only where necessary to accommodate the special provisions of housing administration”, according to the law’s explanatory memorandum.

This means that the regulator will seek to keep housing stock within the sector, as well as meet the usual insolvency objectives of ensuring creditors receive as much as possible of what they have lent, including by the sale of a registered provider’s assets.

Fiona MacGregor, director of regulation at the RSH, said that the new powers strengthen “the legal tools available to the regulator to protect the interests of tenants, investment secured on social housing assets and public investment in the sector”.

“What has not changed is our determination to avoid having to call upon the new regime,” she added.

The RSH’s updated regulatory framework, which began to be rolled out in 2015, places additional requirements on risk management, board skills, asset and liability registers, and stress-testing on RPs.

Ms MacGregor told Social Housing in March that these changes meant a new regulatory approach underpinned by quarterly surveys, annual stability checks and regular in-depth assessments.

“We do not intend administration to become our default approach in dealing with problems,” she said.

Speaking as the new powers came into force last week, Ms MacGregor said: “As a regulator we will continue to proactively regulate providers’ governance and financial viability, ensure that we identify and manage any viability issues as they emerge, and intervene before any financial difficulties of a provider reach the insolvency stage.

“While the Housing Administration regime provides a vital safeguard, prevention remains the best cure.”

The Housing Administration regime was recommended by a report into the near insolvency of Cosmopolitan in 2014. The report said that the structuring of index-linked finance leases on student accommodation run by non-registered subsidiary CSH was a key problem.