RSH downgrades two landlords to G2 and upgrades three others to G1

Kate Dodsworth, chief of regulatory engagement at the  RSH, said: “Social landlords are currently facing a range of complex challenges and this makes careful scrutiny more important than ever.

 

“We are using all the tools at our disposal, including the new proactive inspections and the stability check programme, to ensure our standards are being met and tenants are protected.

 

“As soon as a landlord becomes aware of a potential issue, they should flag it to us immediately, so it can be resolved as quickly as possible. We always welcome self-referrals, which shows a landlord is taking accountability and understands their responsibilities.”

 

Governance downgrades

 

After Moat and Plus Dane’s downgrades, both are now rated C2/G2/V2.

 

The RSH said Moat had demonstrated that there was an appropriate risk management and control framework that aligned to its strategic risks.

 

However, the regulator found that the landlord, which manages over 19,000 homes across the South East and East of England, needed to improve the effectiveness of this framework in practice, to deliver improvements in outcomes to tenants.

 

“Whilst Moat’s board actively seeks and gains an appropriate level of assurance across a range of areas, there are weaknesses in its use of this information to drive improvement,” the RSH said in its regulatory judgment.

 

“It does not consistently apply lessons learnt across the organisation or identify where there are trends in the weaknesses of internal controls.

 

“Moat is currently in the process of making improvements to its assets and liabilities register to increase the effectiveness of its use in the board’s decision-making. Alongside this, Moat has undergone significant change within its leadership team in recent years, which has impacted the pace of improvements.”

 

The RSH also downgraded Moat’s viability rating from V1 to V2.

 

The regulator said the housing association was investing in its existing homes to improve their quality and energy efficiency, alongside investing in improvements to its repairs service. In addition, the landlord continues to develop new homes funded largely by new debt, which exposes it to sales and interest rate risk.

 

The RSH said: “This will mean that Moat has the capacity to respond to a reasonable range of adverse scenarios, but it will need to manage these material risks. We have assurance that Moat has reporting and oversight in place to manage these risks.”

 

The regulatory judgement for Plus Dane showed that, following audit reviews last year, the 13,200-home landlord found weaknesses in the operation of its internal controls and concluded there was a need to improve its risk management and assurance framework.

 

A number of action plans were developed, and Plus Dane has been delivering a range of changes to its structures, policies, processes and systems, according to the regulatory judgement.

 

As well as a focus on asset management services and complaints, Plus Dane has put in place a data governance programme to “address issues with inconsistency in the quality and adequacy” of the data it holds.

 

The RSH added that the landlord was continuing to make improvements to strengthen the board’s oversight of key risks across the organisation.

 

“Plus Dane has undergone significant changes within its leadership team, and this impacts on its capacity while it continues to recruit,” the regulator said.

 

“Whilst Plus Dane has made progress in delivering its plans through a period of significant organisational change, its board will need to gain assurance that this has resulted in the significant improvements needed.”

Governance upgrades

 

Habinteg, YMCA SPG and SAHA were all upgraded from G2 to G1. Habinteg and YMCA SPG are both rated G1/V2, and were upgraded following stability checks, while SAHA was upgraded via a planned inspection which also saw it gain its first consumer grade. It is now graded C2/G1/V2.

 

The RSH said 3,000-home Habinteg had strengthened its governance arrangements, specifically its risk management and internal control framework. The judgement showed the landlord’s stress-testing and mitigation strategy work had improved in line with regulatory expectations.

 

The RSH said: “Overall, we consider that Habinteg has provided appropriate assurance that it has sufficiently addressed the governance weaknesses we previously identified. Our judgement is that the landlord meets our governance requirements.”

 

The regulator found that YMCA SPG has provided evidence to demonstrate that it had strengthened its governance arrangements since an in-depth assessment (IDA) in August 2023 identified gaps in the board’s oversight of stress-testing, risk management and its delivery of the strategic plan outcomes.

 

The RSH said: “At the time of the IDA, additional work was being undertaken by YMCA SPG to improve its stress-testing and mitigations, and the board needed to continue this work to better inform strategic decision-making.

 

“Through our engagement work, we have seen evidence that board oversight of stress-testing and mitigation strategies is robust, and that the board is receiving regular reporting on progress against its strategic plan.

 

“These improvements have strengthened the board’s oversight and ability to assess and respond to any presenting challenges or changes in its financial position.”

 

On SAHA, the regulator said there was assurance that the association’s governance arrangements enable it “to effectively manage its risks and adequately control the organisation”, allowing it to deliver its objectives.

 

There have been changes to SAHA’s leadership, and governance has continued to improve since it was upgraded from G3 to G2 in May 2023.

 

The RSH said: “Our judgement is that SAHA meets our governance requirements. Through the inspection, SAHA has provided evidence to demonstrate the effectiveness of its governance arrangements and that it effectively manages the risks of its activities, allowing it to deliver its strategic and charitable objectives.

 

“We have concluded that this has provided sufficient assurance that SAHA has made the necessary improvements to be assessed as a G1 grading.” 

 

Failure to comply with the Rent Standard

 

The regulator found “serious failings” at Trident Housing with regard to delivering the outcomes of the Rent Standard and said “significant improvement” was needed.

 

The provider, which retained its G2/V2 grades, confirmed to the regulator that a total of 519 tenancies had not complied with the Rent Standard. Many of these have multiple errors across different areas and over several years.

 

“Taking into account the number of the errors made by Trident, over an extended period of time, and the potential impact on tenants, we have concluded that there have been serious failings in how Trident has delivered the outcomes of the Rent Standard, and we do not have assurance that it was previously compliant with the act,” the regulator said.

 

The RSH said Trident has been transparent and was “engaging constructively” with the regulator. It has sought appropriate external advice in respect of the errors and was taking steps to contact tenants to make them aware of the issue.

 

The landlord has rectified its rents from April 2024 and has developed a recovery plan for addressing previous overcharging and making refunds to tenants.

 

The regulator said: “We are engaging with Trident as it continues to address the issues that led to these errors. Our engagement includes ongoing monitoring of the delivery of its recovery plan, and we will seek evidence to give us the assurance that sufficient change and improvement is being made.

 

“Our priority will be that any relevant risks to tenants are adequately managed and mitigated and to ensure that affected tenants have appropriate redress.”

 

Financial viability downgrades

 

Arawak Walton and Alliance Homes were both downgraded from V1 to V2. Both are now graded G1/V2.

 

Arawak Walton is investing in improving the quality and energy efficiency of its existing homes. However, it acknowledged to the RSH the need to increase the proportion of homes with up-to-date information, including through physical surveys, so that it can better inform the level of future investment required.

 

Arawak Walton is forecasting it will continue to meet its financial covenants. However, cash headroom on its interest cover covenant has reduced.

 

“These factors weaken financial performance, which set in the context of economic pressures, impact on Arawak Walton’s capacity to respond to adverse events,” the RSH said.

 

Alliance Homes was increasing investment in its existing homes, which was weakening its interest cover. Its development programme includes homes for shared ownership sale, exposing it to housing market risks, the regulatory judgement noted.

 

It also relies on other sources of non-social housing income to support the social housing business, according to the judgement.

 

The regulator said these factors, along with economic pressures including inflation and interest rates, affected the landlord’s capacity to respond to adverse events.