Report urges LSVT board changes
Stock transfer organisations that fail to adapt their board memberships in a changing operating environment will face governance problems, a report has warned.
Research carried out by consultancy Altair found Large Scale Voluntary Stock Transfer (LSVT) landlords that had failed to change the types of people on their boards since their stock transfers faced “challenges in their governance arrangements”.
LSVT landlords, which hold 44% of the 2.7m housing association homes in England, have traditionally differed from traditional housing associations in terms of their local focus, retaining close ties with founder local authorities and tenant and councillor participation in governance.
The report, commissioned by Magenta Living, Incommunities and Bolton at Home, said research into LSVTs’ specific governance arrangements is outdated, with little academic study in the last five years. It said: “Yet, due to recent developments in the operating environment and the increased diversification of the sector, the need to understand best practice approaches to governance, particularly in the LSVT sub-sector, has never been more pertinent.”
It said the impact on business plans created by recently announced government policies, including the 1% annual rent cut, and the Right to Buy extension, will “place increasing pressure on organisations to ensure that they have board members with the skills and experience necessary”.
However, the report, entitled LSVT governance that is fit for the future, found “many [LSVT landlords] have introduced board pay, streamlined their arrangements, and reduced the size of their board to enhance and supplement their approach”.
“Most significantly we have found that there has been, and continues to be, a move towards more skills-focused governance arrangements.”
It added: “It is apparent that those who do not adjust to the challenges… are likely to find the capability, viability and adequacy of their organisations’ governance threatened and their effectiveness and resilience undermined.”
The report also said the government should revise its guidance to place “the required emphasis on the need for adequate skills when transfer organisations are created”.
The research was based upon questions to a range of landlords, including a recent survey undertaken by the National Housing Federation of more than 70 LSVT organisations.