Metropolitan restructures to reduce exposure after HCA voices concerns
Regulator concerned by financial risks at landlord
The housing regulator is monitoring one of the UK’s largest housing associations due to concerns about financial risks associated with funding some of its regeneration projects.
The Homes and Communities Agency has been in ongoing dialogue with Metropolitan after its predecessor, the now defunct Tenant Services Authority, flagged up concerns about Metropolitan’s ‘significant’ exposure to regeneration schemes.
It is understood the HCA decided the 36,000-home association was a case it should continue to watch closely when its regulatory committee took over from the TSA in April. It is not under supervision and is not the subject of short-term concern.
The regeneration scheme of most interest is Clapham Park in south London - one of the largest schemes in the capital.
Metropolitan is carrying out the project, under which it aims to build 2,480 new homes - 1,470 of which are to be for market sale - and refurbish 975 existing properties, with subsidiary association Clapham Park Homes and Lambeth Council.
A source close to the situation said Metropolitan had quite a high-cost structure on its regeneration plans. The source added it had ‘very significant exposures [to regeneration] in the medium term’.
The association, which announced the appointment of new chief executive Brian Johnson yesterday, has carried out a company restructure to raise capital for its schemes. It is also in talks with Lambeth Council to make some cost-saving changes to the Clapham Park scheme.
Metropolitan said is in talks with its partners and lenders to draw together a new financing package for the scheme and is understood to be considering making an £80 million investment itself.
Peter Cleland, interim chief executive of Metropolitan, said: ‘We have demonstrated to the HCA these risks have been managed. We need to build more risk capital, and are restructuring the business to achieve this.
‘Our business plan has always been based on very prudent assumptions, but clearly a scheme of this size would always be for any large group, an issue the regulator would take a keen interest in how we are resolving. That doesn’t mean they are concerned. They are satisfied we are making the right progress and decisions.’
An HCA spokesperson said: ‘It’s not appropriate to comment in detail on specific cases but I can confirm we have been kept fully informed of the issues facing Metropolitan, and will continue to monitor its progress in addressing them.’