Regulator to consult other watchdogs on dealing with profit-making providers
HCA seeks help on regulation
The Homes and Communities Agency regulatory committee is seeking advice from watchdogs in other sectors on how to regulate for-profit social landlords.
The committee, which took over social housing regulation on 1 April, is currently reviewing how it intends to regulate the first wave of for-profit providers. This could lead to a consultation about changes to its regulatory framework later in the year.
At a meeting in April, committee members discussed plans for regulating for-profit providers and how to ‘ring-fence’ risk and prevent value leaking from social housing assets into shareholders’ pockets. Committee members suggested the HCA should speak to other regulators.
Julian Ashby, chair of the HCA regulatory committee, said the regulator hoped to learn lessons and techniques from other sectors.
Mr Ashby said: ‘This is the first time the social housing regulator has had to regulate for-profit providers. It [speaking to other regulators] seems to be a very obvious and sensible thing to do.’
Mr Ashby said the HCA will consult regulators of for-profit organisations that provide public service benefits such as those in the water, gas and electricity sectors and the rail industry.
The HCA has already been involved in discussions with Monitor, the health service watchdog.
Mr Ashby signalled a desire to learn from other sectors with the appointment of Jane May to the committee. Ms May has been a director at both Ofwat, the water industry regulator, and the Office of Rail Regulation.
John Bryant, policy leader at the National Housing Federation, said the move to look outside the housing sector was sensible and said it was important to ensure assets are not used to pay dividends to shareholders.
‘The primary function of a for-profit provider is to generate profits for distribution to shareholders, it has an incentive to maximise profits in a way that a non-profit provider has not,’ he added.
Meanwhile, the HCA has announced that social landlords no longer need to seek permission to sell individual empty properties. Instead, landlords can now get consent for a policy or programme of disposals.
How other sectors regulate
- Water: Ofwat provides financial regulation of water companies, the Drinking Water Inspectorate regulates quality while the Environment Agency provides environmental regulation. Services are provided by for-profit companies which act as regional monopolies.
- Rail: The Office of Rail Regulation regulates Network Rail, a non-profit limited company which maintains railway tracks. Train services are provided by for-profit companies, which are licensed by ORR.