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Association that sold social homes on open market slammed for fire safety failings
A housing association previously censured for selling homes on the open market has been slammed by the English regulator again – this time for placing tenants at risk due to fire safety failings.
Kinsman Housing attracted the ire of the Regulator of Social Housing (RSH) in November due to its acquisition homes meant for social housing and selling them on the open market, with proceeds going to an investor.
This morning the RSH issued a second regulatory notice slamming the small south-east London association for being “extremely slow to act” over serious fire safety issues at one of its properties.
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In the notice, the regulator said that Kinsman had been warned that one of its new buildings was affected by safety issues in January 2017, but did not carry out survey work until September 2018, following an intervention from the regulator.
“This means that for a considerable period of time, Kinsman did not have assurance that its building was safe and that tenants were not at risk of harm,” the notice said.
The survey in September last year recommended more intrusive inspections, which were carried out in December.
This survey, the regulator said, “identified some serious and wide-ranging concerns in relation to fire safety”.
A separate fire risk assessment in January 2018 identified a number of actions required to make the building safe.
But the regulator said: “These risks were known about for a considerable period of time and the evidence demonstrates that Kinsman was extremely slow to act when concerns were raised and failed to identify significant risks.”
The association is now “making progress” in remedying the issues, the notice said.
It added: “Taking into account the seriousness of the issues, and the duration for which tenants were potentially exposed to risk, the regulator has concluded that it is proportionate to find that Kinsman has breached the Home Standard [for services to tenants] and that there was a risk of serious detriment to tenants during this period.”
The regulator said that it will “work with Kinsman as it seeks to address the issues” and will consider whether it needs to take further enforcement action.
The previous regulatory notice, issued in November, found that Kinsman was non-compliant with the RSH’s standards for governance and financial viability. It said that the landlord could not show that arrangements it had entered into “do not inappropriately advance the interests of third parties”.
These involved Kinsman acquiring a social housing unit using funds from an investor, understood to be businessman Terry McMillan.
“The homes acquired from large registered providers were done so on the basis of continued social housing use. However, apart from the tenanted unit, these were sold on the open market shortly after acquisition with all proceeds from the sale, including any capital uplift, going directly to the investor,” the regulator said at the time.
“Kinsman’s failure to consider the implications, potential outcomes and risks of the acquisitions it has entered into demonstrates a lack of skill, diligence and effectiveness.”
At the time of the first notice in November, Kinsman owned just 35 homes.
It followed the downgrade of another association, Pathfinder, which was also linked to Mr McMillan. Pathfinder was taken to court by Southwark Council, which claimed in court documents that individuals were paid to sign “sham transactions” which made it appear that they were buying homes meant for shared ownership, whereas in fact the association was selling them on the open market.
Kinsman was contacted for comment.
Regulatory judgements in England explained
The Regulator of Social Housing publishes regulatory judgements for all providers owning 1,000 or more social housing homes.
These judgements set out whether the provider is complying with the regulator’s governance and financial viability standards.
The regulator carries out an assessment either through a scheduled in-depth assessment, or reactive engagement (in which the regulator acts following information about a provider).
It then awards the provider a rating from one to four for financial viability (V) and a separate rating from one to four for governance (G).
Providers must score two or higher in both categories to be judged as complying with the standards.
As providers have increasingly taken on more risk to cross-subsidise social and affordable housing delivery through market-facing activity, the regulator has changed a number of associations’ viability ratings from V1 to V2.
The regulator often categorises this kind of regulatory action as ‘regrades’ rather than downgrades. Click here to read more.
Key to ratings:
V1/G1: Compliant
V2/G2: Compliant
V3/G3: Non-compliant and intensive regulatory engagement needed
V4/G4: Non-complaint, serious failures, leading to either intensive regulatory engagement or the use of enforcement powers
Rating straplines in full:
Governance ratings:
G1: The provider meets our governance requirements.
G2: The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.
G3: The provider does not meet our governance requirements. There are issues of serious regulatory concern and in agreement with us the provider is working to improve its position.
G4: The provider does not meet our governance requirements. There are issues of serious regulatory concern and the provider is subject to regulatory intervention or enforcement action.
Financial viability ratings:
V1: The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.
V2: The provider meets our viability requirements. It has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure continued compliance.
V3: The provider does not meet our viability requirements. There are issues of serious regulatory concern and, in agreement with us, the provider is working to improve its position.
V4: The provider does not meet our viability requirements. There are issues of serious regulatory concern and the provider is subject to regulatory intervention or enforcement action.
