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Government proposes new social housing regulator

The government plans to create a new social housing regulator, separate from the Homes and Communities Agency.

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Inside Housing previously exclusively revealed the government was considering separating the regulator from the Homes and Communities Agency (HCA).

A government spokesperson said this will be an “administrative” change that will not affect the regulator’s powers or operations.

The government has published a review today which concluded the HCA should continue to support housebuilding and increase the supply of land for housing, and the regulator should function separately.

The government has also launched a consultation today into the proposal to set up the regulator as an independent body which will run until the end of January. Last week the regulator launched a consultation into charging fees.

Julian Ashby, chair of the HCA Regulation Committee, said: “The HCA Regulation Committee welcomes the government’s continued commitment to having a strong and independent regulator for the social housing sector. The decision to separate the regulator from the HCA will strengthen our ability to promote a viable, efficient and well-governed social housing sector able to deliver homes that meet a range of needs.

“This change is to the organisational structure and governance of the regulator only and will not impact on our regulatory approach or day-to-day operations.”

The consultation document said this move was necessary to address the potential conflict of interest arising from the HCA’s funding arm.

Gavin Barwell, housing minister, said: “We are determined to create a housing market that works for everyone and the Homes and Communities Agency and regulator will play an important role in delivering the homes this country needs.”

Sir Edward Lister, chair of the HCA, said: “The Homes and Communities Agency has a strong track record of delivering the government’s housing targets but we know we need to do even more in future to ensure more people have the opportunity to own their own home.

“We therefore fully welcome the recommendations of the government’s review. We are already implementing a number of changes to our operating model to help speed up delivery and promote new approaches to housebuilding. We will set out how we intend to play a more active role in the delivery of the government’s increased housing ambitions in the coming months.”

UPDATE 9.50am, 01/12/2016: John Bryant, policy leader for regulation at the National Housing Federation, welcomed the proposal for a seperate regulator. He added: “This will streamline processes and increase effectiveness across the organisation and help to foster the right environment for housing associations to deliver the houses our nation needs. We will maintain a close dialogue with the HCA throughout the implementation process.”

Terrie Alafat, chief executive of the Chartered Institute of Housing, said: “We support the creation of an independent regulator. The HCA has done an excellent job as regulator, but changed circumstances mean that it is right to consider different arrangements.”

Key passage from the review

The HCA review found there was a compelling case for change of the regulator’s structure, given the way the HCA has evolved since it assumed responsibility for social housing regulation. Since the establishment of HCA’s investments arm (HCA-I) in 2014, the Agency has expanded into commercial investments. This has made the HCA, in some cases, both a secured creditor and regulator of registered providers.

This potential conflict of interest did not exist when the decision was made to incorporate social housing regulation within the HCA, as at that time the agency’s funding predominantly focused on grant-making.

The HCA’s governance arrangements and an operational ‘ethical wall’ have ensured that information is not inappropriately exchanged between the regulator and investment function. However, as the financial landscape of the sector evolves and becomes more complex, it becomes ever more important that the HCA and the regulator are best positioned to adapt to such changes, and that commercially sensitive information is sufficiently safeguarded.

THE CHANGING SHAPE OF ENGLISH SOCIAL HOUSING REGULATION:

Dec 2008: Housing Corporation is scrapped and its functions transferred to a new regulator, the Tenant Services Authority (TSA), and a new investment quango, the Homes and Communities Agency (HCA)

Apr 2010: TSA’s remit is expanded to cover local authorities, arm’s-length management organisations and housing co-operatives

Oct 2010: Housing minister Grant Shapps announces the TSA will be scrapped and its functions merged into the HCA

Apr 2012: HCA takes over regulation, with a reduced consumer role

Mar 2016: The government announces a review of the HCA

Nov 2016: HCA publishes consultation proposing independent regulator


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