Lease-based provider that took regulator to court receives compliant governance and viability gradings

But the High Court rejected Inclusion’s judicial review, and it later emerged that the provider had to pay £337,000 in legal costs to the regulator.

Inclusion said it is the first predominantly lease-based provider to be awarded a compliant governance and viability grading by the RSH.

The regulator has previously warned that specialised supported housing is not being delivered in a way that consistently meets its standards, highlighting providers’ limited capacity to manage risks and instances of weak governance.

A report by the RSH from 2019 stated that it is “hard to see how a provider of [specialised supported housing] which is substantially financed by long-term leases and subsequent tight margins can meet the requirements” of the governance and viability standards.

In its latest judgement, the RSH said: “We expect Inclusion to deliver on its action plan to support ongoing improvements, such as reviewing the quality of its board reporting and board skills to ensure effective governance arrangements. 

“Inclusion will need to carry out further work on business planning assumptions based on recommendations from the reviews it has carried out, and continue to improve its mitigation planning.”

The regulator also said the provider has “financial capacity to manage a reasonable range of adverse scenarios and has access to sufficient liquidity”.

“However, it needs to manage material risks to ensure continued compliance,” the regulator added.

The judgement said Inclusion’s overall leases are now shorter in length, which “reduces the overall lease liability compared to turnover”.

Inclusion has not yet been assessed against the consumer standards.

Neil Brown, chief executive of Inclusion Housing, said: “Inclusion Housing has, throughout the last 11 years, achieved stronger finances, exceptional productivity, more value for money, delivered top 3% tenant satisfaction, while providing multimillion-pound social impact benefits through the supply of over 5,000 new social housing units, [and] financially outperforming numerous G1/V1 providers. 

“We look forward to further demonstrating the inherent talent, strong organisation, sound stewardship and progressive leadership that has made Inclusion Housing the most important, disruptive and influential supported housing provider in the country, in order to achieve our much-deserved highest viability and governance rating.”