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Cumbrian housing association judged non-compliant over financial issues
The social housing regulator has issued a heavy downgrade for a Cumbria-based housing association, warning it was failing to mitigate risks and could have placed its financial viability in danger.
In one of six judgements published today (see box), the Homes and Communities Agency (HCA) downgraded 2,770-home Impact Housing Association from a top-rated G1 (for governance) and V1 (for financial viability) to a non-compliant G3 and V3 this morning, reporting “serious” concerns about its operation.
The judgement, which was issued following an in-depth assessment, said there was not sufficient “headroom” in its business plan should things go wrong. It said it had lacked assurances that the board of Impact was managing its affairs with “an appropriate degree of skill, diligence, effectiveness, prudence and foresight”.
Impact provides general needs homes, as well as some supported housing, housing for older people, and shared ownership properties. It said in a statement that it was working with the HCA to resolve its problems.
The regulator criticised Impact’s board for failing to manage risk properly and relying too heavily on short-term financial factors, such as projected efficiency savings and the restructuring of loan arrangements. If these did not materialise, the organisation’s viability would be thrown into doubt, the judgement said, with limited “headroom” in its business plan and not enough stress testing being carried out.
Projections around future costs, such as maintenance and repairs, were not based on up-to-date information about the condition of Impact’s stock.
| LATEST JUDGEMENTS | |||
| Provider | Gov | Via | Explanation |
| Chelmer Housing Partnership | G2 | V1 | Governance downgrade |
| Cornerstone Housing | G1 | V1 | No change to gradings |
| Genesis Housing Association | G1 | V2 | Viability regrade - V1 to V2 |
| Impact Housing Association | G3 | V3 | Governance and viability downgrades |
| Paragon Asra Housing | G2 | V1 | Merger |
| Vivid Housing | G1 | V1 | Merger |
| LATEST NOTICES | |||
| Brandon Poor’s Estate | N/A | N/A | Governance and Viability Standard |
| Wellington Mills Housing Co-operative | N/A | N/A | Governance and Viability Standard |
| Seven Dials Housing Co-operative | N/A | N/A | Governance and Viability Standard |
With regard to the landlord’s board, Impact was accused of failing to provide enough assurances “in relation to board skills, and the capacity and capability of the board to exercise effective control over the business” while the quality of data reported to the board was “poor”.
However, the regulator added that the association has “responded positively and acknowledged the regulator’s concerns”. The judgement said it is “working with the regulator to ensure it has the capacity and capability, and in conjunction with external advisers, the support to make the changes required”.
Impact’s long-term strategic decision-making was therefore inadequate, the HCA said, and decision-making was carried out in a “piecemeal” manner.
Mark Costello, chair of Impact, said “While the report is disappointing, the board and management team are already working towards improving our position. The report reflects the situation at the assessment which commenced in December. Since then, and in advance of the judgement publication, we have been working on an action plan to make changes that are right for our organisation.”
In other judgements published today, the HCA also downgraded Chelmer Housing Partnership from a G1 to a G2, saying “not all [its] board members are recruited and assessed on a skills basis, aligned to the needs of the business and its risk profile”. The 9,200-home landlord’s viability rating was unchanged at V1.
Three regulatory notices were also issued by the HCA this morning relating to small providers Brandon Poor’s Estate, Wellington Mills Housing Co-operative and Seven Dials Housing Co-operative. It said the landlords, which all own fewer than 1,000 units, had failed to submit financial statements “despite repeated reminders”. The regulator relies on accounts to monitor the compliance of small landlords.
The judgements, which made them non-compliant with governance and viability standards, said: “As the regulator has not received such accounts or any other source of assurance… it does not have adequate assurance of the financial viability of [the organisation].”
