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Equity-linked housing association says securing compliant rating will be challenging
A housing association operating a controversial model of financing specialist supported housing (SSH) with equity-backed leases says it knows achieving a compliant rating with the regulator will be difficult.
Bespoke Supportive Tenancies (BeST), which is the only association currently on the Regulator of Social Housing’s (RSH) gradings under review list, said in its accounts for the year to 30 September 2018 that it is “not blinkered to the size of the task” of being compliant.
It said: “The board would, without doubt, like to see a compliant rating although, having said that, they are not blinkered to the size of the task that a small charitable company achieving this level straight away will face.”
All five of the other equity-linked housing associations to have been investigated by the regulator have been declared non-compliant with standards on governance and financial viability. The regulator said in a separate report on the equity-linked model that it was “hard to see” how any associations operating this model can comply.
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Despite this, 1,350-home BeST said in its accounts it plans to grow further in the future “in a controlled way”.
The model involves housing associations leasing SSH on a long-term basis from various funds to which they must make monthly index-linked payments.
These are funded through housing benefit, which is paid at a higher level than it is for other kinds of social housing, because SSH is exempt from various rent regulations.
BeST, Inside Housing revealed in February, was linked to Fairhome, an aggregator with connections to two of the five associations to be downgraded so far, which arranges lease deals between associations and funds.
In a statement to Inside Housing at the time, a spokesperson for Fairhome said that while there had been "informal connections in the past", Fairhome had not worked with BeST since September 2016.
BeST’s accounts also reveal that it made a small surplus in the period of £448,478, an improvement on the £405,898 loss it made in the previous year.
The association took in £13.5m in rent, ‘property acceptance fees’ and service charges and paid out £13.1m mainly in payments to the funds that own the homes.
BeST took on new properties during the year, almost doubling the amount it is required to pay to the funds. In total, it is obliged to pay £72.3m to its creditors over the long term, up from £37.7m in the previous year.
According to the accounts, BeST only employs 31 people, including three directors. Two of these – David Poppitt and Hugh McCaw, are paid £12,000 a year each. BeST also pays three employees between £90,000 and £110,000 a year each.
