Further three landlords downgraded over viability concerns

Kate Davies, chief executive of Notting Hill Housing Association, spoke out this week against the regulator’s recent clutch of viability downgrades based on associations’ development plans. She said the “new habit of going around, seeing anybody who’s taking a bit of initiative and giving them a V2 strikes me as another bit of bad policymaking”.

Orbit was marked down due to a development strategy “predicated on cross-funding between affordable provision and a debt-funded market sales programme [this] gives rise to risks and exposures which it needs to manage”, the regulator said.

An Orbit spokesperson said: "This regrade reflects our commitment to tackle the housing crisis by leveraging our asset base to support our housebuilding programme. It will not affect our business plan or ambition to deliver many more affordable and social homes."

The HCA found Thrive had less ability than most providers to deal with downside risks and noted that it was “projecting weaker future performance [due] to the increased debt burden it is incurring to support its growth plans”.

A Thrive spokeswoman said: "Thrive has made a commitment to invest in expanding our development programme with the aspiration of building 800 new homes over the next five years.

"As a result of this rapid increase in volumes, some financial ratios will weaken as we borrow more money to achieve this ambitious development programme.

"Our key financial ratios are still strong, as is reflected in our A+ credit rating and overall financial performance is good."

On Broadland’s venture into development for outright sale the regulator said it “has no track record in this area and, while it is taking a measured approach, an increased degree of risk will apply to a material proportion of future cash inflows”.

Michael Newey, Broadland group chief executive, said: “After several years of low development delivery, in 2016 our board and executive team committed the organisation to a much larger programme to contribute to meeting the significant housing needs of families and individuals in Norfolk and North Suffolk. As a result, we now have committed plans to deliver 600 new affordable homes over the next four years, supported by the development and sale of 200 homes in the open market.”

Another regulatory judgement saw Trident Housing Association’s V1 rating restored after it was downgraded in July 2016 to V2 relating to risks to income affected by welfare reforms.

The HCA said Trident’s business plan “now demonstrates improved performance which has increased its capacity to deal with downside risk”.

Trident group chief executive John Morris said: “We have worked closely with the HCA and are very pleased to gain our V1 grade.”

Bolton At Home saw its governance rating increased to G1 after successfully implementing changes to its risk and internal controls framework. Chief executive Jon Lord said: “We are very pleased to regain our G1 status.”

The latest HCA regulatory judgements in full