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Genesis viability rating downgraded
Genesis has had its financial viability rating downgraded by the regulator, but remains compliant with its standards.
In one of six judgements published by regulator the Homes and Communities Agency (HCA) today, the 31,000-home London landlord was told that despite achieving £19m in operating cost savings over the past six years, Genesis’ unit costs remained relatively high, largely due to its exposure to supported and temporary housing.
Its social lettings are generating low returns compared with other providers, while its core operations interest cover and operating margins were both seen as being in the lower quartile for the sector, the judgement said. However, the regulatory judgement was largely positive, upholding Genesis’ top G1 rating for governance alongside the compliant V2 status.
The statement from the HCA said: “Over the next five years Genesis’ business plan forecasts an improvement in… these measures which will provide greater contingency to manage its increased development risks and sales exposures. Some of this improvement is expected to result from the implementation of further efficiency initiatives.
| 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 |
“Genesis has carried out detailed stress testing across a range of business risks, including sales delays and a drop in sales values, increases in interest rates and inflation affecting operating expenditure and development costs and increases in bad debts. This has demonstrated that Genesis has the financial capacity to deal with a reasonable range of exposures but needs to manage the material risks identified in its stress testing arising from its growth and sales strategy to ensure continued compliance.”
Neil Hadden, chief executive at Genesis, said: “We are pleased to attain a compliant grading at a challenging time for housing associations.
“In order to deliver on our social purpose of building affordable homes, we are having to work harder than ever to realise value through effective management of our assets and the development of commercial products to help finance lower-cost housing products. Like other housing associations who have also had a V2 rating recently, it demonstrates that we are doing all we can to responsibly deliver those new homes and new products.”
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].”
