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Housing associations must prepare for ‘disorderly Brexit’, warns regulator
Housing associations must be prepared for a “disorderly Brexit”, the Regulator of Social Housing has warned.
Speaking at the Social Housing Conference, Simon Dow, interim chair of the regulator, said stress-testing and preparing for the worst-case scenarios was vital for housing associations.
Mr Dow referred to the Bank of England’s scenarios, picking out specifically its predictions for what would happen to the economy in the case of a “disorderly Brexit”.
Last week, the Bank of England released figures detailing its projections for what would happen in its worst-case scenario after the UK leaves the European Union.
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According to these figures, a “disorderly Brexit” would see GDP fall by 8%, unemployment would almost double to 7.5%, inflation would soar to 6.5% and house prices could fall by up to 30%.
The Bank of England said it would then have to raise interest rates to 5.5% in order to compensate for the shock to the economy.
Mr Dow said: “These are scenarios, they’re not predictions or forecasts. We do not make predictions or forecasts, and we are not a political organisation.
“But it makes complete sense for us to remind you – not, I’m sure, that most of you need reminding – that providers must be stress-testing for Brexit and ensuring that they have the mitigation strategies in place that they can implement in the event the scenario becomes reality.”
Mr Dow also discussed the regulator’s current attitude towards housing associations selling homes outside the sector.
Before deregulation measures brought in last year, housing associations had to ask for the regulator’s consent before it could do this.
Although this is no longer required, the regulator downgraded the large housing association Moat Homes last month after it sold older people’s homes to a for-profit provider.
In response to a question on the issue from the audience, Mr Dow said that if social housing providers are going to do this, they have to make sure their governance processes are “cast-bloody-iron”.
He added: “The area that we’re particularly sensitive is about tenanted properties. Of course, clearly, you’re talking about people’s long-term life chances if that goes wrong.
“Some of you will have seen a recent regulatory judgement where we did make some comments about that process. It is something we’re going to be keeping a close eye on. We believe we’re doing this not least because if it did go badly wrong, the public outcry would harm everyone in this audience.”
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