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Regulator warns of changing behaviours by associations trying to attract ‘wall of money’
The regulator has warned housing associations against changing their behaviours in a bid to secure funding from large investors offering a “wall of money”.
Speaking at the National Housing Summit today, Fiona MacGregor, chief executive of the Regulator of Social Housing (RSH), remarked on a behaviour change within the sector regarding getting finance.
Responding to a question about the RSH’s biggest concerns, she said: “I think one of the things that we have been very conscious of is that kind of shift I think with the so-called ‘wall of money’ out there, and investors trying to place money and get a good return.
“I think we see in some cases that has led to a change in behaviours and approach, and you see a bit of kind of reverse engineering – with at one end being clear about the return that they’re trying to get for the investors, and then working back from that to what kind of payment you might want, in terms of leases for example.
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Scottish regulator warns landlords over tenant safety after issues found at a number of associations“And that doesn’t necessarily seem to us to be the right way round, and doesn’t seem to us necessarily in keeping with the spirit of how the sector has operated up until now, which starts at the other end of the telescope with what service do we need to be providing for the tenants that we’re housing, including in some cases some very vulnerable tenants, what does that cost and then how do you fund that.
“But you start at the other end and it completely changes the behaviour.
“So I think that wall of money, and some quite sophisticated investors coming into the sector, is something that we think has changed how we think about some of the issues that we need to address, and I think that is something that matters.”
In her speech, Ms MacGregor emphasised the importance of housing associations publishing annual tenant involvement reports in line with the RSH’s standards – warning: “Are you doing that? We might be looking.”
She also noted that the ability to increase rents by up to Consumer Price Index plus 1% next year “will come with greater scrutiny from stakeholders including government”.
Ms MacGregor said the fact that a high proportion of the handful of providers with an unregistered parent have been ruled non-compliant in recent years “tells you something”. She added: “I think it’s really important that if you think there’s a need to have an unregistered parent you’re really crystal clear about the reasons why and what benefits it brings.
“If it’s just a kind of vanity approach, I’m not sure we’d be that persuaded by it.”
Knowsley Housing Trust and Ongo – two of the only associations part of a group whose parent entity is not registered as a social housing provider – have both been given non-compliant G3 regulatory ratings for governance since 2018.
