Regulatory judgements: two councils in breach of Home Standard after widespread health and safety failings

Also following a self-referral, the regulator found that Welwyn Hatfield Council “has failed to meet statutory health and safety requirements in relation to fire, water, electrical and asbestos safety”.

Similarly to Cornwall, around 90% of Welwyn Hatfield Council’s applicable buildings do not have a current FRA.

Meanwhile, “thousands” of FRA actions identified in 2018 have not been completed, “around half of which had been given the highest risk rating and needed to be done immediately, or as soon as reasonably practical”, the regulator said.

Hundreds of the council’s buildings have never received an electrical inspection, while a smaller number were inspected over 10 years ago.

The local authority reported that more than 100 asbestos re-inspections were overdue and that hundreds of properties did not have a compliant Legionella Risk Assessment.

Since identifying these issues, Welwyn Hatfield Council has been working with a consultant to develop an action plan in order to return to compliance and has also looked to strengthen its in-house compliance team.

The RSH said it will not take statutory action at this stage and will work with the council as it implements its new programme.

Fiona Thomson, executive member for housing and climate change at Welwyn Hatfield Council, said: “I want to apologise to our tenants and leaseholders for not meeting all our responsibilities under the Home Standard. We fell short of what is expected of us, and what our tenants expect from us as their landlord.

“We are committed to dealing with the issues quickly and referred them to the Regulator for Social Housing so we can address the situation swiftly.

“It is encouraging our progress has been recognised by the regulator, including the new systems, processes and staff now in place to bring our compliance up to date.

“Our tenants and leaseholders will remain our top priority as we continue this important work, to give them the confidence we are doing everything we can to make sure it does not happen again.”

The latest batch of judgements also saw financial viability regrades for three associations. Bournemouth Churches Housing Association (BCHA) and Chelmer Housing Partnership (CHP) had financial viability ratings move from V1 – the highest rating – to a V2. Great Places Housing Group’s rating was upgraded from V2 to V1.

V2 means the provider meets viability requirements and has the capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure compliance.

BCHA is a community benefit society that owns 1,400 homes across the South West, which include both general needs homes and homelessness and care and support housing across the stock.

Explaining the decision to downgrade the landlord, the RSH said BCHA has sufficient access to liquidity and continues to comply with key financial covenants, but the nature of its business means it operates in tight financial margins and it faces material exposures that needed to be managed.

It also said the landlord has a material reliance on a volatile contractual income from a management agreement previously held with another provider. According to the RSH, the operating margins for this deal had reduced to due to the loss of revenue from 400 homes, while overhead costs remained.

It added that BCHA needs to manage its security position carefully as it has only limited chargeable assets available, which would impact on BCHA’s access to future funding.

The association maintained its G1 top governance rating.

Martin Hancock, chief executive of BCHA, said: “We are delighted that following an IDA [in-depth assessment] we have retained our G1 governance status recognising the excellent leadership, direction and risk management from the BCHA board members, especially during the past 16 months of the pandemic.

“Our desire to find a way forward, fulfilling our purpose and mission will mean we operate on a lower surplus than most housing authorities, as well as doing what we can to use our assets to build and acquire desperately needed new homes to meet increasing demand.

“We understand that the V2 regrade recognises that position and with well-managed risk controls we can continue to focus on homelessness and some developments with funding secured until well into 2023, and additional lending already identified to be put in place beyond that time.”

CHP, which owns 10,000 homes across the South East, saw its financial viability grading drop because of material risks it needs to manage. It said the biggest one was increased investment planned for its existing stock to improve energy efficiency and building safety.

The RSH also found that the association’s increased development plans and investment in a new operating model put pressure on CHP’s interest cover performance. Nevertheless, it said the landlord has an adequately funded business plan and is forecasted to meet its financial covenants. It was also graded G1 for governance.

Mary Gibbons, chief executive of CHP, said: “These ratings are an endorsement of all the hard work we put in to ensure we are well governed and financially secure. In awarding us the highest possible G1 grading the regulator recognises that we are well governed and in a strong position to continue delivering on our corporate objectives. The re-grading to V2 recognises that we have sound financial plans in place to deliver our business plan. It also takes into account our ambitious development programme to help meet local housing need, and the funds we have set aside to deliver our strategy to become carbon net zero.

"We believe it’s right to have bold plans for the future, and as the rating shows we’re in a great position to provide more quality affordable homes and great services for our customers.”

Great Places saw their financial viability bumped up to a V1, giving the association top ratings on governance and financial viability.

Great Places was given a V2 rating in April last year following its merger with Equity Housing Group due to Equity’s “weak interest cover from social housing lettings and limited covenant headroom”.

The regulator said the merged organisation has “increased covenant headroom” and “has the capacity to absorb additional pension costs and is not dependent on sales surplus to maintain covenant compliance”.

Matthew Harrison, chief executive of Great Places, said: “The hard work and dedication of our 800 colleagues, who have worked tirelessly in such challenging circumstances during the pandemic, has been instrumental in helping us to build upon our values and achieve our vision of great homes, great communities, great people.

“The past 16 months have been unprecedented times and completing the transfer of engagements of Equity Housing Group into Great Places on 1 April 2020 would never have been anyone’s choice of timing. However, the transfer was successfully completed and we are now well on the way to finishing our two-year Cosmos integration programme, delivering the benefits we envisaged in the merger business case.

“As an ambitious developing organisation dedicated to doing our bit to tackle the housing crisis, we are aware that our significant shared ownership sales programme and more modest market sales activity presents risks and exposures, but those are risks that we successfully manage and mitigate, which this judgement recognises.”

Progress Housing saw its governance grading moved up to a G1 after previously receiving a G2 rating in February 2020. At the time, the RSH said the association needed to strengthen its risk management and control frameworks to ensure it was managing risks effectively. Issues with the organisation’s ability to give assurances around health and safety and rent requirements were also highlighted as areas of improvement.

However, the regulator said that after reactive engagement with the association, it is now satisfied that these issues have been addressed.

Jacqueline De-Rose, group chief executive of Progress, said: “After an agreed programme of continuous improvement, we are very pleased to be informed of our reinstatement to a G1/ V1 status effective from 28 July 2021.

“This regrade to G1 signals the continuation of our journey as we embed these changes and deliver our continuous improvement activities. We are committed to being one of the very best housing associations in the country in this field of work.”

Red Kite Community Housing, which owns roughly 6,500 homes in Wycombe and the surrounding area, maintained its G2/V1 grading, however the basis for its governance grading was changed.

Red Kite was downgraded to G2 in January 2020 after it was defrauded of almost £1m following a cyber attack.

In today’s judgement, the regulator said Red Kite has “addressed the internal control weaknesses which were directly related to the downgrade”, but said the landlord “needs to improve other aspects of its governance arrangements to support continued compliance”.

“Compliance reporting on landlord health and safety obligations and financial covenants is not sufficient to enable the board to exercise effective oversight,” the judgement said.

It added that when Red Kite undertakes stress-testing, its “mitigation strategies are under developed and require strengthening”.

In terms of financial viability, the regulator said Red Kite “has an adequately funded business plan, sufficient security in place, and is forecast to continue to meet its financial covenants under a wide range of adverse scenarios”.

Trevor Morrow, chief executive of Red Kite, said: “A huge thank you to everyone at Red Kite – staff, volunteers, board members and contractors, who have all contributed to our business and this positive judgement.”

Nehemiah Housing, which owns roughly 1,200 properties in the West Midlands, has been given a G1/V2 grading.

The landlord has been upgraded to G1 after being downgraded to G2 in 2019 when the regulator found its board needed to “strengthen its business-planning, risk and control framework”.

The most recent assessment found Nehemiah has improved in these areas and “implemented recommendations from an independent review of governance which have strengthened its approach to managing risk and stress-testing”.

On financial viability, Nehemiah has maintained a V2 grading, however the basis for this has changed.

The judgement said: “Nehemiah has the capacity to deal with a reasonable range of adverse scenarios but needs to manage increased maintenance and major repairs expenditure. This reduces Nehemiah’s capacity and flexibility to cope with downside risk and requires ongoing management to ensure continued compliance.”

Housing Plus Group, Midland Heart, Plus Dane Housing and Vivid have all had their G1/V1 ratings reaffirmed in strapline judgements.