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Sixth equity-linked housing association ruled non-compliant by regulator
A housing association funded by lease deals with investment firms has been ruled non-compliant by the regulator, bringing the number of providers using this type of model that have not met the regulator’s standards to six.
In a regulatory notice published this afternoon, the Regulator of Social Housing (RSH) said that Bespoke Supportive Tenancies (BeST) has failed to meet the regulator’s standards for governance and financial viability.
BeST, which owned and managed 996 homes at its last Statistical Data Return in March 2018, “has not been able to demonstrate that it has managed its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence and foresight”, the notice said.
The association provides specialist supported housing (SSH) to vulnerable adults through a business model that sees it lease homes on a long-term basis from private investment funds to which it must make monthly index-linked payments.
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These are funded through housing benefit, which is paid at a higher level than it is for other kinds of social housing, because SSH is exempt from various rent regulations.
In accounts published last month, BeST said it was “not blinkered to the size of the task” of being compliant with the RSH’s standards.
The regulator has said it is “hard to see” how housing associations with equity-linked models can comply.
All five of the other equity-linked housing associations to have been investigated by the regulator have been declared non-compliant with standards on governance and financial viability.
The regulator’s notice said that BeST “has no long-term financial plan” for meeting its lease obligations in different scenarios and has a “weak” underlying financial profile.
It added that the RSH has seen information showing that the landlord’s reported aggregated rent income is less than its lease costs and so can only continue to meet its obligations “with the continuation of growth, third party support, and the use of pooled service charge income”.
It also said that the regulator “lack[s] assurance on how the board has satisfied itself” that BeST is meeting the criteria for SSH.
The notice acknowledged that the association’s board has “has committed to work with the regulator to address the issues”.
The RSH also identified that the directors registered to the organisation on Companies House “were inconsistent” with the trustees registered with the Charity Commission.
No regulatory judgement has been published as BeST had fewer than 1,000 homes at its last Statistical Data Return – although it now has an estimated stock size of 1,350.
The RSH is considering whether to use its enforcement powers against BeST and is set to “engage further” with the association based on “initial information” provided about its compliance with health and safety legislation.
Inside Housing has contacted BeST for comment.
