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Regulator unveils plans to ‘future-proof’ economic standards amid sector ‘tensions’
The Regulator of Social Housing (RSH) is calling for landlords’ input over the sector’s “challenges and tensions” ahead of a formal consultation on its economic standards next year.
The Regulator of Social Housing is calling for landlords’ input over the sector's “challenges and tensions” ahead of a formal consultation on its economic standards next year #UKhousingIn a new 40-page document, published today, the agency has laid out its initial thinking on how it might alter its regulation of landlords.
Explaining the move, the RSH said its approach has to change as the sector is “likely to remain under significant financial pressure over the next five to 10 years”.
It added that “future-proofing” its economic regulation will reduce the “likelihood of financial failure” in the sector.
It is also around a decade since the last review, while the sector has grown in “scale and complexity”, the regulator said.
Jonathan Walters, the RSH’s chief executive, said: “Our focus is simple: a more efficient, financially resilient social housing sector – and a modern regulator that drives it.”
The changes are expected to be enacted in April 2028 after a formal consultation next year.
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Plans for the review emerged in March this year.
Among the proposed changes, the regulator said it wants to be “more risk-based and targeted” in its regulation and “clearer” about its expectations of landlords.
The paper flags the growth of for-profit providers, although it notes they are “still a relatively small part of the sector”. However, it said: “We... want to ensure new entrants can come into the sector to deliver long-term commitments to tenants and their homes.”
On the risks with for-profits, it added: “Landlords may have less control over homes or be at greater risk of financial failure. Investors may assume that they will sell homes or whole landlords to realise capital gains.
“Existing landlords could increase their leverage or subsidise their development more. All of these increase the risk of tenants losing their homes and of homes being lost from the regulated sector.”
Mr Walters added: “We want landlords who invest for the long term, improve safety and quality, manage risk, and deliver more and better homes for current and future tenants.”
More broadly, on the balance of allowing more risk, the regulator said: “We could choose to be more permissive in our regulation and allow for a higher likelihood of financial failure and loss of homes.
“Doing this might enable more investment in more homes but we and all our stakeholders would need to be clear-eyed about the potential consequences.
“This includes the possibility that our existing regulatory tools would not be able to prevent or mitigate financial failure, loss to creditors and loss of homes in higher-risk financing models.”
The paper also floats the idea of introducing a requirement that “sets out more clearly the central role social housing should take in a social landlord”. This could be in relation to the proportion of social housing assets, or turnover, or it could take another form, the paper said.
Among its ideas, the RSH is also looking at whether to require large landlords to carry out stress tests to help them “manage and demonstrate their financial resilience effectively”.
The RSH said it is also interested in views on the “advantages and disadvantages of intervening more readily and robustly when a landlord is unable or unwilling to act in an acceptable timescale”.
Responses to the initial plans must be received by 30 September.
The regulator’s Governance and Financial Viability Standard was introduced in 2015 and its Value for Money Standard in 2017.
Separately last week, the regulator launched a review of the impact of its consumer standards regime, which came into force in April 2024.
Jonathan Walters is speaking at Housing 2026, taking place 23-25 June. Find out more below
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