ao link
Twitter
Facebook
Linked In
Twitter
Facebook
Linked In

You are viewing 1 of your 1 free articles

Regulatory judgements: London council becomes latest authority to breach Home Standard

A London council has become the latest local authority to breach the Home Standard after the regulator identified failures in relation to fire safety, gas safety and asbestos management.

Linked InTwitterFacebookeCard
Picture: Getty
Picture: Getty
Sharelines

Lambeth Council is the latest local authority to breach the regulator’s Home Standard for failures in relation to fire and gas safety #ukhousing

Lambeth Council has been found by the regulator not to have completed asbestos surveys in 180 communal areas #ukhousing

More than 40 properties owned by Lambeth Council were found by the regulator to be without valid gas safety certificates for up to 24 months #ukhousing

Lambeth Council, which owns around 22,500 homes, was found by the regulator to have “a significant number of overdue remedial actions arising from fire risk assessments [FRAs]”, including some for FRAs considered intolerable or substantial.

According to a regulatory judgement published today, the council was also found not to have completed asbestos surveys in over 180 communal areas, while over 40 properties were found to be without valid gas safety certificates for up to 24 months.

The regulator said there is evidence that Lambeth has made improvements over the past six months and has “significantly accelerated” the pace of remedial works.

However, it considered Lambeth’s case a breach of the Home Standard because of the “breadth and scale of the failure” and the “long-standing nature of the issues”.


READ MORE

Connexus remains compliant for governance despite Home Standard breachConnexus remains compliant for governance despite Home Standard breach
Council breached Home Standard on fire, asbestos and electrical safetyCouncil breached Home Standard on fire, asbestos and electrical safety
Council breached Home Standard over fire safety failure at 17-storey tower blockCouncil breached Home Standard over fire safety failure at 17-storey tower block
Council signs agreement with 10 housing associations to tackle housing issuesCouncil signs agreement with 10 housing associations to tackle housing issues

It also said that the council did not have an “effective system in place to allow it to manage the risk of tenant safety and meet its statutory health and safety responsibilities across a range of areas”.

Lambeth is the latest local authority found to be in breach of the Home Standard this year, following similar judgements against Gateshead, Arun, Runnymede and four councils in Kent.

In May this year, the regulator wrote to all stock-retaining councils reminding them of their health and safety obligations following the breaches.

A Lambeth Council spokesperson said: “Lambeth Council takes the safety of our residents incredibly seriously and has made significant strides recently in improving the safety of our properties. This good progress is recognised by the regulator.

“In the areas identified by the regulator, Lambeth has taken swift action to resolve these matters. There are no longer any outstanding asbestos surveys or ‘intolerable’ or ‘significant’ fire risk actions.

"On outstanding gas certificates, only a very small number remain outstanding, equating to a current position of 99.9% compliance. Those very few cases are being handled by dedicated council enforcement officers who are working on a day-by-day basis to resolve resident access issues.

"We firmly believe that – taken together - robust measures are now in place to ensure all these standards are maintained."

The notice of the breach came as the regulator released three narrative regulatory judgements today. These include a downgrade for The Guinness Partnership, which saw its financial viability rating moved down from V1 to V2.

This rating means that the 64,000-home association is compliant and has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure continued compliance.

Guinness scored G1 for governance, the highest rating a landlord can achieve from the regulator.

The regulator said that while Guinness has an adequately funded business plan and sufficient security, its sales programme – which includes an increasing reliance on the cross-subsidy model – gives rise to risks and exposures that need to be managed.

It added that this combined with increased investment in existing homes reduces the capacity the landlord has to respond to adverse rents.

Guinness is currently a strategic partner with Homes England and the Greater London Authority and has secured £224m in grant funding to finance the construction of 2,500 homes annually by 2022.

A Guinness spokesperson said: “Both [V2 and G1 grades] are compliant gradings.

“This regrading is a reflection of our significant planned investment in our existing homes and new homes. The regulator has confirmed Guinness has an adequately funded business plan, sufficient security and is forecast to continue to meet its financial covenants.”

London-based housing association Octavia also saw its financial viability rating lowered to V2 from V1. The association scored G1 for governance.

The regulator said that the association, which owns 5,000 properties across central and west London, complies with the financial viability element of its standard but that its latest plan forecasts increased costs linked to its development programme.

It said a rise in interest payments and in shared ownership selling costs could negatively impact Octavia’s interest cover for several years. It added that there is a reduced capacity within the organisation to offset potential risks crystallising, such as those to do with market sale exposure and additional fire safety work.

Octavia plans to build 200 new homes a year for the next five years, with half of these homes for social, affordable or intermediate rent and the other half for shared ownership.

The regulator also found that Octavia’s stress-testing did not provide evidence of a robust plan in the event of “severe but plausible” downside scenarios.

An Octavia spokesperson said: “We are committed to building more quality affordable homes for local people and prioritising continued investment in health and safety for our residents.

“This brings increased exposure to risk and Octavia takes a long-term view. We are confident that a strategy that places emphasis on providing new, much-needed affordable homes and concentrating on resident safety is the right thing to do.

“We continue to monitor the external environment and closely manage the associated risks.”

In the final judgement, North Cumbrian association Eden Housing’s financial viability rating was upgraded from V2 to V1.

The judgement said that the association had a “fully funded business plan” with no requirement for refinancing. It also noted that improved interest cover and liquidity ratios reflect its increased financial resilience.

Regulatory judgements and notices published on 12 November 2019

ProviderGovernanceViabilityExplanation
Bernicia GroupG1V1No change
Black Country Housing GroupG1V1No change
Broadland Housing AssociationG1V2No change
Bromford Housing GroupG1V1No change
Community Gateway AssociationG1V1No change
Eden Housing AssociationG1V1Viability upgrade
Empowering People Inspiring CommunitiesG1V1No change
Gloucester City HomesG1V2No change
GreenSquare GroupG2V2No change
Guinness Partnership (The)G1V2Viability downgrade
Home GroupG1V1No change
Housing SolutionsG1V1No change
Karbon HomesG1V1No change
Leeds Federated Housing AssociationG1V1No change
London Borough of LambethN/AN/AHome Standard breach
Mosscare St Vincent’s Housing GroupG1V1No change
North Star Housing GroupG1V1No change
Octavia HousingG1V2Viability downgrade
One Housing GroupG1V2No change
One ManchesterG1V1No change
Pierhead Housing AssociationG1V1No change
Pioneer Housing and Community Group (The)G1V1No change
Plymouth Community HomesG1V1No change
Two Rivers HousingG1V1No change
United CommunitiesG1V1No change
Vivid HousingG1V1No change

Jargon-busting: some regulatory terms and what they mean

Jargon-busting: some regulatory terms and what they mean
  • Co-regulation: this means boards are responsible for deciding how to meet the regulator’s standards – the regulator does not prescribe how to do this
  • Gradings under review list: a public list of providers under investigation who are at risk of being judged non-compliant with regulatory standards
  • In-depth assessment: a planned inspection, in which the regulator assesses a providers viability, governance and approach to value for money
  • Narrative regulatory judgement: a detailed explanation of the reasons behind a regulatory judgement. Narrative judgements are published where a providers’ viability or governance ratings have changed, or where RSH has particular issues or concerns.
  • Reactive engagement: refers to the regulator reacting to complaints or allegations about a provider and taking action
  • Stability check: an annual assessment of all providers owning 1,000 social homes or more. RSH uses accounts and statistical return data to check for any changes in a providers’ risk profile.
  • Strapline regulatory judgement: where a provider is meeting the standards, and its governance or viability ratings have not changed since its previous judgement, the regulator does not publish a full judgement explaining its reasons for the gradings. Instead it just publishes the gradings themselves, in a ‘strapline’.

 

Regulatory judgements in England explained

The Regulator of Social Housing publishes regulatory judgements for all providers owning 1,000 or more social housing homes.

These judgements set out whether the provider is complying with the regulator’s governance and financial viability standards.

The regulator carries out an assessment either through a scheduled in-depth assessment, or reactive engagement (in which the regulator acts following information about a provider).

It then awards the provider a rating from one to four for financial viability (V) and a separate rating from one to four for governance (G).

Providers must score two or higher in both categories to be judged as complying with the standards.

As providers have increasingly taken on more risk to cross-subsidise social and affordable housing delivery through market-facing activity, the regulator has changed a number of associations’ viability ratings from V1 to V2.

The regulator often categorises this kind of regulatory action as ‘regrades’ rather than downgrades. Click here to read more.

 

Key to ratings:

V1/G1: Compliant

V2/G2: Compliant

V3/G3: Non-compliant and intensive regulatory engagement needed

V4/G4: Non-complaint, serious failures, leading to either intensive regulatory engagement or the use of enforcement powers

 

Rating straplines in full:

Governance ratings:

G1: The provider meets our governance requirements.

G2: The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.

G3: The provider does not meet our governance requirements. There are issues of serious regulatory concern and in agreement with us the provider is working to improve its position.

G4: The provider does not meet our governance requirements. There are issues of serious regulatory concern and the provider is subject to regulatory intervention or enforcement action.

 

Financial viability ratings:

V1: The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.

V2: The provider meets our viability requirements. It has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure continued compliance.

V3: The provider does not meet our viability requirements. There are issues of serious regulatory concern and, in agreement with us, the provider is working to improve its position.

V4: The provider does not meet our viability requirements. There are issues of serious regulatory concern and the provider is subject to regulatory intervention or enforcement action.

Linked InTwitterFacebookeCard
Add New Comment
You must be logged in to comment.