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An Essex-based housing provider funded through leases with private firms has been found non-compliant by the regulator after a probe failed to provide assurances over its “on-going viability”.
Larch Housing Association, which manages 297 homes, has not been able to manage its “resources effectively to ensure its viability can be maintained” and has not “ensured its governance arrangements deliver an effective risk management framework”, the Regulator of Social Housing (RSH) said in a notice published yesterday.
Larch owns and manages five social housing units and the rest are classified as “non-social housing” by the RSH. Its most recent accounts reveal it had assets of £280,065 while it owed £266,478 to creditors.
The association enters into long-term index-linked lease arrangements with private firms to acquire homes for tenants, the RSH said. The properties are on full repairing and insurance leases.
Several providers operating similar models have been deemed non-compliant with RSH standards over the past year, with the body warning it is “hard to see” how such organisations can comply.
The landlord told Inside Housing it is “working flat out” to resolve “recent cash-flow issues”.
The regulator’s notice said: “The regulator has concluded that it lacks assurance and evidence that Larch is compliant with both the governance and viability elements of the Governance and Financial Viability Standard.
“Investigations undertaken by the regulator obtained inadequate assurance over Larch’s on-going viability, the effectiveness of its risk management and that the board has managed Larch’s affairs with an appropriate degree of skill, diligence, effectiveness, prudence and foresight.”
Because Larch has fewer than 1,000 homes, it has not been given a regulatory rating.
The RSH said Larch has been “unable to achieve its income forecasts” which has “placed significant stress on its cashflow”.
It added: “As a result, Larch has been unable to meet its obligations under its lease arrangements as and when they fall due. Larch is currently reliant on the continued support of its head landlords forgoing lease payments while solutions are explored.”
Larch has committed to work with it to “address the issues outlined” and develop a “recovery strategy”, the notice said.
It added: “The regulator will continue to engage with Larch and is considering whether further action should be taken, including whether to exercise any of its powers.”
In an statement Larch said: “Larch has always strived to provide the highest-quality accommodation and housing management services for its tenants who are some of the most vulnerable in society.
“We have had some recent cashflow challenges which we are working flat out to resolve.”
The organisation added: “We have also been liaising closely with the regulator and we are committed to working with them constructively to address their concerns.”