Downgrade on financial viability for Shoreline

Shoreline Housing Partnership has today become the latest English housing association to have itsfinancial viability rating downgraded to ‘V2’, which means it complies with HCA rules but needs to manage risks to ensure continued compliance.

The HCA cited an increased stock improvement programme delivered by new contractors, a move to bring back in-house repairs, a plan to demolish 640 homes in tower blocks and ‘optimistic’ forecasts of the financial impact of welfare reform as areas of risk for the 8,000-home landlord.

Shoreline is also ‘exposed to a large claim from a former major works contractor’, the HCA regulatory judgement said.

A High Court judgement published last week revealed Shoreline was ordered to pay former contractor Mears £300,000 following a billing dispute.

A spokesperson for Shoreline said: ‘While the judgement is a disappointment, these are all risks that we are both well aware of and prepared for and we are confident that the plans that we have in place can successfully deal with the challenges that are posed.’

The downgrade continues a trend seen this year towards the downgrading of more landlords to ‘V2’. Shoreline is the eighth landlord downgraded to ‘V2’ this year, more than the six issued for the whole of 2014. The HCA is expecting to downgrade more landlords to ‘V2’ due to a more challenging operating environment for landlords.

In other judgements today, the HCA downgraded the governance rating of Bournville Village Trust (BVT) after delays in putting security in place to allow it to draw down funding from a loan. The judgement said Bournville had adequate unencumbered stock but securitisation took ‘far longer than anticipated’. ‘This has resulted in BVT not being able to access any of its new loan facility within originally assumed timescales,’ the judgement said.’The judgement said the risk was ‘exacerbated’ by the association’s exposure to interest rate swap risk. The HCA judgement said: ‘BVT was unable to adequately plan and control the risks associated with acquiring the finance necessary to deliver its objectives.

Peter Roach, chief executive of BVT, said: ‘We are confident that we will be able to address the areas that have been highlighted and we have already made progress towards this.

Housing & Care 21 had its governance and viability ratings upgraded to the highest possible while Your Housing Group had its governance rating upgraded to ‘G1’