The Regulator of Social Housing downgraded three housing associations , including managing risk and electrical safety.
Equity Housing Group, 4,600 homes based in Greater Manchester was downgraded to a ‘G2 V2’ rating following an in-depth assessment (IDA)
That grading requires improvements in some areas of governance and needs to manage “material risks” to its financial viability.
The RSH said: “There is a lack of clarity regarding the respective roles and responsibilities of the board and its committees. “This has resulted in duplication, and also, in some instances, insufficient board attention on matters which have been over-delegated.”
Exposure to the open sales housing market for the first time as part of an expanded development programme as well as “reduced financial performance and covenant headroom” in the early part of its 2018-2023 corporate strategy were reasons for the V2 rating.
Alliance Homes, 6,300-home HA North Somerset, was downgraded to a G2 rating for governance but retained its V1 rating on an IDA
The regulator said there is a need ” to enhance its business planning and strategic risk management”.
The organisation is planning
The regulator points to a “lack of clarity” about financial headroom in its business plan with no assurance that the board has adequately developed mitigating strategies and triggers appropriate to Alliance Homes’ development ambition to build 1,000 homes by 2022 which will involve market sale and rent activities.”
Leeds and Yorkshire HA (1,500 homes) had its governance downgraded to a G2 rating, while its viability rating remained at V1 on self referral after identifying problems with electrical safety compliance.
The regulator suggested that LYHA needs to strengthen the controls that it has in place to manage and monitor key risks, including improvement in performance reporting and “internal controls assurance”.
Hundred Houses Society (HHS), a 1,240-home association operating mainly in Cambridgeshire, failed to move beyond its previous governance rating of G2. In April 2017, the regulator said it had to improve some aspects of its governance.
This time, it said HHS had made progress, but still needed to make some improvements to asset management and had delayed spending and “strategic disposal” decisions until this took place. It maintained its V2 rating for financial viability.
“HHS has a plan in place to establish a new asset management strategy and associated processes and now needs to implement these, following recent changes in its leadership team,” the regulator said.