Housing association boards will need to have an ‘iron grip’ on their finances and improve their governance, the chair of the social housing regulator has warned.
Julian Ashby, chair of the Homes and Communities Agency regulation committee, today called on landlords to improve their risk management.
Speaking at the National Housing Federation’s annual conference in Birmingham, Mr Ashby said landlords are operating in ‘a risky operating environment’ in which the risk level is rising.
He cited the affordable homes programme, welfare reform, fixed term tenancies, housing revenue account reform and the emergence of for-profit providers as factors leading to a riskier sector.
In a tough message to delegates, Mr Ashby said: ‘You will require stronger governance and stronger risk management. You will need an iron grip on treasury management and particularly on covenant compliance.’
‘We have already had to provide intensive support to a small number of providers who have mismanaged the process of securing the cash they need.’
Mr Ashby also urged providers to carry out work to understand the impact on their businesses of welfare reform.
‘I’m surprised about the number who have yet to get their heads around the possible impact,’ he said.
The regulator will publish guidance later this year or in early 2013 aimed at ring fencing the value of social housing assets, where they are transferred to for profit providers.
Mr Ashby said that unregistered organisations, which can sit in the same group structure as registered providers, have the potential to cross-subsidise affordable housing. However, he warned: ‘They also have the potential to undermine or threaten the viability of a registered association and that puts social housing, tenants and lenders at risk.’
Mr Ashby also re-iterated that the new £10 billion government guarantee scheme cannot be used for existing programmes under the affordable