The housing regulator will require higher-risk landlords to write ‘living wills’ to ensure plans are in place if they fall into financial trouble.

The Homes and Communities Agency regulation committee is drawing up the proposals which are based on principles used by the Financial Services Authority in the banking sector.Under the plans, landlords will be required to create a ‘living will’ – a document which outlines the debt the landlord has and the security underpinning it.

The document will suggest ways of raising income quickly, such as disposing of stock or breaking up the group in order to resolve financial difficulties swiftly.Living wills would only apply to organisations deemed to be at higher risk of financial trouble because, for instance, they are undertaking a diverse range of activities.

The criteria will be published next month, but it is understood around 40 to 50 landlords could be affected.The HCA has yet to decide how to enforce the requirement, but the failure of affected landlords to adopt a satisfactory living will could result in a poor regulatory judgement.