Landlords breaching the VFM rules

The regulator has issued long-awaited governance rating downgrades to landlords for failing to publish an adequate 2013/14 value for money self-assessment.

Only eight landlords have fallen foul of the rules this year-a stark contrast to a year ago when 15 failed to follow the rules and a further 160 were issued with warning letters telling them to improve or face a downgrade.

The low number of judgements is likely to cause surprise in the sector, particularly following strong comments by HCA regulation chair Julian Ashby in an Inside Housing column in December, in which he said there is a ‘lack of understanding [in the sector] of the need to demonstrate value for money to a sceptical public’.

Jonathan Walters, deputy director of regulation at the HCA, said the relatively low numbers of downgrades were due to a better performance from providers.

He said: ‘Fair play to the sector, it came in for criticism last year, but it has done a better job this time around.’ Mr Walters rejected any suggestion that the low numbers were due to the HCA being softer on landlords than expected.

Five landlords today had their governance ratings downgraded to ‘G2’, which means they comply but need to improve. They are Acis Group, Community Housing Group, Local Space, Trident Housing Association and Wandle Housing Association.

Three other landlords also failed to meet the standard, but were not downgraded further as the regulator was already concerned about their governance. They are Saffron Housing Trust, Tower Hamlets Community Housing, both already ‘G2’, and Tuntum Housing Association, which is a non-compliant ‘G3’.

The eight landlords failing to follow the rules were all relatively small players, with an average of 4,000 homes.

Unlike last year, the first of the new value for money standard, no landlords were downgraded for failing to meet the self-assessment deadline of 30 September and none were penalised for publishing the assessment in the wrong place.

The main areas of concern this year were landlords not including good enough indicators to allow comparison with past and future performance, while some providers found difficiulties in evidencing return on assets.

Richard Renwick, chief executive of Tuntum Housing Association, said the HCA had found his organisation’s assessment too complex for stakeholders to use and understand, and that he will ensure it is simplified next year. Mr Renwick, said however: ‘Our tenants understand we offer value for money.’

Adam Ronaldson, chief executive of Saffron Housing Trust, said he regretted that the ‘format’ of Saffron’s value for money assessment ‘did not allow the regulator to obtain the assurance it needs’ and that Saffron will be seeking guidance on how to adopt a more accessible format next year.  Mr Ronaldson said: ‘Saffron generates a surplus which puts it in the top 10% of the HCA global accounts…as well as increasing its stock by five times the sector average.’ He added: ‘Saffron is always delighted to demonstrate that it operates efficiently.’

A spokesperson for Wandle Housing Association said: ‘We look forward to working with the HCA to learn lessons from their critical judgement of our past approach to value for money and [we] will improve in the future.’

Tony Stacey, chair of Placeshapers, said the number of downgrades suggested that landlords had improved on last year and called it a ‘positive story’ for the sector.