Plus Dane housing association is at risk of being judged non-compliant with viability standards rules due to a drop in value of properties owned by its commercial subsidiary.
According to Inside Housing:
Plus Dane, which manages 18,000 homes across Merseyside and Cheshire, has today along with 1,381 home Chapter 1, been placed on the Homes and Communities Agency’s ‘watch list’ of organisations in danger of non-compliance.
Plus Dane is at risk of having its financial viability rating downgraded to ‘V3’ which means there are issues of ‘serious regulatory concern’. Currently there are no other landlords with a rating as low as ‘V3’.
The HCA’s concern relates to Plus Dane’s commercial subsidiary Three60.
Plus Dane‘s 2013/14 financial accounts listed ‘risk of continued diminution of investment property values in Three60 leading to potential covenant breach’ as a potential major risk.
The drop in property values has not yet led to a breach of terms in existing lending agreements. Inside Housing revealed in 2013 that Three60 properties had dropped in value, potentially exposing it to losses of £8m.
The watchlist placing will come as a blow to Plus Dane, which is undergoing a governance overhaul under new chief executive Barbara Spicer.
Ms Spicer said: ‘Over recent months we have been working to try and mitigate the on-going risks that our commercial subsidiary Three60 presents to the organisation as a whole.’
Ms Spicer told Inside Housing earlier this year that Plus Dane is looking at each property owned by Three60 on an individual basis and deciding whether to sell it.
Plus Dane is already non-compliant with the HCA’s governance ratings following a downgrade in August 2013.
Another landlord, Chapter 1, is also at risk of downgrade to a ‘V3’. The landlord said this was due to ‘poor performance of the business in the last financial year’.