HAs downgraded over risk management and safety issues

The social housing regulator has shown its intent to improve risk management and tenant safety across the rental sector, by downgrading three housing associations.

North Somerset based Alliance Homes, with 6,300 homes under management was downgraded to a G2 rating for governance, but retained its top V1 rating for financial viability. The regulator said the landlord “needs to enhance its business planning and strategic risk management”. It said there is a lack of clarity about financial headroom in its business plan, which does not provide the regulator with assurance that the board has adequately developed mitigating strategies and triggers appropriate to the association’s development ambitions. Equity Housing Group, which owns around 4,600 homes across Greater Manchester, Derbyshire and Yorkshire, was downgraded to a ‘G2, V2’ rating following an in-depth assessment. It had previously been given the highest rating of ‘G1, V1’.

The regulator criticised Equity for a lack of clarity over the respective roles and responsibilities of the board and its committees, resulting in cases of duplication, or insufficient board attention on matters which had been delegated. Exposure to the open sales housing market for the first time as part of an expanded development programme was cited as a reason for the viability regrade, as well as reduced financial performance and covenant headroom in the early part of its 2018-2023 corporate strategy. Leeds & Yorkshire HA had its governance downgraded to a G2 rating, while its viability rating remained at V1. The association had referred itself to the regulator after identifying problems with its electrical safety compliance. The regulator said the association needed to strengthen the controls it has in place to manage and monitor key risks, as well as improving its performance reporting and internal controls assurance. Meanwhile, the Shepherds Bush Housing Group was upgraded from G2 to G1, following a downgrade in April 2016. It maintained its V1 grading for viability. The west London association has improved its work on the value for money standard and its stress testing now meets the regulator’s expectations.

By Patrick Mooney, editor