Industry news


HA deregulation – momentous change or a damp squib?


divided on how much of an impact this will have on the sector. In a nutshell, social landlords no longer have


A


to obtain the regulator’s consent if they want to sell or mortgage their housing, to merge with another housing association, or to restructure their business. To some this represents the first steps into a


golden age of new freedoms where associations can act independently and determine their future, along with the right to control their own activities. However, others say this is the least that could


be done in an attempt to get HAs reclassified as private bodies by the Office for National Statistics and off the public sector’s balance sheet, where they have sat since 2015.


Homework


The Homes & Communities Agency has retained the right to be notified of property sales and


lighter regime of regulating the activities of housing associations has finally kicked in, but opinions remain


other disposals, as well as rule changes and restructures, after the decisions have already been made. This has been likened to ‘marking the


homework’ at the end of term or just before exams are sat, rather than as part of a continuous process. It also means the HCA can step in and take action after the event if it has specific concerns. However, its ability to appoint board


members and senior managers has been diluted and can now only occur where there has been a breach of legal requirements. A further complication has been highlighted


by the need for charitable associations, of which there are 600 or a third of the total number of HAs, to obtain consent from the Charity Commission. In the past this was not needed as the work


was effectively delegated to the HCA, but with deregulation, this requirement has resumed much to the irritation of the NHF. None of this has stopped the regulator from issuing a loud and cautionary warning to boards


and senior executives that they need to act with care and sensitivity to risks, while working to protect the sector’s reputation at all times. But the focus on good governance has


certainly shifted from the HCA to individual boards, who will have to take a more active role in activities like scrutiny, oversight and risk assessment, while carefully managing relationships with senior executives. It will only take one HA to act in an injudicious


way – putting tenants homes at risk, or defaulting on a private loan – for the new system to come under strain and for calls to be made to reverse the changes.


Diligence


It’s possible that private lenders will step up their due diligence requirements and request more financial returns and operational information from HAs that they work with. But the extent of this is unknown and will


probably vary. Credit rating agency Standard and Poor’s has


already said that credit ratings will not be damaged by deregulatory changes, despite some initial concern from lenders. The HCA has seen fit to remind HAs about


the need to consult tenants over sales of properties and one outcome could be that a closer relationship may develop between the HCA and the Ombudsman – in which case complaints could become a more important source of regulatory information and intervention. This might result in a greater voice being


given to tenants.


6 | HMM May 2017 | www.housingmmonline.co.uk


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