Industry News
Regulator identifies key risks facing social housing sector in 2022 and beyond
T
he Regulator of Social Housing has set out its view of the key risks and challenges facing the social housing sector and some of
the actions registered providers should be taking to manage those risks. Against a very challenging and fast-moving
economic backdrop, the Sector Risk Profile highlights a number of specific risks for social housing providers that boards need to manage in meeting the regulator’s standards. Some areas of risk are also relevant to councillors where their local authority owns and manages its own homes. In the current economic climate with the highest
inflation for 40 years, a deep recession looming for 1 – 2 years and a squeeze on household incomes, this could probably have been boiled down to getting through the next couple of years intact, while supporting tenants and delivering on legal commitments and regulatory standards. Fiona MacGregor, chief executive at the regulator,
said: “Providers must take a strategic approach to managing the significant risks we have identified in our Sector Risk Profile and act appropriately to maintain their continued financial viability. “Boards and councillors are the custodians of
people’s homes, and it’s absolutely vital that tenants’ homes, safety and the delivery of essential landlord
services are not put at risk.” Te key risks are identified as:
• Te impact of high inflation • Cost of living crisis • Tenant safety • Delivering landlord services • Investing in stock to meet quality, safety and decarbonisation commitments • Development of new homes
Te report shows that providers face substantial financial pressures, with high inflation levels impacting on operating costs and the cost of debt also rising at the same time as increased cost of living pressures on tenants, a proposed rent cap, and a weakening housing market. To maintain financial resilience, providers
need to continue responding appropriately to the changing conditions. Boards and councillors will need to have a clear sense of their priorities and make trade-offs. Tey must ensure that their mitigating actions are strategic and timely, underpinned by stress testing and robust planning, and communicated effectively to stakeholders. Alongside their financial viability, tenant
safety and the delivery of landlord services are key responsibilities which boards must continue
“It’s absolutely vital that tenants’ homes, safety and the delivery of essential landlord services are not
put at risk.” Fiona MacGregor
to prioritise. Providers are planning significant investment in existing homes to meet quality, building safety, and decarbonisation commitments. Tis must be underpinned by robust data on stock condition, a clear understanding of policy changes in these areas, and properly engaging with and listening to tenants. Boards will also need to recognise that delaying investment in existing stock could increase cost pressures over the long term and damage the sector’s reputation. Demand for new homes remains high even as the
economics of development become more uncertain. Providers will need to consider carefully how to assess new development, ensuring that risks are tightly managed, including investment in market- sale homes which could affect providers’ core social housing business.
Mayor demands higher standards from social
housing landlords in London
Te Mayor of London has warned the capital’s affordable housing providers that they could lose access to funding if they fail to maintain their properties at the high standards tenants deserve. While Parliament is currently debating new
legislation on strengthening consumer protection, the Mayor is clear that Londoners should expect high standards immediately. Sadiq Khan is calling for leadership from the Government, with additional affordable housing funding and reforms, such as a Commissioner for social housing residents, to drive better conditions.
A growing number of councils and housing
associations operating in London have been embarrassed by exposures in the media of poor repairs and complaint handing, while the regulator has also served regulatory notices over health and safety failings affecting thousands of tenants’ homes. Te Mayor’s warning follows a letter to City
Hall’s housing investment partners sent from the Deputy Mayor for Housing & Residential Development, Tom Copley. In this letter Mr Copley set out the actions City Hall will take if the Regulator issues either a non-compliant grade or a Regulatory Notice against a housing provider. Both notices indicate that a provider has breached a consumer or economic regulatory standard. In extreme circumstances, the GLA may limit
access to funding to a specific set of projects, including those already underway, and in the most severe cases, withdraw all funding and revoke investment partner status. Te Mayor of London’s new £4bn 2021-
26 Affordable Homes Programme already requires higher standards on design, safety and environmental performance for new homes than
6 | HMMDecember/January 2023 |
www.housingmmonline.co.uk
those funded outside London. Te Regulator has a requirement to assure these standards are maintained in the long-term where they exceed the Decent Homes Standard benchmark. Te GLA is also introducing additional scrutiny
of the housing maintenance track-records of newly qualifying investment partners, and in the requalification process for partners who have had their investment status restricted. Mayor of London, Sadiq Khan, said: “Most
social housing in London is well managed and maintained. However, this is unfortunately not always the case and I am determined to use my funding powers to drive up standards in both new build and existing homes. We owe it to all Londoners to provide better, safer, and fairer housing in the capital. “London is building some of the most impressive
new affordable homes in the country, but it is vital that existing residents experience high standards too. I will continue to call on the Government to also take responsibility for pushing for higher standards, including by making much needed additional funding available.”
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