The Regulator of Social Housing (RSH) will work with key stakeholders to create a consumer standards regime that works for tenants, landlords and itself, the organisation’s chair has said – vowing that the introduction of proactive inspections will not be “back to the future” in terms of former approaches.
Speaking at the Social Housing Annual Conference yesterday (1 December), Simon Dow, interim chair of the RSH, told delegates: “For those with memories of the Audit Commission, the Housing Inspectorate, the regulator is determined that inspection will not be simply ‘back to the future’.
“We will work with you to come up with arrangements that we believe support tenant services, and [support] you as landlords to deliver those effectively.”
The Housing Inspectorate, which was part of the Audit Commission and previously acted as an inspector of services to tenants, closed in 2011 alongside a number of other non-governmental housing bodies as a new legislative framework was brought in.
Following the publication of the government’s long-awaited Social Housing White Paper last month (November), the RSH has now been tasked with building a new proactive approach to regulating consumer standards. Key changes to be brought in include the replacement of the ‘serious detriment test’ with new regular inspections, expected to be every four years for large landlords.
Mr Dow said that the regulator would have three key “tests” for developing the new regime, emphasising that it would need to be “something that works for tenants, for landlords, and something that is amenable to regulation – and in some cases enforcement as well”.
Good governance would remain “pre-eminent” within the new consumer focus, he said.
“We’re very clear that good governance is what makes sure that the economic vitality and health of an association remains intact. Well, just as it’s important in the economic arena, it’s going to be vital in the consumer arena as well – so good governance will remain a critical focus of the regulator through the next few years.”
Resources – and fees
There was also an indication that some of the cost of building the new regulatory function could be passed to landlords through fees.
Fiona MacGregor, chief executive of the RSH, told delegates that while it would take time for the regulator to scale up into its new role, the white paper makes a clear commitment to ensuring that the regulator has the additional resources it needs so that it may also maintain its focus on economic regulation.
“Those resources will build up over time, and that’s not unhelpful in terms of conversations with government in terms of budget settlements on a year-on-year basis, and possibly, ultimately conversations with the sector about the principles that Treasury always applies – that if regulation applies to everyone in equal measure, then there’s a presumption in favour of that being funded through fees. And I think that’s where we may be heading.”
Addressing the sector’s financial health – as captured by the financial forecast returns submitted by housing associations, and the recently published Sector Risk Profile – Mr Dow said that “turnover, margins and interest cover are down, but the good news is that interest rates are down and funding is particularly competitive at the moment”.
And while EBITDA MRI cover levels are tracking slightly below 2019 levels, the reduction in cover is still one the regulator is “comfortable with”, he said.
Mr Dow acknowledged that the pandemic had introduced “increased economic and housing market uncertainty”, while other significant changes are taking place in housing associations’ forecasts, which are not all COVID-19 related.
Housing associations are forecasting lower development, fewer homes for outright sale and increased debt as they maintain investment in existing stock while accounting for lower sales receipts. Outlined in last week’s Sector Risk Profile, the forecasts include a “historically high level” of need for new debt facilities over the next five years, at £41bn.
But Mr Dow said that the regulator is not concerned about the sector’s overall position. “We at the regulator believe that at aggregate level the sector is solvent, liquid, viable, strong financially and able to do the tasks called upon it.”
Asked about the impact of Brexit, as the end of the transition period approaches, Ms MacGregor said that a lot of work had been done in the sector during initial Brexit planning around 18 months ago, for example to put contingency plans in place around component parts, and to ensure access to liquidity remains strong.
But she said: “The bit that is the bigger unknown is what might it mean for the housing market, and depending on the terms of any exit from the EU. Everybody has been very surprised by how well the housing market has held up, and that pent-up demand has held up, supported by the Stamp Duty Land Tax holiday.
“I think you need to be prepared to act if the housing market doesn’t continue to be quite as buoyant”.
The Social Housing Annual Conference is taking place virtually on 1-3 December. For more information and booking, click here.