The Homes and Communities Agency (HCA) has opened its statutory consultation on changes to the Regulatory Framework.
The consultation follows the HCA’s discussion document last year which asked for views on how regulation can help protect social housing assets and maintain the credit worthiness of the sector in a more complex and risky operating environment.
Following helpful feedback and discussion within the sector, the Regulator is now consulting on changes to its Framework that will enable the Regulator to deliver its statutory objectives more effectively, while maintaining the confidence of investors, tenants and other key stakeholders in the sector.
The HCA is consulting on a range of proposals designed to ensure that providers are managing the risks to social housing assets and their ongoing compliance with our standards:
- Changes to the Governance and Financial Viability Standard (G&FV)
- Focus on risk management and mitigation, including the requirement for providers to have undertaken robust stress testing of the business plan and to have a comprehensive register of their assets and liabilities in addition, the Regulator will expect providers to ensure that they have the appropriate skills to manage their risks and to certify annually their compliance with the standards where providers’ businesses are ultimately controlled by a non-registered organisation, then the Regulator will be seeking additional assurances about the security of the social housing assets
- Code of practice - as well as changes to the G&FV Standard, the Regulator is proposing to introduce an associated code of practice that will amplify and expand on the standard to help providers understand the concerns of the Regulator.
- Disposals regime - the Regulator is planning on changing its consents regime.to protect the public value in social housing assets as they move between the not for profit and for profit sectors.
Julian Ashby, Chair of the HCA Regulation Committee, said: “We have considered the feedback on the discussion document in great detail and believe that this consultation reflects a reasonable response to the significant changes in the social housing sector. The sector used to rely on substantial levels of government grant for new development, housing benefit underwriting rental income in full, and banks providing long term debt on low margins. This no longer applies. The consequences for both providers and the Regulator are profound.
“For providers, there are different business models to consider and different risks to manage as they navigate this more complex world. In this context, the Regulator needs to ensure it is keeping pace with developments and is able to spot where problems may emerge and deal with them effectively.
“Our job is to protect social housing assets and their public value. This is for the benefit of tenants, taxpayers and lenders. It also provides the preconditions for further investment and asset growth. We consider that changes will be needed to keep the Regulatory Framework ‘fit for purpose’. We want to consult on these changes before reaching a firm conclusion.”
Details of the proposed changes and the rationale are in the statutory consultation document, which is available to download from our consultation page. The consultation is subject to a statutory 12 week consultation period that will close on Tuesday 19 August.