How a small housing provider grapples with regulation and governance

A strong and effective board is essential in overseeing strategic direction to drive the organisation forwards. Yet over the past 30 years, the nature and composition of housing association boards has changed substantially, reflecting heightened regulatory, political and customer expectations.

In view of the increasing competition for good board members who have a broad range of skills and experience, as well as empathy for the social housing sector, a key area for reflection is whether or not to pay, even a nominal sum, to attract the right people. For larger housing providers, board member remuneration has been the norm for some time and is becoming so for many smaller housing associations, creating an additional financial burden. 

“For larger housing providers, board member remuneration has been the norm for some time and is becoming so for many smaller housing associations, creating an additional financial burden”

Over the past few years, the reputation of the social housing sector has undoubtedly been tarnished by the human consequences of service failures, in particular around property condition, for example, fire risk and damp and mould. All housing providers need to act on the broader recommendations from public inquiries and the Housing Ombudsman, as well as any targeted recommendations relating to their own property stock or services.

Smaller housing providers can make good use of their depth of knowledge of local communities, as well as customer insight and links forged over many years to enhance customer satisfaction. The regulatory tenant satisfaction measures (TSMs) should be a great way to use data, gathered in a standardised way, to help drive improvement.

Small associations with fewer than 1,000 homes are not required to submit data returns, but are expected to publish the TSMs and all boards should expect to receive regular updates on both TSM performance and, critically, plans for improvement. While publication of the TSMs is one ingredient, visibility of the improvement plans is arguably of greater importance in demonstrating transparency and commitment.

Strengthened regulation comes at a cost. While for smaller providers, the annual regulatory charge is a considerably lower direct cost than for larger ones, the hidden costs of regulation are high. The administrative burden of collating and publishing the TSMs is not inconsiderable and there is a risk that a focus on meeting these performance measures can lessen the time housing teams spend on working directly with tenants, especially in smaller organisations with smaller staff teams.

Improving systems and data collection is part of the solution, but this too has an impact on already scarce resources.

“While publication of the TSMs is one ingredient, visibility of the improvement plans is arguably of greater importance in demonstrating transparency and commitment”

I firmly believe all housing providers want to be able to keep homes in good condition, keep customers happy and develop more homes. Effective planning is essential and this means robust financial modelling to underpin business strategy and more detailed plans.

Identifying and forecasting cost is reasonably straightforward, especially as many costs within housing associations will vary according to the number of properties, although the quantum per property will vary with age, condition and geography. Central costs, including the costs of governance and regulation, may be disproportionately high for smaller housing providers and in some instances will be a factor in joint resourcing or merger discussions.

Certainty of revenue income in the medium and longer term has been less than straightforward over the past 10 years. During a four-year period from 2016 to 2020, the sudden government-imposed rent reduction resulted in a rapid review of business plans and stark choices for many housing associations. Faced with an unexpected lowering in revenue, a ‘quick fix’ for financial plans was to reduce planned maintenance and investment in housing stock.

For the new government, setting and sticking by a clear rent settlement is an area that most if not all housing providers will agree is key to delivering investment in existing and new homes to enhance the quality of social housing.

Jane Harrison, finance director, Soho Housing