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What the new interim regulator chair expects from social landlords
New interim chair of the English social housing regulator Simon Dow says he knows how hard it is to get governance right all the time
It seems that 2018 is shaping up to be an eventful year. It’s just five weeks into the year and we have a new housing minister, a rebranded Ministry of Housing, Communities and Local Government, and both the regulation and investment sides of the Homes and Communities Agency have rebranded as the Regulator of Social Housing and Homes England.
As if that wasn’t enough, we have also said goodbye to Julian Ashby as chair of the Regulation Committee.
Julian has stepped down a couple of months early as he has accepted a role as the chair of Paradigm Housing Group.
The decision to go early, and so avoid any conflict of interest, is typical of the integrity of the man who has overseen the shaping of regulation during the past decade. We will miss Julian; he has strengthened regulation and done much to ensure that the regulator is well respected.
This is also a good time to flag up that we will shortly be launching a survey of both registered providers and our other key stakeholders.
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We are committed to being open and transparent with our stakeholders, and the introduction of the fees regime underlines for me the importance of holding ourselves to account for the quality of our regulation and our ability to meet our statutory objectives.
I know that you will respond clearly and openly; as we want to hear the good and the bad and we want to know how we can do better.
Despite the recent changes we remained focused on doing the important job that parliament has given us.
Just before Christmas we published the annual Global Accounts for the sector, which covered the sector’s financial performance during the first year of the rent reductions.
“We expect landlords to have thought through how they continue to meet both our standards and their obligations to tenants.”
It showed that despite these reductions registered providers invested £10bn in new properties and £1.6bn in existing stock, which included spending £6.3bn on new rented supply. The sector also reported the completion of 41,000 social homes.
At the same time operating margins were maintained at around 30% during both years as the sector took costs out of management and planned maintenance spend.
We know from our engagement with providers that this improvement in margins was achieved by a combination of efficiency savings, stopping some non-core activities and by delaying some cyclical repair works.
The response of individual landlords is the responsibility of their boards and we expect them to have thought through how they also continue to meet both our standards and their obligations to tenants.
So far the evidence we have is of providers doing just that, but I would urge providers not only to do the right thing, but also to do their best to make this visible.
The Global Accounts show a strong financial position with the sector delivering new homes and continuing to be an attractive place for investors to put their money.
Change in 2018 will continue.
Providers will need to consider the implications of the Hackitt review and the Grenfell fire while continuing wherever possible to provide the new supply across all tenures that the government and wider public are so keen to see.
This means that providers’ boards and leadership teams will need to maintain financial strength, respond to the aspirations of stakeholders and preserve their individual missions.
The results of the in-depth assessments we carry out tell us that the vast majority of providers are achieving this balance right which is reflected in our judgements where more than 80% of providers are at a G1 top rating for governance.
There was much debate before Christmas about whether V1 or V2 was the most appropriate grade for providers to aim for and we are clear that, where informed choices are being made about how to apply an organisation’s resources to meet its agreed objectives, we are comfortable with both V1 and V2 .
“We expect you to tell us the good and the bad about your organisation.”
But we are also clear in those discussions that G1 is unequivocally the grade that we want providers to achieve.
Having run a large provider I know just how hard it can be to get governance right all the time and that mistakes can happen.
We accept that running a housing association is a demanding job; and if things do go wrong then be honest and transparent with us.
Our whole regulatory system is based on boards taking responsibility for delivering their objectives, meeting our standards and being open with the regulator. This is the basis of the co-regulatory settlement.
Where providers come to us in a timely manner then that is always material to our judgement.
Just as we want you to tell us the good and the bad about our regulation we expect you to tell us the good and the bad about your organisation.
Simon Dow, interim chair, Regulator of Social Housing
