Five-year stock condition surveys may no longer be enough, says Regulator of Social Housing

She continued: “If your starting point is already quite out of date… and you’re not using other sources of data to feed in to that overall picture: calibrating repairs, requests from tenants, calibrating complaints, looking at whether or not damp and mould in one property is endemic in an estate… If you’re not taking all that information together and relying on a slightly out-of-date, slightly less sophisticated, slightly less proactive approach, it may no longer be enough.

“You’ll see more on that from me in a consultation consumer standards hopefully in the summer.”

An investigation by Inside Housing in August last year found that just under one in three local authorities used surveys on a small proportion of their properties to assume the conditions of the rest.

“If you drive past a small proportion of your homes and then clone them based on archetypes, and that means that you’ve physically not seen and inspected some of them for however long it is, possibly not anymore,” Ms McGregor said.

“There is probably a need for a bit of a rebasing of how well do you know your stock in the round, and then can you move to that rolling survey methodology?”

She also repeated the regulator’s previous message that it is content for providers to attain a V2 grading for financial viability.

The top grade is V1, but as providers increase investment in new homes or existing stock, they often stretch their financial capacity, which results in a second-tier rating.

“We are mostly very comfortable with providers being at V2, which is a compliant grade, where it is accompanied by a G1 for governance,” she said.

Providers should run their organisation to meet their strategic aims and “what is the most important thing for your tenants and residents”.

“If you then adapt that to try and second-guess whether or not you might get back to a V1 or manage to maintain a V1, that seems to us to be looking at things through completely the wrong end of the telescope,” she said.

Ms MacGregor also told attendees she had seen some common themes among a group of providers that had recently been downgraded to a V3 viability rating.

“We do see some of the lease-based providers unable to manage their exposures, potentially signing up to leases they can’t meet or commitments over the longer term,” she said.

Lease-based providers are those who tend not to own their own stock, but lease them from private investment funds, making inflation-linked payments obtained from rental income. 

A “very common theme,” she added, is providers “losing sight of their treasury management function, losing sight of their covenants” and then “putting themselves in the hands of their lenders in terms of remedies,” she said.

Asked how worried the regulator is about another Swan, the struggling housing association that was absorbed into Sanctuary as a subsidiary in February, Ms MacGregor said the sector is “pretty robust” in aggregate, adding that “I think we did a good job on spotting Swan”.

“But it can get intense very quickly, and that ability to act fast and take action and support, whether it’s statutory appointments or working with potential rescue partners… it does depend to an extend on just how good the provider’s own information is,” she added.