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The Regulator of Social Housing (RSH) has downgraded Grand Union Housing Group for financial viability due to the impact of higher service costs on its financial performance.
The 13,000-home landlord has been handed a V2 grade. This means the association remains compliant with the standards, but it “needs to manage material risks to ensure continued compliance”, the English regulator said.
In its judgement, the RSH said the Milton Keynes-based landlord has enough financial capacity “to deal with a reasonable range of adverse scenarios”, but is under pressure from increased costs for services such as repairs and maintenance.
“Increasing costs mean that Grand Union is unable to cover interest costs from core activity in the short term and therefore its capacity to withstand downside risks is reduced,” the regulator said.
The RSH acknowledged that Grand Union’s “financial profile reflects the investment it is making in existing tenants’ homes and the development of new homes”.
The regulator noted the association has taken steps to increase its future financial capacity.
In its last full year to March 2024, Grand Union posted a £4.9m drop in surplus to £7.1m. This came despite an increased turnover of £95.3m.
The landlord had its governance grading affirmed at G1. It has not yet received a consumer grading.
A Grand Union spokesperson said: “Grand Union remains financially stable, and this new rating reflects the investment we are committed to make in our customers’ homes along with the development of new homes.
“We are delighted that our governance rating remains unchanged following the assessment.”
Earlier this week, the association announced that its merger with Longhurst Group is set to complete on 16 December. As a combined group it will be known under the new name of Amplius.
Under the tie-up, Northamptonshire-based Longhurst, which is the bigger of the two landlords with around 24,000 homes, will transfer its engagements to Grand Union.
Among the 35 landlords included in today’s judgements was Your Housing Group (YHG), which was upgraded for governance from G2 to G1.
YHG self-referred to the regulator in June 2022 after an audit review found “wide-ranging errors” in its rent and service charge-setting.
“YHG has provided evidence to demonstrate that it has strengthened its governance arrangements since June 2022,” the RSH said.
As well as reimbursing tenants who had been overcharged rent, the association has also made changes in leadership to improve organisational capacity, risk oversight and “the management of key financial risks”.
The RSH said: “A financial transformation plan has been delivered to increase YHG’s capacity and financial expertise alongside implementing data and process improvements.”
East Midlands Housing Group and Livin received a C2 grade under the consumer standards.
Notting Hill Genesis (NHG) received a C3 after the regulator found “serious failings”. It was also downgraded to G3 for governance, but retained a V2 grade for financial viability.
The following housing associations all retained their grades for governance and financial viability:
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