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London housing association hit with regulatory notice for failing to implement rent cut
A south London housing association has been admonished by the Regulator of Social Housing (RSH) for failing to implement fully the 1% rent cut.
Wandle Housing Association has breached the Welfare Reform and Work Act 2016, which legislated for the rent cut, a regulatory notice published today declared.
It is the first time the RSH has issued a regulatory notice over an issue relating to rent-setting.
Social housing providers in England were ordered to reduce rents by 1% each year between 2016 and 2020, blowing a massive hole in the sector’s finances.
But Wandle, which has a housing stock of around 7,000 units, did not properly apply the rent reductions for approximately 1,000 of its general needs homes, according to the notice.
The RSH said it identified an average rent increase for general needs homes in figures submitted by the landlord for the regulator’s 2018/19 Statistical Data Return – despite the rent cut being in place.
Wandle’s investigations have since found that it overcharged tenants around £320,000 between 2016 and 2020 as a result of incorrect rent-setting.
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It concluded that most incorrect rents were due to either homes being mistakenly classified as secure tenancies, which could be exempt from the rent cut in some cases, or a failure to implement the 1% reduction in the first 12 months on some new tenancies, the notice said.
The association has now developed an action plan that will see it reimburse overcharged tenants, meet regulatory requirements on different types of rents, correct relevant data errors, carry out a policy and procedure review on rent-setting, and improve its auditing of rent changes.
The RSH said that Wandle’s board has accepted its regulatory findings and is engaging positively with external support “to take the steps necessary to resolve these issues”.
Wandle has been graded G2/V2 by the RSH since August 2018, indicating compliance with the regulator’s standards but a need “to improve some aspects of its governance arrangements” and “manage material risks” to its financial viability.
Its regulatory grading is not changed by today’s notice, which declares a breach of the RSH’s economic standards.
In March, the RSH wrote to all social landlords in England warning about the importance of complying with its Rent Standard.
Tracy Lees, chief executive of Wandle, said: “I am sorry that we failed to fully comply with the requirements of the Welfare Reform and Work Act 2016, and apologise to affected tenants and our local authority partners for the errors.
“We have been working hard with external advisors to establish how and why the mistakes happened, and putting in place safeguards and improvements to procedures to make sure they do not happen again.”
Update: at 11.45am 28/09/20
A comment from Wandle was added to the story
Jargon-busting: some regulatory terms and what they mean
- Co-regulation: this means boards are responsible for deciding how to meet the regulator’s standards – the regulator does not prescribe how to do this
- Gradings under review list: a public list of providers under investigation who are at risk of being judged non-compliant with regulatory standards
- In-depth assessment: a planned inspection, in which the regulator assesses a providers viability, governance and approach to value for money
- Narrative regulatory judgement: a detailed explanation of the reasons behind a regulatory judgement. Narrative judgements are published where a providers’ viability or governance ratings have changed, or where RSH has particular issues or concerns.
- Reactive engagement: refers to the regulator reacting to complaints or allegations about a provider and taking action
- Stability check: an annual assessment of all providers owning 1,000 social homes or more. RSH uses accounts and statistical return data to check for any changes in a providers’ risk profile.
- Strapline regulatory judgement: where a provider is meeting the standards, and its governance or viability ratings have not changed since its previous judgement, the regulator does not publish a full judgement explaining its reasons for the gradings. Instead it just publishes the gradings themselves, in a ‘strapline’.
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