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London landlord rated non-compliant by RSH for economic breach
Origin Housing has been downgraded to a non-complaint grade by the Regulator of Social Housing (RSH).
A new regulatory judgement published today by the English regulator has found Origin to be in breach of the economic standards.
Origin, which owns and manages 7,000 homes across London and Hertfordshire, now has a governance grade of G3 and a financial viability grade of V3. This is down from G1/V2.
The RSH, which placed the landlord on its gradings under review list in October, said it lacks assurance that the landlord has a robust risk control and business planning framework.
It failed to ensure appropriate monitoring, reporting and compliance with its funders’ covenants and did not notify the regulator promptly of a potential covenant breach.
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The RSH is not satisfied that Origin can manage its affairs with skill or diligence due to inadequate resourcing and data errors in its financial reporting.
This poor financial governance and weak internal controls have affected Origin’s future financial viability and is putting its social housing assets at undue risk.
In the same month the association’s gradings were put under review by the RSH, Inside Housing reported that Origin was pulling out of its operations in Essex and putting its properties up for sale.
At the time, the landlord said it was looking for new owners for its retirement homes in Chelmsford to refocus its business on London and Hertfordshire.
Harold Brown, senior assistant director for investigations and enforcement at the RSH, said: “This case provides an important reminder that governing bodies must have an iron grip on their key risk exposures and ensure effective reporting. It was disappointing that the provider was aware of issues, but did not promptly communicate them to the regulator.”
Origin said in response: “We have recognised the need to improve our financial processes and reporting and have been taking the right steps to strengthen control of our finances, especially given the impact of broader economic pressures and of rising demand and costs on our financial plan.”
The association has appointed a new finance director, Mark Farrar, to help it build a stronger skill-base within its finance department.
“We commissioned an independent audit of budgetary controls and reporting in July 2023, which concluded in September, and we are implementing the recommendations in full. A further independent review into the covenant challenge related to one particular lender is underway,” the landlord said.
The RSH is working with Origin, at the same time as the landlord is partnering with lenders and independent advisers to regain its complaint rating.
Origin added: “We began the process of selecting a prospective merger partner over a year ago, recognising the increasingly challenging operating environment and the need to enhance financial strength and capacity to invest in our residents’ homes, services and local communities.
“We selected Places for People for initial discussions in May 2023 and announced the partnership proposal in October, with a view to joining the group in spring 2024.”
After news of the merger plans broke, Inside Housing revealed that Places for People promised to invest “at least” £50m in existing Origin homes over a five to 10-year period if the tie-up goes ahead.
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