Regulator downgrades nine associations over financial viability

Similarly, 42,000-home Hyde has been downgraded to V2 because its “large and diverse” development programme means it is facing increased exposure to sales.

The regulator said Hyde is currently restructuring its loan portfolio, which is expected to bring “long-term benefits” but in 2018 will result in one-off charges that the association cannot meet from the surplus on its in-year operating activities.

Together Housing Group, which owns 37,000 homes, had its governance upgraded to G1. Previous financial data returns had not met the regulator’s expectations, but since 2016 the association has reduced the risks “stemming from inaccurate or untimely” financial reporting.

County Durham Housing Group, which owns 18,000 homes, had its governance upgraded to G1.

The regulator’s report said it had previously had an “inefficient and unsustainable” control framework but this has now been strengthened and the association has “eliminated elements of duplication and inefficiency”.

Green Square Group, which owns 12,000 homes, has been downgraded to V2 after a significant increase in its development programme. It is projected to have an increased exposure to sales risk as market sales are now a “major element” of its business plan compared with other providers.

Wrekin Housing Group, which owns 12,000 homes, was downgraded to V2 because its current debt burden is “relatively high” and is forecast to increase significantly to fund a large development programme.

Acis Group, which owns 6,800 homes, was downgraded to a V2 rating because interest cover and covenant headroom have fallen in the group’s latest business plan due to a “significant increase” in major repair costs.

This “weakens” the performance of the group’s social housing business and means there is “increased reliance” on non-social housing income. The group is forecasting a “significant” increase in shared ownership and open market homes which leaves it with “increased exposure to housing market volatility”.

An Acis spokesperson said: “We are disappointed with the result of this new assessment, however not surprised. We recognise that our decision to invest heavily in our properties over next four years, to ensure we meet the needs of our customers and the wider communities that we serve, has impacted on the underlying metrics on which the social housing regulator places emphasis. Acis operates a diversified portfolio that includes a high proportion of student accommodation units."

The 1,500-home Christian Action (Enfield) Housing Association was downgraded to V2 because the regulator said the margins it can generate are “relatively low” and both interest cover and headroom have fallen in the latest business plan.

The 3,800-home East End Homes was also regraded to V2 because of a “significant increase” in major repair costs.

Eden Housing Association, which owns 1,900 homes, had its financial viability downgraded to V2 because increases in capital repair spend, routine maintenance costs and general overheads have weakened its interest cover, liquidity ratios and covenant headroom.

Manningham Housing Association owns 1,400 homes and has been downgraded to V2 because it has “limited capacity” to deal with downside risk.

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