Small Southern housing association hit with governance downgrade

The housing association, which also owns a small number of homes in Greater London, reported a deficit for the year ended March 2021 and low headroom against its interest cover covenant, the judgement said. 

This “limited capacity” is expected to continue for “the short to medium term”, during which time Mount Green will be reliant on “fixed asset disposals and first tranche sales to support financial performance and covenant headroom”. 

The regulator said it had concluded that Mount Green needs to improve its risk management, including its approach to stress-testing. 

It said Mount Green’s current stress-testing “shows that it is sensitive to relatively small changes in costs and income, with several scenarios resulting in a breach of its interest cover covenant”.

Mount Green therefore “needs to develop a more robust and comprehensive risk management framework”, which will involve “enhancing mitigation strategies for stress scenarios and clarifying the circumstances in which they would be triggered”, the judgement said. 

However, the RSH said it continues to have assurance that Mount Green complies with the standards as it “has a fully funded development programme, sufficient security to support its business plan and is forecast to continue to meet its funding covenants”.

Bill Flood, chief executive of Mount Green, said: “We welcome the regulator’s judgement that Mount Green remains compliant with their expectations, and that we have the financial capacity to deal with a reasonable
range of adverse scenarios.”

He said the accounting period for which the judgement covered include two substantial one-off costs for historic items. 

“Current demands on the sector are unprecedented, but we are confident that Mount Green is effectively managing risk to meet those demands,” Mr Flood added. 

The regulator also published strapline judgements confirming the G1/V1 grades for Eden Housing Association, Golden Lane Housing and One Vision Housing.