Supported housing provider breaches rent standard and deemed non-compliant

The RSH has also seen evidence of some local authorities withholding payments of housing benefit because of concerns about whether housing benefit rules have been met and the accuracy of information passed to them about tenants by managing agents on Parasol’s behalf.

The regulator said that this had a significant impact on Parasol’s cash flow requiring a contingency plan to be developed and action to be taken to prevent a liquidity issue.

The housing association also failed to ensure that its governance arrangements deliver an “effective risk management and control framework” and could not show that it has managed its resources effectively to ensure its viability can be maintained.

It failed to ensure it has an “appropriate, robust and prudent” business planning, risk and control framework, the regulator found.

The judgement follows the regulator placing Parasol under review in early November.

A spokesperson for Parasol said: “Parasol Homes is currently working closely with the Regulator of Social Housing to understand and address any concerns and provide the assurance needed in relation to our compliance with the governance and financial viability and rent standards”.

Elsewhere, St Mungo’s Community Housing Association saw its governance assessment downgraded to G2 and its financial viability kept at V2 but the basis for this grading changed.

Following an in-depth assessment, the regulator judged that St Mungo’s asset and liability records were incomplete and that the organisation needed to improve its understanding of property assets, including liabilities to ensure it was able to properly assess, identify and manage risks within its portfolio.

The RSH said: “St Mungo’s is unable to assure itself that it is operating in line with rent-setting requirements and needs to strengthen its controls and assurance around rent standard compliance.”

St Mungo’s currently owns, leases and manages around 3,400 homes and provides accommodation to 34,000 people, with a reported turnover of £122m for the year ending 31 March 2021.

The regulator also noted a number of issues at board level that required improvement, such as effective monitoring of performance against the housing association’s strategic aims.

It was noted that St Mungo’s had a fully funded business plan based on what the regulator deemed as “reasonable assumptions”, however those financial plans did not align with the association’s financial strategy to improve operating margins.

The regulator said: “There remain material risks which St Mungo’s needs to manage. The business plan and nature of its work is inherently low-margin, which reduces the organisation’s ability to absorb adverse shock.”

A spokesperson from St Mungo’s said: “Our assessment took place earlier in the year before a number of changes that were in progress had been implemented. While it is pleasing to note we remain compliant, we are confident that the improvements we are implementing will have a positive impact to addressing the points made and we will continue to work with RSH to provide assurances they need on compliance with the landlord regulatory requirements.”

Following an in-depth assessment (IDA) the RSH confirmed Network Homes’ grades at the same level as before, however the basis for its financial viability grading was changed.

The regulator said that Network needed to manage the “material risks” arising from its substantial investment strategy, which will see the association develop around 2,900 homes over the coming four years. It currently owns and manages approximately 21,000 homes in London, Hertfordshire and the South East.

The development plans would see Network Homes grow its stock count by over 10%.

Following the IDA, the regulator said it has “assurance that Network continues to comply with the financial viability elements for the governance and viability standard”, noting an adequately funded business plan and sufficient security in place.

Last month, Network received a regulatory notice after it was found to have breached the rent standard across a four-year period, after it charged inaccurate rents to some tenants as a result of not implementing the 1% rent cut as set by the government under the Welfare Reform and Work Act in 2016.

On this, the regulator said that it had assurance that Network’s overall governance arrangements enable it to adequately control the organisation and to continue meeting its objectives.

A spokesperson for Network Homes said: “Network Homes is pleased to have retained its G1 grading for governance and V2 grading for financial viability following an in-depth assessment by the Regulator of Social Housing in June 2021.

“The ratings confirm our ongoing compliance with governance and viability requirements.

“The retention of our V2 grading reflects our ambition to deliver on our strategic objective of increasing the number of homes for people in housing need and that we are effectively managing the risks associated with a large pipeline of affordable homes, building safety challenges and other investment requirements into our existing homes.”

Elsewhere there were a total of 26 strapline judgements, meaning these associations maintained their gradings from the regulator. These included large associations including Home Group, which maintained a G1/V1 rating; Gentoo, which held on to a G1/V2 rating; Incommunities, which got a G2/V1; and Sanctuary, which was graded G1/V2.

Other notable strapline judgements included The Abbeyfield Society, which saw its G2/V2 rating continued, and Habinteg, which maintained its G2/V1.

Riverside and Progress Housing were also given interim judgements following their mergers with One Housing and Reside Housing respectively.