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Tenant-led housing association downgraded in latest regulatory judgements
An association with a tenant majority board has been downgraded due to the cost effectiveness of some of its current activities, the latest set of judgements published by the English regulator has revealed.
Watmos Community Homes, which was formed by a transfer of eight tenant management organisations (TMOs) from Walsall Council in 2003, has had its governance rating downgraded from G1 to G2.
In a judgement published today, the Regulator of Social Housing (RSH) said Watmos’ board, which has a tenant majority, “is not currently operating at a sufficiently strategic level to ensure that the provider’s agreed strategy reflects its current activities, and that it is being delivered in a cost-effective manner”.
The regulator said Watmos, which also owns homes in London after three Lambeth-based TMOs joined the group in 2012, “needs to strengthen its assurance on the capacity and skills mix on its board” and “needs to strengthen its stress testing to better inform its business planning”.
The “quality of reporting” to Watmos’ board “requires improvement”, while “a limited range of targets in both internal and external reporting restricts the ability of the board and other stakeholders to assess strategic performance”, the RSH added.
Watmos maintained its V2 rating for financial viability, with the regulator stating that it “has the financial capacity to deal with a reasonable range of adverse scenarios but has material risks which it needs to manage in relation to increased planned maintenance expenditure”.
Meanwhile, Hightown Housing Association and YMCA St Paul’s Group have had their governance ratings upgraded.
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Hightown has had its governance rating upgraded to G1, giving it an overall grading of G1/V1.
The 7,000-home association’s governance rating was downgraded in June last year after the regulator said it needed to “improve aspects of its risk management” and “strengthen its oversight of its landlord health and safety obligations”.
In its latest judgement, the regulator said Hightown “has since made improvements in its approach to stress-testing and recovery planning and can now demonstrate that the board is drawing upon both to manage the risks associated with the delivery of its strategy”.
It has also “strengthened its reporting of health and safety matters to enable clearer board oversight of performance and management of this key risk area”, the judgment said.
The RSH said Hightown has “an adequately funded business plan, sufficient security in place and is forecast to continue to meet its financial covenants under a wide range of adverse scenarios”.
YMCA St Paul’s Group’s governance rating has also been upgraded to G1, giving it an overall G1/V2 grading.
The 1,150-home landlord was given a G2 grading in 2019, as part of the group’s first regulatory judgement since being formed in 2018. At the time the regulator stated it needed to “strengthen its risk management and internal controls framework and approach to stress testing and mitigation strategies”.
Today the RSH said YMCA St Paul’s Group has “revised its risk appetite and improved reporting is providing the board with oversight of its key strategic risks”.
The organisation, which owns supported housing across London, Surrey and Berkshire, has maintained its V2 grading.
The regulator said YMCA St Paul’s Group is “a relatively high-cost low-margin supported housing provider” and that “a range of non-housing activities with varying financial performance are additional risks”.
In another judgement published today, Central and Cecil (C&C), which owns roughly 1,800 homes in London, maintained its G1/V2 grading, however the basis for its V2 grade has changed.
The regulator said C&C’s “priority is to improve its 1960s stock”, adding that it “needs to manage substantial development and sales exposures to ensure delivery of its stock improvement programme”.
“The board recognises that achieving its investment plans represents an increase in financial risk exposure. It needs to ensure that it closely monitors C&C’s plans to remodel its business to manage and mitigate the risks and ensure continued compliance,” the judgement said.
On governance, the RSH said it has “assurance that C&C’s governance arrangement enables it to adequately control the organisation and continue meeting its objectives”.
Watmos and Hightown have been approached for comment.
Andy Palmer, chair of the board at YMCA St Paul’s Group, said: “We are proud to be the first YMCA to be awarded G1. Over the past 12 months, the board and executive have worked closely together to continue to maintain standards while providing our vital services.
"With the confidence of the regulator and the direction of a new strategic plan, we are committed to providing our housing and support services to communities who are emerging from the pressures of the pandemic.”
Julia Ashley, chief executive of C&C, said: "We are obviously very please that today’s judgement has confirmed our previous G1-V2 grading, endorsing improvements made by C&C over the past few years and recognising the operating environment that we are operating in. We continue to focus on improvements that benefit our residents, who are the heart of our business."
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