Three upgrades and one downgrade in latest batch of RSH judgements

The RSH’s previous judgement for Gateway noted that increasing planned investment in existing homes, including in fire and building safety and energy-efficiency work, “had a detrimental impact on interest cover”.

As a result, that potential further spending on energy-efficiency works and economic uncertainty reduced Gateway’s capacity to deal with adverse scenarios.

But this latest judgement concluded that Gateway’s forecast interest cover profile has now strengthened, informed by recent stock-condition surveys and the clarification of liabilities for required fire and building safety work.

“This increases Gateway’s capacity to deal with adverse scenarios,” the regulator said.

In its previous judgement for One Vision, the RSH said the landlord’s development plans and additional costs relating to its repairs and maintenance programme would impact negatively on its interest cover position.

It said that this, alongside the wider economic uncertainty, reduced the housing association’s capacity to deal with adverse events.

However, One Vision has since completed its fire safety programme, as well as improved its asset costing and lifecycle information.

“As a result, [it] has increased financial capacity and is able to deal with a wide range of adverse scenarios,” the regulator said.

Teign was downgraded from V1 to V2 for viability, while it retained its top grade of G1 for governance.

According to the judgement, the regulator has assurance that Teign continues to comply with the financial viability elements of the Governance and Financial Viability Standard and that its financial plans are consistent with and support its financial strategy.

The RSH said the landlord has an “adequately funded business plan, sufficient security and is forecast to continue to meet its financial covenants”. 

However, Teign is increasing investment in its existing homes and will continue to do so informed by stock surveys, which is weakening its interest cover. This, coupled with wider economic pressures including inflation, reduces Teign’s capacity to deal with adverse scenarios, the regulator concluded. 

Following its first assessment, the regulator gave three for-profit subsidiaries of Sage Investments – Sage Housing, Sage Homes and Sage Rented – grades of G1 and V2. 

According to the three judgements, the subsidiaries’ current acquisition strategy is focused on the purchase of newly developed homes. During this period of growth, they are forecasting a weaker financial profile, the regulator said. 

Lincolnshire Housing Partnership retained its G1/V2 grades.  

Jo Reece, chief executive of Teign, said: “We recognise this as a reasonable assessment. The tough current economic climate means that, along with many other providers, our increasing investment in existing homes has impacted our interest cover. 

“However, as the report states, we have an adequately funded business plan, sufficient security and are forecast to continue to meet our financial covenants.

“We are pleased to remain compliant and are committed to delivering the ongoing planned investment in our homes and services.”

Alison Thain, chair of Sage Homes, said: “We would like to thank the regulator who has worked closely and collaboratively with us over an extended period to understand our business and the work that we are doing to deliver for our customers.

“Our G1/V2 rating underlines our position as an ambitious registered provider that is delivering large numbers of new homes for those that need them the most.

“This is reflected in Sage Homes being named the largest provider of newly built affordable homes in England for the third successive year.

“We are therefore extremely proud that the regulator has recognised the commitment of our boards, investors and our people to our long-term strategy and vision.”

Of the dozens of other landlords named in this round of judgements, they all retained their existing grades.