Company Secretary Snapshot - February 2023

Welcome to our snapshot of key changes and current affairs for Company Secretaries working in social housing.

This month we’re looking at the latest updates to the Social Housing (Regulation) Bill, why the Regulator of Social Housing (RSH) has started to publish enforcement notices, and more developments around the sector.

Tracking the Social Housing (Regulation) Bill

The Housing Secretary has tabled amendments to the Social Housing (Regulation) Bill (the Bill) to introduce ‘Awaabs Law’. This will require registered providers of social housing (RPs) to investigate and fix reported health hazards (including damp and mould) within specified timeframes. The timeframes are yet to be confirmed and will instead be determined following a consultation which will take place later this year.  

The new proposals for Awaabs Law will be introduced via secondary legislation. They will form part of the tenancy agreement which will allow tenants to hold landlords to account by law if the RP fails to provide a decent home.

Other amendments to the Bill include:

• Further powers to strengthen the Housing Ombudsman (HO). The HO will be able to instruct RPs to measure their service against guidance on issues such as damp and mould, to help drive improvements following complaints from tenants.
• Enabling the RSH to set a standard relating to information and transparency requiring RPs to provide information to tenants about how they can make a complaint against that RP.

We have issued a series of briefings on the Government’s response to damp and mould.

Companies House begins accepting online objections to company strike offs

In order to strike off a company from the Companies House register, an application must first be sent to Companies House. Once the application is received, Companies House publishes a notice in the Gazette (the First Gazette Notice).

Interested parties then have two months from the date of the First Gazette Notice to object to the strike off. Companies House has now begun accepting these objections online. Previously, an objection to a company being struck off the register was only accepted by post or by email. Online objections can only be made if the person objecting has a Companies House account.

Typically, a person objecting to a strike off comes from the list of individuals and organisations that directors must notify about the strike off. These are:

• members, usually the shareholders
• creditors, including all existing and likely creditors such as:
  • banks
  • suppliers
  • former employees if the company owes them money
  • landlords or tenants (for example, where a bond is refundable)
  • guarantors
  • personal injury claimants
  • HMRC and Department of Work and Pensions (DWP)
• employees
• managers or trustees of any employee pension fund
• any directors who have not signed the form

In our experience objections most typically arise from HMRC and therefore it is helpful to engage with them at an early stage when you submit the strike off application.

If there are no objections, the company will be struck off the register after two months of the First Gazette Notice being published. A second notice will be published in the Gazette, which means the company will have been dissolved (Final Gazette Notice).

Investment Association statement on shareholder priorities for 2023

The Investment Association (the IA) has published its shareholder priorities for 2023 which are helpful indicators of wider trends in corporate governance outside of the sector:

1. Responding to Climate Change: companies should provide greater disclosure on the process and governance of scenario analysis, including: (1) how climate scenario analysis impacts the company’s business model and strategy; and (2) any changes the Board has made to the business model and strategy as a result of the outcomes of the analysis.
2. Accounting for Climate Change: directors should provide a statement on whether they have assessed climate and transition risk when signing off the accounts. Companies should ensure consistency between information communicated in the financial statements and the information communicated to stakeholders outside the financial statements, such as in press released, investor updates and disclosures in other parts of the annual report.
3. Audit Quality: Audit Committee should consider the FRC’s Professional Judgement Guidance in supporting greater consistency on the judgments made on an audit. Companies should provide targeted disclosures on: (1) how the Audit Committee has assessed the quality of the audit; (2) how the auditor has demonstrated professional scepticism; and (3) how the auditor has challenged management’s assumptions where necessary.
4. Stakeholder Engagement: Boards are required to continue to foster constructive relations and dialogue with key stakeholders to inform strategic, long-term decision making. Companies should continue to respond to the needs of various stakeholders by extending the focus on engagement, supporting and communicating with stakeholders through the cost-of-living crisis. Company disclosures should include the impact of the increases of the cost-of-living and the inflationary pressures in the economy on employees (particularly lower paid employees) consumers including vulnerable customers, and suppliers.
5. Diversity: the existing diversity targets will be increased by 2% which is aligned with the ambition to hit the FTSE Women Leaders Women on Board targets by 2025.

FAQs – Enforcement notices

Welcome to our regular FAQ section where we spotlight some of the more common topics that you have been asking us to advise on. The RSH has recently issued a number of enforcement notices and following some of the inquiries that we have been receiving we have decided to shine a spotlight on them and ask:

What are enforcement notices?

An RP is responsible for ensuring that it manages itself effectively, achieves the standards set by the RSH, and engages positively with the RSH’s regulatory framework.

Where an RP has failed to comply with a standard or has identified any problems, the RSH expects RPs to respond in a prompt and effective manner. The RSH will usually work with the RP to secure a voluntary agreement (voluntary undertaking) to take necessary action to resolve the issues identified. However, if this is unsuccessful, the RSH may step in and issue an enforcement notice.

There are 11 circumstances in which the RSH may issue an enforcement notice. These are:

1. A failure to meet an economic standard or a consumer standard and there are reasonable grounds to suspect there has been or there is a risk of serious detriment to tenants.
2. Mismanagement of the affairs of the RP.
3. A failure to comply with an earlier enforcement notice.
4. A failure to publish information about the penalty or the compensation award where required to do so.
5. For the protection of the tenant’s interests.
6. For the protection of the assets of the RP.
7. A failure to comply with an undertaking given by the RP.
8. A failure to pay the annual registration fee.
9. Where an RP commits an offence under Part 2 of the Housing and Regeneration Act 2008 – e.g. obstructing an inspector from carrying out their investigations on premises that the RSH suspects the RP in question may be failing to maintain in accordance with the correct standards.
10. A failure to comply with an order made by the HO.
11. A failure to comply with the relevant provisions of the Welfare Reform and Work Act 2016 – e.g. failing to apply any applicable rent reductions correctly.

Before issuing an enforcement notice, the RSH will take into account the willingness and resources available to the RP to undertake the necessary action. The RSH will advise the RP accordingly and seek information on the RP’s intended response. The RSH will take account of the RP’s intended response in considering whether an enforcement notice is needed.

When issuing an enforcement notice the RSH will specify the grounds for the notice, the action the RP must take, when the action is to be taken and what information the RP must provide to the RSH. The RSH also expects the RP to co-operate fully with the RSH including co-ordinating its communications strategy on all matters relating to enforcement with the RSH.

Regulatory grades

Our review of regulatory upgrades/downgrades/regrades in the sector since our January edition has highlighted the following themes:

• Breaches of the home standard resulting from:
  • a failure to meet statutory health and safety requirements in relation to electrical safety as a result of having more than 250 properties without a current electrical condition report
  • not having valid communal asbestos surveys in place with over 70% of re-inspection asbestos surveys being overdue
  • a failure to meet statutory health and safety requirements in relation to gas safety as a result of having more than 150 properties without an up to date gas safety inspection

AOB

Will you be attending NHF Housing Finance Conference 2023? Our housing finance colleagues will be in attendance, with Jessica Church presenting alongside Trina Chakravarti from Building Better and Andrew Smith from Savills on Unlocking the value of MMC. We look forward to seeing you!

Recent housing articles

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