Company Secretary Snapshot - July 2023

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

This month we’re taking a detailed look at developments relating to the Social Housing (Regulation) Act 2023 and the consumer regulation review – and more!

Social Housing (Regulation) Act receives Royal Assent

The Act is finally here! It received Royal Assent on 20 July and contains a plethora of reforms around the Regulator of Social Housing’s (RSH) fundamental objectives, its role in regulating the consumer standards and its enforcement powers. Read our summary of the Act.

The RSH has also now released its draft revised consumer standards for consultation. The consultation closes at 6:00 pm on 17 October 2023.

We will be running a programme of activity around the Act and consultation during the autumn – we will publish more information about this soon. We can also deliver bespoke training on the Act and the standards. Please do get in touch if you want to find out more.

Other developments linked to the consumer regulation review

• The RSH also published its annual review of consumer regulation work on 6 July 2023. The key points from the annual review are:
  • All registered providers of social housing (RPs) must maintain a tight grip on the quality of the homes they manage
  • RPs must listen to their tenants’ complaints and carry out thorough and timely investigations
  • It is vital that councillors and other senior leaders ensure effective mechanisms are in place to identify and tackle problems quickly
  • RPs must ensure they complete all legal health and safety checks on time
  • RPs work to understand the root cause of compliance problems and ensure senior leadership teams engage constructively with the RSH
• Tenant Satisfaction Measures (TSM) Pilot Scheme for small landlords – the TSMs were introduced by the RSH in April 2023 requiring all RPs to collect and report annually on their performance. RPs with more than 1,000 units are also required to submit their data to the RSH. The RSH is now seeking volunteers from a range of small RPs to join a pilot exercise (register your interest via the RSH’s website). The pilots will help underpin the RSH’s final approach to the collection of data from smaller landlords.
• Damp and mould: learning the lessons – the RSH published a report outlining findings from its recent engagement with the sector on damp and mould. The RSH reported the following common features from RPs who demonstrated a comprehensive understanding and response to damp and mould and property condition:
  • Better governance – effective organisations demonstrated strong board and councillor oversight of stock condition, including damp and mould, with regular progress reports made to the governing bodies. RPs have a damp and mould policy in place, with stated timescales for response, with the RP taking clear ownership of the issue.
  • Better stock condition data and systems – high performing RPs managed their data well, holding accurate and up to date property condition information and having an effective survey validation process including external data validation. The stock condition surveys included all aspects of the Decent Homes Standard. Some RPs took a more proactive approach by looking at other similar properties once damp and mould had been identified in a home.
  • Better operational approach to managing damp and mould – effective RPs demonstrated a strong focus on understanding the current condition of tenants’ homes with some landlords establishing a specialist team to respond to damp and mould issues, working to specific response times and offering tenants temporary accommodation whilst work was being carried out where needed.
    The RSH has confirmed that a focus for in-depth assessments in 2023 will include ensuring RPs understand its approach to stock condition surveys, why this approach is suitable for its stock characteristics and how it picks up and responds to Decent Homes Standard failures and hazards. The RSH will also want to understand how survey data is used to formulate operational and financial asset management plans, including that properties meet the Decent Homes Standard, and that those plans are being implemented as intended.
    
    Many of these themes appear in the proposed new consumer standards (see above).

• Housing Ombudsman’s Insight report – the Housing Ombudsman (HO) has published a new-look Insight report on 20 July 2023, which will now focus on the vital lessons for the sector on a range of topics each quarter.

Takeaways from Conference Season

We recently attended the National Housing Federation Governance Conference 2023. This year’s theme was tenant voice and influence in governance. Some takeaways:

• 55% of larger RPs are now graded V2 – this has increased from 18% eight years ago. V2 graded RPs effectively have more limited capacity to react to downside risks and so they are expected to have more active risk management to enable them to make effective, informed decisions. Data is key to enable this – and a focus for the RSH in in-depth assessments of V2 organisation will be on identifying knowledge and control gaps. The question as to whether V2 is the new V1 received a mixed response from the room!
• Housing associations should ‘lean in’ to their core purpose – focus on existing customers first, play your role in ‘long term stewardship’ – but there is an opportunity between now and next year’s general election to maximise existing funding and grant pots.
• The RSH was undertaking its second round pilot for the new inspection regime. The next pilot will be undertaken in the autumn. The emphasis was not to grill or over-rely on feedback from pilot landlords – the pilots are to help formulate the approach rather than the finished product.
• There was a very insightful and reflective session by Yvonne Arrowsmith, Interim Chief Executive at RBH following the tragic death of Awaab Ishak. Key learning points included:
  • Over-focus on growth rather than existing residents
  • Complex governance structures – too many groups not looking at the right things; an over-reliance on mutual status as being evidence of engagement; skills gaps
  • Silo working – exacerbated by remote working, people not being ‘on the ground’; not enough ‘listening and looking’
  • Poor information / data – systems holding information in different places; not looking at trends in complaints; disrepair focused on spend rather than subject matter; scope of consultants reviews being limited and not focusing on outcomes for residents
• Risk management – the need to test and plan mitigations in ‘times of calm’; bring risk to life through resident voice; remember to ‘horizon scan’ as well as plan for existing risks; look at other indicators such as media/social media ‘hits’ and subject access request type and increase; practice crisis management.
• Focus on improving dissemination of data and reporting to the board/committees - ensure reports provided to the board are visual, including RAG ratings and consider using provocative titles as this can help focus the board’s attention.
• The National Housing Federation has set out an action plan in the Better Social Housing Review, which we reported on in our last edition of the Snapshot.
• Resourcing governance – budgets are tight – don’t make governance the thing you cut back on!

Regulatory Grades

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

• Downgrades to governance grading from G1 to G2 resulting from:
  • Board lacking oversight of business and financial planning and the lack of clarity and transparency in reporting to the board particularly in respect of financial performance and funders’ covenants.
  • Material risk and exposures due to increasing investment in RP’s existing homes while delivering a significant development and sales programme and is reliant on shared ownership sales surpluses to remain compliant with covenants, which reduces covenant headroom.
• Viability regrades from V1 to V2 resulting from:
  • Financial covenants forecasting limited monetary headroom, which coupled with current economic uncertainty in relation to inflation and interest rates, restricting RPs ability to manage a wide range of financial risks.

AOB

AGM season is approaching

see our ‘FAQs’ from last September’s Snapshot for a summary of typical questions we get asked. Remember, if you have listed debt you will also need to comply with the disclosure requirements in the listing rules in relation to investor announcements alongside the publication of accounts.

How do you demonstrate compliance with ‘all relevant law’?

As you will be aware, all private registered providers are required to meet the Governance and Financial Viability Standard requirement to comply with ‘all relevant law’, and make certifications in their annual accounts in respect of this. We can assist you in a variety of ways, including through our six monthly legal update report service.

We have just launched an online platform for our reporting – this enables you to:

• identify the key legal updates through our summary dashboard, risk ratings, search function, filters and ‘top ten’ summary
• easily and quickly identify priority actions and access resources
• empower and inform your teams to take responsibility for effecting such actions through multiple user access
• confidently report back to the board on key risks areas and how these are being addressed through our summary report

The latest edition has just been released. For further information and how you can subscribe, please contact Diarmaid O’Sullivan.

Recent housing articles

Our team produce a range of articles and insights. If you or your colleagues would like to receive any of our other newsletters, including Housing Finance Snapshot, Governance Snapshot, Property Focus, Pension Points and Employment Eye, you can sign up to receive these via our subscriptions page.

Diary date for Senior Independent Directors

Is your SID a member of the Senior Independent Directors Network? The group is free of charge to attend and provides an opportunity to share ideas and experiences with peers from within the housing sector. The Network will next meet on Tuesday 10 October at 10:00 am and welcomes new members. For further details contact Sarah Greenhalgh.

Next Edition

We’ll be having a summer break during August – see you on the other side!