Welcome to another edition of the monthly snapshot. This month we’re looking at the recent reports from the Regulator of Social Housing and the Levelling Up, Housing and Communities (LUHC) Select Committee.
The Regulator of Social Housing Publishes Consumer Regulation Review 2021-22
On 14 July 2022, the Regulator of Social Housing (RSH) published its review of consumer regulation work between 1 April 2021 and 31 March 2022. The review highlights some key lessons for registered providers of social housing (RPs):
- Good governance and leadership are vitally important to good quality service: The RSH notes that the link between well governed RPs with effective leadership and good quality service delivery has been a consistent theme in particular in the last year. All of the non-compliant decisions that the RSH made this year followed a failure to have appropriate oversight and understanding of compliance and performance on the part of the RP in question. The RSH also notes that boards, councillors and management teams must have clear oversight of service delivery so they can be assured of the quality and safety of homes and services they provide for tenants.
- Effective engagement with tenants will help landlords prepare for proactive consumer regulation: With proactive consumer regulation coming soon, RPs need to continue preparing to deliver the changes needed. The upcoming changes to regulation will emphasise the importance of tenants being listened to and being able to hold their landlord to account. They will also emphasise the importance of tenants having access to prompt and effective redress mechanisms for when things go wrong. We have previously featured the Housing Ombudsman’s Complaint Handling Code which emphasises the role of the board and committees in monitoring complaints.
- Landlords must provide quality accommodation which is safe and well managed: In all of the regulatory notices published by the RSH last year, RPs were found to have breached the Home Standard due to not meeting legal requirements on fire, electrical, water, asbestos or lift safety. Other common themes included failing to carry out necessary remedial works, failure to have accurate data about stock and systemic failures in the repairs and maintenance services provided to tenants. These consistently point to clear actions for landlords in terms of: robust contract management, utilising KPIs and enforcement mechanisms to demand better service from contractors and collecting meaningful and contemporaneous data on properties and satisfaction levels to inform decision making. Organisations should be looking to revisit KPIs and service standards in contracts to ensure these continue to be appropriate.
- Landlords need reliable data and clear oversight of compliance: The RSH notes the issues related to mergers in particular, where RPs did not have clear oversight of legacy data management systems and paid insufficient attention to concerns raised at the due diligence stage of merger discussions. The RSH highlights that governing bodies of merging organisations need reliable and accurate data, and to scrutinise that data, so they can be assured that they meet, and will continue to meet, all health and safety requirements after the merger. Integration of these systems should be treated as a priority.
- Local authorities must also comply with the consumer standards: The RSH notes that all of the local authority cases that it considered in the last year were as a result of self-referrals from local authorities, demonstrating that they understand their responsibilities and are willing to work with the RSH in a co‑regulatory way.
Kate Dodsworth sums up the importance of accurate data and its interaction with good governance and service standards:
“The critical difference between landlords who provide good services and safe, decent homes and those that don’t is often whether they listen to tenants and really hear what they have to say”.
The Levelling Up, Housing and Communities (LUHC) Select Committee publishes report on regulating social housing
In November 2021, the Levelling Up, Housing and Communities (LUHC) Select Committee launched an inquiry into social housing in England, with contributions from RPs, tenants, councils, the RSH and the Housing Ombudsman. The committee published its report on 20 July 2022 and recommended:
- RPs should be “more proactive in monitoring or auditing the condition of their stock” and should put in place systems for regular monitoring, rather than relying on tenants to report problems.
- As part of the RSH’s review of the consumer standards, the RSH should consider amending its Home Standard to place a specific requirement on providers to regularly monitor their stock
- RPs should take stigma and discrimination seriously and not to assume that their staff are immune from such prejudices, and to ensure their boards better reflect their communities. The committee also encourages RPs to make every effort to encourage diversity among senior management teams.
- As part of its review of the consumer standards, the RSH should introduce a requirement on RPs to demonstrate that their boards and senior management teams reflect the diversity of the communities they serve.
- The RSH should amend the tenant involvement and empowerment standard to require RPs to support the establishment of properly independent residents associations. The committee also found that the tenant involvement and empowerment standard is “far too weak on the provision of local services” and that the RSH should significantly strengthen the wording of the standard to require RPs to deliver housing services that are genuinely local and tenant centred.
- The RSH should set out how it intends to monitor and review the performance of the Tenant Satisfaction Measures, with a view to making improvements if they are not delivering for tenants.
The Role of the Housing Ombudsman
- Social housing tenants should be offered the same level of compensation that tenants in the private rented sector (PRS) will be entitled to receive from the new PRS ombudsman (up to £25,000).
- There should be a legal requirement on social housing providers to self-assess against the Housing Ombudsman’s complaint handling code and to report to the ombudsman when they have done so. The RSH should introduce a similar requirement.
- The RSH should introduce a requirement on housing providers to ensure tenants are aware of their right to take a complaint to the ombudsman.
The Role of the Regulator of Social Housing
- The RSH interprets its duty to minimise intervention and act proportionately to mean that it should only find a provider non-compliant with the consumer standards if it also finds evidence of systemic failure. The RSH should reconsider this interpretation and, in particular, the ‘systemic failure’ test should be abolished.
- Clause 4 of the Social Housing (Regulation) Bill should be amended to require the RSH and the Housing Ombudsman to set out in their memorandum of understanding how they intend to prevent gaps between their respective remits
- There should be a clearer requirement on the RSH to engage with tenants whenever it investigates possible breaches of the consumer standards and to place tenants at the centre of its approach to regulation and to incorporate engagement between itself and tenants into its definition of co-regulation.
FAQs – Common themes from Conference Season
Welcome to our monthly FAQ section where we spotlight some of the more common questions that you have been asking.
This month we are looking at some of the common themes that came up during June’s two big conferences: the National Housing Federation’s Housing Governance Conference and the CIH Housing 2022 conference. Below is a selection of some topics that came up during the panel discussions and Q&A sessions:
- How can RPs insure that their audits are aligned with risk appetite? One suggestion for this was to ensure that you discuss risk appetites and corporate strategy with your auditors so that they can take this into account when carrying out their audit and reflect your approach to risk in their reporting.
- Has the Housing Ombudsman noticed any particular trends in the types of complaints it receives? Interestingly, noise complaints are one of the most common types of complaints that reach the HO. So much so, that they resulted in the HO launching a call for evidence to support its next systemic investigation (looking at noise complaints) in April of this year. The investigation is exploring how RPs manage reports of noise nuisance and what drives complaints about how those are handled.
- How can RPs start to prepare themselves for the implementation of the Social Housing (Regulation) Bill – governance teams were encouraged to ask themselves and to get their board members to ask some (tricky) questions about their current processes, such as:
- what is the culture that allows internal reviews to pick out problems instead of them surfacing quicker?
- what are the performance metrics that you are currently using?
- what are your worst social housing properties like?
- how do you know what you don’t know?
- how do you know you are getting assurance and not just reassurance?
- When can we expect to hear the outcome of the RSH’s consultation on tenant satisfaction measures? Current indications are that we will receive an update from the RSH in early Autumn. A further consultation on proposed changes to the consumer standards is also due to begin soon.
- What approach can we expect the RSH to take when reviewing the consumer standards? The RSH has emphasized that certain things will not be changing. The approach will still be co-regulatory and outcome focused. Whatever changes are made, we can expect the new regulatory approach to satisfy three simple tests – (1) it has to be meaningful to tenants, (2) the RSH has to be able to regulate it and (3) it has to be deliverable, by a very diverse sector of RPs.
- What else can RPs do to prepare for the new changes to the consumer standards down the line – RPs should take a look at the RSH’s approach to consumer standards in the regulatory notices which follow the RSH’s current “reactive” approach. There are clues there as to what approach the RSH will adopt in a more proactive role. We summarise the key themes from these notices each month as part of this Snapshot.
- Will the RSH’s new powers result in the Office for National Statistics (ONS) reclassifying the sector again? Back in 2015, the ONS reclassified RPs as public sector bodies which resulted in a series of deregulatory measures being introduced to move RPs back into the private sector. It is sometimes argued that strengthening the powers of the RSH could result in another reclassification. In response to this, the RSH takes the view that the new powers are evidence of a culture shift rather than the beginning of a new reclassification.
Sustainability Reporting Standard
The Sustainability Reporting Standard for the Social Housing sector was launched in November 2020 and is currently being updated with a new version anticipated for later in the year, with a further sector wide consultation expected next year. We have reported on this further in our monthly Housing Finance Snapshot.
Our monthly review of regulatory upgrades/downgrades/regrades in the sector has highlighted the following themes:
- Governance downgrade resulting from:
- a need to strengthen the transparency, clarity and consistency of reporting to board, particularly in respect of performance against funders’ covenants and treasury management.
- the need for assurance that board decision-making is based on timely and accurate information by strengthening controls around the preparation and review of financial information presented to board.
- the need to improve the effectiveness of the board’s oversight of landlord health and safety compliance by ensuring it is based on robust and reliable data.
- Breaches of the consumer standards resulting from:
- failing to deliver an effective service for routine and planned repairs and maintenance.
- having a repairs process that was difficult to navigate.
- poor tenant engagement.
Senior Independent Director Network
We are currently finalising our Senior Independent Director Network event for September. If you would like to attend, please contact Suzanne Ellison.
Bevan Brittan – Housing Conferences
Our Housing Finance team will be attending the NHF Treasury in Housing Conference on 4 October 2022. Join us at 11.45am for the breakout session on “Exploring joint venture opportunities with developers” as our own Wendy Wilks chairs the debate, alongside speakers: Chris Harper – Partner at Bevan Brittan, Matthew Bolwell from Peabody and Helen Collins from Savills.
If you would like to arrange a chat over a coffee during the conference and find out how we can help you, please contact Wendy Wilks, Jessica Church, Chris Harper or Louise Leaver. We look forward to seeing you there!
We will be taking a break from the Snapshot during August but we will be back with another edition in September. See you all then!