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Regulation update

Deep Sagar gives his regular update on the work of the independent Regulatory Board for Wales

Since my last update the following should interest readers.

Regulatory judgements: Under the new regulatory framework from January 2022, the government has released Transition Regulatory Reviews for three housing associations. All three are compliant. It is notable that these have about 30,000 homes within them of the roughly 170,000 that are regulated similarly.

The government has also issued a Judgement under Review notice for one association (Trivallis) in relation to ‘governance and management’. In the Board’s last annual report we had decided against advice that more detailed explanation should be published with each judgement. However, my hope was that some explanation should be offered if an association had not received a compliant judgement. In the case of this association, surprisingly, Inside Housing imparted much more information (which has not been denied by the regulator). It suggested ‘the absence of its senior team means it does not have the necessary management capacity, that it had agreed ‘several in-depth reviews of structures, governance and management arrangements, and financial assumptions’ and ‘appointed four senior independent advisors … to assist with the governance work’. In addition, based on the 2021 interim regulatory judgements one association (Cardiff YMCA) continues under ‘increased’ regulatory oversight for financial viability.

Financial results: The Welsh Government and Community Housing Cymru (the body representing all housing associations) released recently the total financial position of all housing associations in 2021 (the Global Accounts). Despite difficult conditions due to Covid the sector has done well, with cash and net assets increasing. In other words, housing associations are showing financial stability. And, in spite of price increases in the year, associations more than covered their costs handsomely. Their cost of borrowing money has remained at about 4 per cent (though at one place the accounts mistakenly say the cost is 4.76 per cent). However, it can be argued that at least some more could be done with the cash reserves they have and borrowing potentially available.

Tenants’ care: The Ombudsman reported that he received 170 complaints against over 200 last year. He attributes some of the decline to Covid’s impact but housing associations’ financial results show that they spent less on repairs and maintenance than the previous year. These might suggest that customers were well serviced in general. However, a survey of all associations’ tenants published by the Welsh Government recently raises some questions (the government’s agreement with the sector provides that all social landlords will carry out a ‘standardised’ tenant satisfaction survey while asking that a specific methodology be used).

Results suggest to me that about 20 per cent of customers are ‘fairly or very’ dissatisfied with their association with the main reasons being repairs, anti-social behaviour, services charges and not listening. Methodologically, the surveys at 95% level of confidence had margins of error between 3 to 5%. However, the government says that since it has not verified the survey method actually used by associations it cannot validate this data. I find the government’s approach surprising. On the one hand associations are spending time and money collecting very valuable information. On the other the government believes the overall information (which could suggest customers in 35,000 homes are unhappy) is unvalidated and thus of limited use. The regulator says that it would take each association’s survey into account when considering its Transition Reviews.

Services charges: My instinct is that most associations would be working on improving perceptions on repairs, anti-social behaviour and listening. However, I would make a plea on services charges. These are not easy to understand and might not have been understood by the customer when they moved in. I hope special efforts are made to explain why services charges are levied at the rate they are. And of course this year the minister’s decision has kept rent increases down to about 3.1 per cent. Given the way the consumer prices index has been increasing, I would be hopeful that she considers rent affordability in detail again before next year’s formula is announced.

Homelessness: Welsh Government has begun publishing monthly information on the number of homeless people. My board applauds this and the work that councils and associations have been doing to reduce homelessness. It is sad that in March 2022 the government estimated about 80 people were still sleeping rough.

Regulation elsewhere: The UK Government has issued a bill which would regulate housing associations and councils more closely in England. Among the main proposals are inspection at 48- hours’ notice by the regulator, unlimited fines and a 250-customer panel feeding views to ministers every few months. In Northern Ireland its housing minister kept tenant rents this year at the level of last year’s. I continue to believe that although regulatory regimes differ watching and learning from what others are doing always helps.

Deep Sagar is independent chair of the independent Regulatory Board for Wales

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