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Regulator identifies troubled landlords

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Published by 24publishing for 24dash.com in Housing and also in Communities, Local Government

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The new social housing regulator has published its first wave of regulatory judgements, revealing that it has concerns for three landlords who are not currently meetings its economic standards.

It comes as the proposed rescue merger of Cosmopolitan Housing Group – one of those singled out for concern by the HCA – has been put into fresh doubt following its negotiations with Merseyside-based landlord Riverside.

The Homes and Communities Agency (HCA) today published the first batch of 18 regulatory judgements. While the majority currently meet its economic standards, it has concerns for three landlords who are not.  

  • The financial position of troubled landlord Cosmopolitan, which manages over 12,500 homes, is of “serious concern and is subject to regulatory intervention or enforcement action”, the HCA said. The regulator has been working with the landlord since earlier this year in a bid to put it back on firmer footing. It’s also failing on governance with “issues of serious regulatory concern”, the HCA said. The judgement said: “The regulator’s assessment of Cosmopolitan Housing Group’s governance and viability has been downgraded since the last regulatory judgement published in February 2008 to reflect serious problems with its governance, risk management and financial position. These in turn reflect major shortcomings, including a failure to recognise and manage operational risks, an overly ambitious approach to development and the emergence of failures in internal control dating back some years.”
  • London-based Metropolitan Housing Trust is falling down on governance, with the HCA also having concerns about its financials. The judgement said: “The group’s financial planning has reflected serious weaknesses, including unrealistic efficiency targets which were not predicated on an appropriate evidence base or supported by adequate delivery plans. Consequently a total of £47.2m of savings were removed from financial plans over the years 2012/13 to 2014/15 and the group was not able to achieve its 2011/12 budget. Anticipated efficiency savings have been considerably reduced in the revised business plan.”
  • The regulator has “issues of regulatory concern” with 10,000-home Swan Housing Association. It said its assessment of Swan’s governance has been downgraded as a consequence of issues arising from a routine development compliance audit report produced in December 2011. “The auditors reported that some of the documents presented as evidence to them had been falsified and that the dates on others had been changed, apparently to conceal premature draw-downs of grant funding instalments,” the HCA said.

HCA director Matthew Bailes said: “While three of the five full judgements published reflect the regulator's concerns, it remains the case that the vast majority of providers are meeting the standards.”

The Regulator also signalled today, its intention to seek further assurances from providers around their non-social housing activities. 

Mr Bailes added: “Alongside getting assurance on the economic standards, we are actively developing the Regulatory Framework, with a strong focus on the relationship between social housing and non-social housing activity. So it makes sense for Boards to ensure they have an iron grip on these relationships, and any risks to social housing assets.  We are likely to be much clearer – and more demanding – about our expectations on this in future.”

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