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HCA sets up new 'watch list' of at risk housing providers

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HCA sets up new 'watch list' of at risk housing providers


Published by Jon Land for in Housing

HCA sets up new 'watch list' of at risk housing providers HCA sets up new 'watch list' of at risk housing providers

The Homes and Communities Agency has set up a new 'watch list' of housing providers whose gradings are under review due to viability issues.

The list, which appears on the HCA website, has been created to make the regulator's assessments of individual social landlords "more transparent".

The move comes after MPs on the Communities and Local Government Select Committee criticised the HCA's ratings system for "failing to reflect the serious weakening in the financial viability of Cosmopolitan Housing Association".

The select committee said: "In this case the assessment of financial viability was neither timely or useful. The eventual downgrading of Cosmopolitan to the lowest grade amounted to a futile exercise in locking the stable door after the horse had bolted. We are not surprised that Moody's paid such close attention to the episode."

It continued: "Ratings published by the regulator should be reliable and capable of being understood at face value. The practice of using governance ratings to signal concerns lacks openness and is confusing. It is misleading to the taxpayer and tenants, and potentially also to lenders who, it appears, are expected to understand the coded message from the regulator."

In its reponse, the HCA said that in addition to the 'watch list' it had revamped the grading straplines on its website to make them more transparent and easier to understand but insisted its ratings are "robust and accurate".

It said: "We have a duty to be proportionate, consistent, transparent and accountable. Where we think we will need to revise a judgement we will aim to do so as soon as possible, accepting on occasions that this can take time."

The HCA also responded to the committee's observation that it had issued very few non-compliant viability judgements.

"The social housing sector has a strong balance sheet and predictable revenues," it explained. "Managed well, social housing businesses should not get into financial difficulties, and this should remain the case notwithstanding the evolving risk profile of the sector."

It added that housing association boards are expected to have an "iron grip" on viability and risk management issues.

There are currently no housing providers on the HCA 'watch list'.

Click here to read the HCA's responses to the CLG select committee's recommendations in full.


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