HCA publishes feedback on proposed changes to Regulatory Framework

The regulator of social housing providers, the Homes and Communities Agency (HCA), has published its analysis of the sector’s initial response to a discussion document on potential changes to its core Regulatory Framework.

Published in April, Protecting Social Housing Assets in a More Diverse Sector opened the debate on how social housing should be regulated as providers become increasingly diverse, and in particular how to ensure the Regulatory Framework remains ‘fit for purpose’ to ensure social housing assets remain protected against a backdrop of increasing complexity and risk.

The proposed changes will enable the Regulator to deliver its statutory objectives more effectively while maintaining the confidence of investors, tenants and other key stakeholders in the sector at a time when providers are diversifying into a broader range of activities and the number of new providers registering to provide social housing is increasing.

HCA’s Regulation Committee has considered the feedback, with conclusions indicating the Regulator’s thinking in advance of a statutory consultation in the new year:

  • The substantial diversity of organisations in the sector makes a ‘one size fits all’ approach to protecting social housing assets impractical
  • Recovery planning offers a starting point for not-for-profit providers with a parent on the register, but this needs to be supplemented by other steps to improve risk management by those providers:
  • A broader understanding of risk and contingent liabilities
  • Better scenario testing, and
  • A plan for protecting social housing assets in a failure situation
  • The position on for-profit providers differs, where the regulator’s remit only relates to social housing and not the whole entity. These providers will be subject to some form of ring fencing.
  • All sales proceeds made by for-profit providers on stock acquired from not-for-profit providers will be required to be invested in social housing. These providers will be free to generate and distribute profits based on stock they buy from outside the sector or build themselves.

Julian Ashby, Chair of the HCA Regulation Committee said:

“We are determined to deliver our statutory objective to protect social housing assets. The sector is becoming riskier and it is necessary that we review the best way to protect tenants and public investment, while ensuring that the sector is well-placed to continue to attract private finance at competitive rates. The substantial diversity of organisations in the sector makes a ‘one size fits all’ approach to achieving this impractical.

“Our discussion document prompted some lively debate. We we have listened to the response and will use it to inform the formal consultation early next year. We continue to listen and work with stakeholders as we develop detailed propositions for these changes.”

The feedback will contribute to the formal 12 week statutory consultation on changes to the Regulatory Framework in early 2014.