Regulator of Social Housing’s Sector Risk Profile 2024 – Key ‘Takeaways’ for Boards, Councillors and Executive Teams

There’s no doubt that the social housing sector continues to face some significant challenges as we look forward to 2025. The Regulator of Social Housing (RSH) recently published its annual Sector Risk Profile (SRP) which is a must read for the boards, councillors and executive teams with responsibility for the delivery of landlord services as Registered Providers (RPs).

Over the next 12 months and beyond, RPs will be required to make complex and often difficult decisions as they navigate the competing pressures around investment in existing homes and services, increased regulation and legislation and delivering much needed new housing.

The SRP highlighted that viability risks facing providers have increased intensified over the past year, driven by both internal and external pressures, with financial performance weakening as a result.

Overview

Each year the SRP identifies a range of pressures and risks facing the social housing sector, including governance, strategic direction, financial viability and the safety and quality of homes. This year’s publication, like the others, is far from a cheery read, but presents a realistic position of the sector and highlights the myriad of risks that boards and councillors need to be considering as they make decisions moving forward. In a joint blog, DTP and Devonshires identify our key ‘takeaways’ and the areas where we feel that boards, local authority councillors and executive teams should ensure they have real focus on as they navigate their way through the year ahead.

Governance

The RSH has a ‘co-regulatory’ approach to regulation which is clearly re-stated within the SRP.  The boards of private registered providers and councillors of local authorities are responsible for the delivery of landlord services and will be held to account for how these services are run, along with the outcomes that they deliver as RPs.

The SRP makes several references to the responsibilities of boards and councillors and what the RSH expects of them, and outlines how they ‘will need real skill and judgement, underpinned by the right information and the willingness to provide effective challenge, if their organisations are to continue delivering for current and future tenants’. It is therefore crucial that boards and councillors ensure they have the right skills, knowledge and experience around the table, along with appropriate forms of assurance, to support their decision making.

We encourage RPs to identify the ways in which the risks outlined in the SRP may apply to their organisation and strategic risk register, consider what mitigations can be put in place and what levels of assurance can be provided to boards and decision making bodies in relation to these. With boards often coming together for away days strategic events in Autumn and Winter, this can be a key time to consider and discuss risk strategies and delivery against the RPs strategic direction.

Strategic Direction and Financial Viability

One of the key functions of a RP board or for local authority councillors is to set the strategic direction and priorities for the organisation, and ensuring it remains in line with its purpose. As the SRP outlines, a lack of strategic direction can result in failure to take appropriate decisions. Having in place clear performance indicators aligned to the strategic direction and priorities set by the board will help support the monitoring of performance against these priorities and ensure appropriate decisions are made in line with achieving them.

The RSH identifies the need for RPs to navigate a range of competing demands whilst maintaining financial viability in order to protect tenants’ homes. Boards and councillors will need to ensure that their decision making is robust, in line with their purpose and strategic priorities and communicated transparently to a range of stakeholders. Where concerns of viability arise, the RSH expects early warning of this to be communicated to them. What practical steps can RPs take to support the delivery of their strategic plans and help ensure they remain financially viable?

• Ensure that boards/councillors have a thorough understanding of strategic risk, and in the case of group structures, how this can flow and impact on different parts of the group
• Establish robust risk management, mitigation and resilience plans, including options should financial distress occur, ensuring that mitigation options are not ‘short-term’ fixes
• Undertake robust stress testing of their financial plans and any resilience/mitigation options which can deliver long term solutions
• Have an up-to-date Assets and Liabilities Register in place
• Ensure that financial performance is closely monitored by the board/councillors including any covenant compliance
• Have a clear risk appetite statement in place, including factors including mergers  and partnerships, and what circumstances may trigger a change in appetite
• Engage with funders pro-actively, and at an early stage whenever viability concerns arise
• Ensure communication with the RSH is timely and meets the needs of the Transparency, Influence and Accountability Standard in terms of self-referral

Tenant Safety and Quality of Homes

Ensuring tenants’ safety and the provision of quality accommodation are fundamental requirements of a RP and should be at the forefront of governance considerations for boards and local authority councillors. However, the RSH articulates in the SRP that through its regulatory engagement it has found ‘significant variation in landlords’ understanding of the condition of their homes, with consumer regulation casework highlighting a number of landlords without accurate, up-to-date, and complete data on the condition of their homes’.

Whilst spend on repairs and maintenance in the sector has increased dramatically (and is expected by the RSH to amount to £50bn over the next five years), there is clearly more that boards and councillors can do to ensure that the quality of their homes is of a high standard and that their tenants are safe. The RSH has found ‘examples of landlords with a significant number of homes that did not meet the Decent Homes Standard, or where poor data meant there was a lack of assurance the standard was being met’.

The SRP therefore identifies the following areas that boards and councillors should specifically focus on in relation to the quality and safety of homes:

• Ensure an accurate, up to date and evidenced understanding of the condition of their homes; with minimum requirements to meet the Decent Homes Standard and considerations for evolving legislative or regulatory requirements. This information should be based on physical inspection of properties and consider net zero requirements, the consultation on energy efficiency standards and plans for a review of the Decent Homes Standard.
• Understand the prevalence of damp and mould in all homes, with a clear plan to deal with any identified issues which takes account of any specific needs that a tenant may have.
• Ensure that fire safety is a key priority, identifying any safety defects or works with clear plans in place for remediation.
• Ensure timely action is taken to remediate ‘life critical fire safety’ (LCFS) defects taking into account risks to tenants and tenants’ needs.
• Understand the costs associated with LCFS remediation works and any implications for other planned major repairs, particularly for large and complex buildings.
• Take prompt and effective action to ensure homes are safe generally, and where work is expected to take time to complete, consider appropriate interim measures.
• Ensure no-access policies are robust whilst remaining mindful of tenants’ individual needs.
• Have an effective and efficient repairs service in place, which allows for repairs to be conducted in a timely way, ensuring open and prompt communication with tenants on progress with repairs.
• Have full assurance on the number of homes for which all specified safety checks have been carried out, including where services are provided or managed by third parties such as managing agents, care and support providers or contractors.
• Ensure the robustness of source data used in reporting and triangulate data across different sources

If you or your organisation requires support in navigating any of the risks highlighted in the SRP or our blog, please contact:

Sarah Jackson, Director, DTP s.jackson@dtp.uk.com

Samantha Grix, Partner, Devonshires Samantha.grix@devonshires.co.uk