Here is a roundup of the main points arising from the joint sessions Steve Douglas, Susan Kane and Fiona Underwood chaired with Trowers & Hamlins this month on: Future regulation – implications of the Housing and Planning Act- IDAs, VFM and more.
The first thing to reiterate is that the HCA had contingency planning in place and is now implementing the following:
- Monitoring mark to market exposures – focusing on ensuring associations have sufficient cover for cash/ collateral calls.
- Short term – reviewing financial forecast returns and Q2 quarterly surveys.
- Longer term – impact is uncertain but keeping an eye on trends.
The implications of the Housing and Planning Act means more transition for the HCA. The regulator has now changed its ‘tagline’ from ‘protecting social housing assets’ to ‘promoting a viable, efficient, well-governed sector able to deliver homes that meet a range of needs’.
The loss of the consent regime is in the Act but a commencement date has not been announced and is expected to be publicised in the Autumn. Home ownership criteria is also yet to be publicised but is likely to expect HAs to have a home ownership offer for tenants. If VRTB is not the best option, the HA should have an alternative in place.
There are concerns from lenders that the removal of the consents regime may lead to “bad mergers”. Perhaps in recognition of the comfort that a regulatory regime gives, the HCA acknowledged that there had been an increase in HAs seeking to gain consent on mergers in recent months before the regime disappears.
The regulator has warned that HAs should consider how they apply deregulatory freedoms and should be mindful of the sector’s reputation – there has been negative media attention in the past when associations have hiked rents up to 40 per cent, or disposed of social units (e.g. New Era in Hackney). They should be particularly mindful of moving tenanted properties out of the regulated sector and the need to consult tenants appropriately if they propose to do so.
Value for money
There was a positive response from HAs following the publication of the HCA’s regression analysis. But politically, there is a recognition that the sector is still considered to not be doing enough. There is 50% unexplained variation in costs, between arguably similar organisations. It would be wise to prepare for the HCA to name organisations in its future publications and analyses. Also expect the HCA to be interested in tracking VFM gains, including mergers going forward.
The new regulating the standards document has also been published and reflects the increasing importance of VFM in regulation.
In the medium to long term the HCA is likely to review the regulatory standards that haven’t been changed since 2012 to reflect on their proportionality and relevance to the current operating environment and the Regulator’s revised role.
The HCA is expected to consult on the introduction of fees for its work over the next few months. This will follow the outcomes of the Government’s review of the HCA.
If you would like to find out more about these sessions, please contact Steve Douglas on 07810 152 840 | email@example.com, Susan Kane on 07870 685 891 | firstname.lastname@example.org or Fiona Underwood on 07788 643 092 | email@example.com Altair or Sharron Webster at Trowers and Hamlins.