What does it mean for you? Housing and Planning Act 2016

andy-ballardThe much heralded new Act received Royal Assent in May 2016.

The Minister, when launching the Bill, said:

“The Housing Bill will allow us to go even further by kick starting a national crusade to get one million homes built by 2020.”

It was said to meet the housing crisis head on and deliver the much needed new homes.

However, many of its provisions are voluntary and this is significant.for the governance of housing associations.

First and foremost the fact that the word “voluntary” is being used in respect of:

  • Right to buy
  • Pay to stay

… is directly linked to the decision of the Office for National Statistics to reclassify housing associations as being within the public sector last autumn.   The ONS concluded:

“That PRPs are public, market producers and as such they will be reclassified to the public non-financial corporations’ subsector for the purpose of national accounts and other ONS economic statistics.  This classification applies with effect from 22 July 2008; the date of enforcement of the HRA 2008.”

Put simply, housing was transferred from the private sector to the public sector and consequently housing debt added to public debt.

The general consensus was that both the government and the sector wanted to move housing back to the private sector as soon as possible and as a result much of regulatory control previously exercised by the HCA has withdrawn.

So what does that mean by way of good governance?

To a degree – no change. Boards remain in charge. They are responsible for their organisation(s). They must comply with their governing documents and their chosen code of governance. As the NHF Code of Governance 2015 (“Code”) reminds us, those adopting the Code must publish:

“An annual statement of compliance with the Code in their annual financial statements, and make a reasoned statement about any areas where they do not comply”.

Put simply: “comply or explain”.

Of course, with the new freedoms, Boards should revisit their Risk Map to ensure it is relevant and up to date. Remember, identification of risk and its mitigation is a tool that helps you develop your business and deliver its objectives: it is not a negative!

Boards should also check their systems of control to ensure they are still fit for purpose. It is worth revisiting your Financial Regulations and Standing Orders to ensure that checks and balances are in place and that the board can take assurance that it is:

“Establishing, overseeing and reviewing a framework of delegation and systems of internal control”.

With greater responsibility comes the need for greater vigilance. Board appraisal, skills gap(s) and board review should highlight whether your Board has the necessary skills to manage the business and mitigate the risks highlighted in your Risk Map. Take time out at a facilitated Away Day to ensure your Board still works effectively in the new regulatory environment.

Andy Ballard is an Associate Director at Altair and can be contacted on 07974 733 334 and andy.ballard@altairltd.co.uk.