No 'one-size-fits-all' approach to protecting social housing assets: HCA

The substantial diversity of organisations in the social housing sector makes a ‘one size fits all’ regulatory approach to protecting social housing assets impractical, the Homes and Communities Agency has said.

Publishing an analysis of the sector’s response to a discussion document – Protecting social housing assets in a more diverse sector – issued in April and covering potential changes to its core regulatory framework, the HCA regulation committee also said:

• Recovery planning offered a starting point for not-for-profit providers with a parent on the register, but this needed 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 differed, where the regulator’s remit only related 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.  

A 12-week statutory consultation on the proposals – designed to ensure the regulatory framework remains ‘fit for purpose’ – will take place in 2014.

The HCA said the changes would “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”.

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.”