Unifying the world of social housing regulation

The TSA’s New Regulatory Framework comes into force on 1 April 2010. Nick Billingham examines what it means for local authorities and ALMOs.

The new regulatory framework under the Housing and Regeneration Act 2008 comes into effect from 1 April 2010. For the first time housing associations and local authorities (including ALMOs) will be subject to a common regulator, the Tenant Services Authority, or TSA. However, there are important distinctions under the new framework in the treatment of the “old” registered social landlords on the one hand, and local authorities and ALMOs on the other.

From 1 April 2010 all existing registered social landlords will automatically transfer to the TSA’s new register of registered providers of social housing. At the same time all local authority providers will also automatically be placed on the register. ALMOs will not be registered unless they own stock in their own right; it will be for the registered local authority provider to ensure that their ALMO meets all relevant regulatory standards. The register will differentiate between local authorities who have ALMOs and those who retain their own housing stock.

The new register is also designed to encourage new social housing providers into the market, including private commercial organisations which can be registered as ‘for profit’ providers to distinguish them from local authorities and other ‘not for profit’ providers.

The draft National Standards

The TSA has developed six draft National Standards which are to be at the heart of the new regulatory framework. Consultation on the new standards published in November 2009 (“A new Regulatory Framework for Social Housing in England – a statutory consultation”) ended on 5 February. This leaves a few weeks for the standards to be finalised ready to “go live” on 1 April. All providers will then be expected to produce a report to their tenants by 1 October 2010 setting out how they will meet the Standards and have local standards developed in conjunction with their tenants by April 2011.

So what are the new Standards and do they apply to local authorities and ALMOs in the same way they apply to other registered providers, like housing associations?

The TSA has established six overarching Standards – down from the 14 it originally proposed last year. The intention is that the Standards are focused on desirable outcomes and are not too prescriptive. The TSA will be able to issue Codes of Practice to clarify and expand on the Standards but the TSA has committed to keeping any Codes to a minimum so as to preserve the objective of an outcome-based framework. In addition to the National Standards, all registered providers, or RPs for short, will be expected to agree local standards with their tenants for areas of service that are relevant to them locally.

The first Standard is the Tenant Involvement and Empowerment Standard. This will apply to all RPs and focuses on customer service and choice, tenant involvement, and complaints. RPs are expected to treat tenants with fairness and respect and ensure that tenants have opportunities to be involved in the management of their homes. Complaints must be resolved promptly, politely and fairly and records of complaints kept and published annually.

The second Standard is the Home Standard. This deals with the quality of accommodation and repairs and maintenance. As a minimum, RPs must ensure that tenants’ homes meet the Decent Homes Standard, i.e. are warm weatherproof and have modern facilities, by 31 December 2010. They must provide a cost-effective repairs and maintenance service that meets the needs of and offers choice to tenants.

The Tenancy Standard deals with allocations, rents and tenure. RPs must let their homes in a fair, transparent and efficient way; they must make the best use of available housing and ensure that their allocations policies reflect the diverse needs and aspirations of tenants and potential tenants. In relation to Tenure, RPs are expected to grant the most secure form of tenure compatible with the purpose of the housing and the sustainability of the community. The Rent Standard, which requires RPs to continue to comply with the Rent Influencing Regime and the Government’s Rent Direction of November 2009, will not apply to local authorities (or ALMOs) and the Government has indicated that it will issue a rent standard applicable to local authorities (and ALMOs) at a later time.

The fourth Standard is the Neighbourhood and Community Standard. This requires RPs to keep communal areas clean and safe and to deal effectively with anti-social behaviour.

The Value for Money Standard stems from the requirement in the 2008 Act that the TSA ensures that RPs “…perform their functions efficiently, effectively and economically”. Hence this Standard, which expects RPs to have a comprehensive approach to managing their resources to provide cost-effective, quality services and homes and to publish information about how they have achieved value for money each year.

The sixth Standard, the Governance and Financial Viability Standard, will apply to not-for-profit and profit-making RPs and places a greater emphasis on the role of boards in ensuring that the National Standards are met. However, the Standard will not apply to local authority providers and ALMOs. This is because local authorities and ALMOs operate under a different governance model and are answerable to democratically elected councillors. However, in assessing service delivery the TSA says it will “work closely” with the Audit Commission if any regulatory issues arise.

How will the TSA enforce the new Standards?

There are two fundamental aspects to the TSA’s proposed approach to enforcement.

Firstly, the notion of co-regulation which places the primary responsibility of compliance with the Standards Framework on governing bodies (i.e. boards of RPs or, in the case of local authorities, councillors) with tenants being directly involved in scrutinising the performance of their landlord and holding them to account.

Secondly, that the TSA will focus its attention on the poor performing providers and will subject the stronger performers to minimum levels of regulatory engagement.

Space does not allow a full review of the TSA’s powers here; suffice to say that in relation to local authorities and ALMOs the government intends giving specific powers to the TSA dealing with serving enforcement notices, appointing advisors to a local authority, censuring a local authority, and directing a tender or transfer of management of housing stock.

These powers have yet to be announced which means that, as matters stand, the only powers applying to local authorities and ALMOs (and all other RPs) from 1 April 2010 will be the power to collect information, to arrange surveys and inspections, and to direct an inquiry or an extraordinary audit. RPs other than local authorities and ALMOs will be subject to the various other enforcement powers vested in the TSA from April. One of the most important distinctions here is that local authorities and ALMOs will not face penalty fines whilst other RPs will.

Unifying the regulation of housing associations and local authorities was never going to be easy to achieve with a “one size fits all” framework. Some might argue that the distinctions which the TSA has made mean that there will not be a level playing field between associations and local authorities and ALMOs. But if the culture of co-regulation and minimal interference with the good providers takes hold, then the unified framework should work to everyone’s advantage, whether not-for-profit providers, local authorities and ALMOs or those for-profit providers the TSA and the government are so keen to see joining the social housing sector.

Nick Billingham is a partner at Devonshires Solicitors (www.devonshires.co.uk).