Heylo boosts turnover as it restructures in bid to regain regulatory compliance

Non-compliant Heylo Housing Registered Provider (HHRP) has increased its turnover by 19% as it continues to work on a restructure to allay the concerns of the Regulator of Social Housing.

The for-profit provider, which is backed by investment giant Blackrock, increased its shared ownership housing assets from 7,404 to 7,924 homes. It said this helped it to boost turnover for the year to 30 September from £27.5m to £32.6m.

Under its model, HHRP leases properties from investment companies or ‘pods’ within the wider Heylo Group and then onward leases them to customers.

But in a regulatory judgement in December 2022, the Regulator of Social Housing (RSH) found Heylo to be non-compliant with its Governance and Financial Viability standard.

It raised concerns that Heylo relied on arrangements with its unregistered parent to fund its operations and that all income is passed through to the pods via a managing agent. RSH said it lacked assurance that Heylo understood and managed the impact of these arrangements. It said the investment pods had the ability to require Heylo RP to surrender its leases in short order to protect their lender interest.

In its accounts, Heylo, said the group has now agreed to place the registered provider as the parent entity to the asset-holding investment pods.

It admits the legal restructure is not complete but is “imminent” and arrangements have been embedded “as if the RP is already the corporate parent” It said a system of internal controls and an assurance framework has been enhanced.

>>See also: Regulator announces probe into Blackrock-backed ‘for-profit’ provider’

“HHRP has been enabled to and taken steps to fully identify risks and combinations of risks across a range of scenarios through detailed and robust stress-testing and identified and enacted mitigating actions where required to protect its social housing assets.”

The number of homes Heylo contracted from housebuilders fell from 2,752 to 677 units.

HHRP, which is chaired by former L&Q chief executive David Montague, has also carried out a review of the skills of its board. It has appointed former Settle finance director Ebele Akojie to its board along with Jason Green, managing partner at Liverpool Street Capital Advisors.