Regulator of Social Housing upgrades three RPs and downgrades another in latest judgements

The Regulator of Social Housing (RSH) has upgraded the viability grades of three housing associations and has downgraded a South Devon housing association’s in its latest batch of regulatory judgements published today.

The RSH has moved the financial viability gradings of Black Country Housing Group, One Vision Housing and Gateway Housing from ‘V2’ to the highest ‘V1’ score. All three have G1 governance grades.

South Devon housing association Teign Housing’s financial viability grade however has been downgraded from V1 to V2.

Its existing G1 grade for governance remains. A ’V2’ grading means a provider still complies with the governance and viability  standard but has somewhat less capacity to respond to adverse events.

The RSH judgement said: ”Teign is increasing investment in its existing homes and will continue to do so informed by planned surveys on the condition of its homes.

”This is weakening its interest cover which, when coupled with wider economic pressures including inflation, reduces Teign’s capacity to deal with adverse scenarios.”

Jo Reece, chief executive of 3,800-home Teign Housing, said: “We recognise this as a reasonable assessment. The tough current economic climate means that, along with many other providers, our increasing investment in existing homes has impacted our interest cover. However, as the report states, we have an adequately funded business plan, sufficient security, and are forecast to continue to meet our financial covenants.” 

The regulator said it has also withdrawn regulatory notices for Swan Housing Association, now part of Sanctuary, and Norwich City Council. Regulatory notices are normally published when the regulator finds that a provider with fewer than 1,000 homes is not compliant with an economic or consumer standard. 

The regulator has published its first graded assessment of for-profit landlord Sage’s governance and financial viability. The judgement gave Sage a G1 grade for governance and a V2 grade for viability. 

Sage Homes Registered Provider holds a few hundred properties, the majority of which are under construction, while Sage’s remaining 13,000 properties are split equally between Sage Housing and Sage Rented. 

The judgement notes that Sage’s current acquisition strategy is purchasing newly developed homes using loans and equity investment from its shareholder, Blackstone.

In July 2022, Blackstone and private equity investor Regis announced that they were selling a stake in Sage to attract more investment for development.

“During this period of growth SHRP [Sage Homes Registered Provider] is forecasting a weaker financial profile”, the RSH judgement stated.

It added that Sage needs to carefully manage a range of exposures associated with its plans for future growth. 

Alison Thain, chair of Sage Homes, said: “We would like to thank the Regulator who has worked closely and collaboratively with us over an extended period to understand our business and the work that we are doing to deliver for our customers.

“Our G1 V2 rating underlines our position as an ambitious Registered Provider that is delivering large numbers of new homes for those that need them the most. This is reflected in Sage Homes being named the largest provider of newly built affordable homes in England for the third successive year. We are therefore extremely proud that the Regulator has recognised the commitment of our Boards, investors and our people to our long term strategy and vision.”

Latest regulatory judgements