Concern raised by regulator about Rochdale Boroughwide Housing's future financial viability

A 'regulatory judgement' published by The Homes & Communities Agency has raised concerns about Rochdale Boroughwide Housing's (RBH) future financial viability.

The Social Housing Regulator is satisfied that RBH currently meets viability requirements, however the regulator has identified a number of specific exposures, that individually or in combination, could impact on RBH’s viability.

• The impact of welfare benefit reforms
• Delivery of the stock improvement programme on time and within budget
• Due to RBH’s loan arrangements, its business plan is exposed in the medium term to both re-pricing and re-financing risks
• Differential inflation assumptions used in the business plan
• As a result of the four year rent reduction, RBH needs to deliver a £6m savings programme by April 2018. The business plan is reliant on these savings being achieved. 

A spokesman for RBH said: “The regulator believes that RBH is meeting the regulatory requirements on financial viability. The rating reflects the financial realities faced by all housing providers from rent cuts and welfare benefit changes, which are particularly challenging for recent stock transfer providers.

“The rating acknowledges the risks but recognises that RBH are managing them appropriately.”

However, a member of staff at RBH, who does not want to be named, has revealed that RBH management are concerned, she said: "They are running round like chickens with their heads cut off, threatening staff about speaking to the press. They are blaming everything on the government 1% reduction in rents, which is ridiculous."

The regulatory judgement downgrades RBH’s governance - the regulator concluded that whilst RBH does meet governance requirements it needs to improve some aspects of its governance arrangements to support continued compliance.

The spokesman for RBH said: "We fully accept the regulator's judgement, which we were expecting. RBH is looking forward to working with the regulator to regain our G1 rating for governance as soon as possible."

Donna Bowler, Rochdale Borough Council’s assistant director for place, said: “RBH [mutual] was established in 2012 as a result of the transfer of the council’s housing stock and is regulated by the Homes and Communities Agency (HCA). The council has been assured by RBH that it intends to work with the regulator to regain the top rating it previously held.”

HCA Regulatory Judgement
Rochdale Boroughwide Housing Limited
Regulatory Ratings 

Properly Governed: G2 [down from G1]
The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.

Viable: V2 [unchanged]
The provider meets our viability requirements. It has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure continued compliance.

The regulator’s assessment on compliance with the Governance & Financial Viability standard is expressed in gradings from G1 to G4 for governance and V1 to V4 for viability. For both viability and governance the first two grades indicate compliance with the standard. A G3 or V3 assessment indicates a level of concern with the organisation’s performance that is likely to be reflected in intensive regulatory engagement. A G4 or V4 judgement indicates a more serious failure of governance or viability leading to either intensive regulatory engagement or the use of enforcement powers.

For further details of the regulatory approach, see Regulating the Standards at:

http://www.gov.uk/hca

Download