Social landlords continue to comply with regulatory standards following the reclassifications of RSH

Today (15 November 2022), the social housing regulator published the first substantial set of results from its annual stability checks for registered private providers with more than 1,000 homes.

Stability checks focus on the financial resilience of providers and take into account changes in their risk profile, including external economic factors beyond their control.

The 27 providers whose results are published today meet the financial sustainability standard and 20 have been upgraded from V1 to V2. The reclassifications reflect the regulator’s judgment that these providers have the financial capacity to withstand a reasonable range of risks that need to be managed to ensure continued financial stability.

The 2022 stability checks are based on data submitted by providers in June 2022. The results released today are in line with regulator expectations and reflect challenging conditions across the economy. Rising inflation and borrowing costs, along with a weaker housing market, are putting increased pressure on providers’ financial flexibility as they continue to invest in new homes and carry out safety, decarbonization and repair work.

HSR is aware that some suppliers are reflecting on their strategic priorities and reworking their plans to take into account more recent economic developments. HSR expects strategic decisions made by vendor boards to be reflected in future data submissions.

HSR will continue to publish the results of its stability checks for all major registered private providers over the coming months. In line with the broader economic environment, the regulator expects to issue a number of reclassified V2 judgments for suppliers during this process.

Jonathan Walters, Deputy Managing Director of HSRsaid:

The results of our first round of stability checks reflect the significant economic challenges facing the sector.

In this context, we have seen a significant number of suppliers upgrade to V2 grades. These suppliers continue to meet our financial viability standard and the industry remains in a strong financial position overall.

It is crucial that all providers maintain a strategic approach to risk management and focus on their key objectives: investing in new and existing homes and providing quality services to their tenants.

Notes to Editors

1. HSR regulates over 200 registered private providers with over 1,000 households and performs stability checks on these providers annually.

   • Stability checks review the financial information that vendors have submitted and consider whether each vendor’s current viability score is consistent with the information in their regulatory filings.

   • In doing so, the regulator focuses on financial soundness indicators and evidence of any significant changes in risk profile.

   • When the vendor’s rating is unchanged as a result of the stability check, the regulator issues an indicative regulatory judgement. Where it considers a provider’s current rating to be inconsistent with its regulatory returns, the regulator will modify its rating and issue a narrative RJ.

   • Once published, the rating will be reviewed during an in-depth evaluation or subsequent stability check.

2. Stability check judgments issued since October 2022 are based on financial forecast reports submitted in June 2022. HSR is aware that some suppliers are reflecting on their strategic priorities and reworking their plans to take into account more recent economic developments. HSR expects strategic decisions made by boards to be reflected in future returns.

3. Providers with a V1 rating for financial viability meet the regulator’s viability requirements and have the financial capacity to withstand a wide range of adverse scenarios. Providers with a V2 ranking also respond HSRto viability requirements, with the financial capacity to withstand a reasonable range of adverse scenarios, but must manage significant risks to ensure continued compliance. V3 and V4 are non-compliant grades.

4. The complete results of the first series of HSRStability checks for 2022 are shown in the table on the Regulatory Judgments and Notices, and Ratings Under Review page.

5. More information on how HSR regulates, including its annual stability audit process, can be found in Regulating Standards.

6. For press office contact details, see our Media Inquiries page. For general queries please email [email protected] or call 0300 124 5225.

7. The Social Housing Regulator promotes a viable, efficient and well-governed social housing sector capable of providing and maintaining housing of an appropriate quality that meets a range of needs. It does this by putting in place strong economic regulation focused on governance, financial sustainability and value for money that maintains lender confidence and protects the taxpayer. It also sets consumption standards and can intervene if these standards are violated and there is a significant risk of serious harm to tenants or potential tenants.