Decision

Current regulatory judgement: Incommunities Limited (17 January 2024)

Updated 17 January 2024

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Incommunities Limited
• Regulatory code: L4476
• Publication date: 17 January 2024
• Governance grade: G2
• Viability grade: V1
• Reason for publication: Changed basis for governance grade
• Regulatory route: In Depth Assessment

Regulatory judgement

This regulatory judgement confirms the regulator’s existing assessment of Incommunities Limited’s governance grade as G2 and its financial viability grade as V1, following completion of an In Depth Assessment (IDA).

Incommunities Limited (Incommunities) continues to meet the requirements on governance set out in the Governance and Financial Viability Standard. In October 2020 Incommunities was downgraded to G2 because it needed to strengthen its risk management and control framework. Incommunities has since streamlined its governance structures and improved the management and board oversight of its strategic risks and aspects of internal controls.

Further improvements in internal controls are ongoing to ensure the robustness of data across core areas, including stock condition and some income streams. Incommunities has a renewed focus on asset management and health and safety in its core operations but is yet to fully implement its plans for improving its stock, including its high rise buildings.

Following a self-referral from Incommunities over the incorrect setting of rents between 2016 and 2022, a Regulatory Notice was issued in July 2022. Subsequent investigations uncovered further weaknesses in rent setting. Incommunities has made material progress in rectifying miscalculations and is implementing a series of improvements with board oversight and additional assurance from external verification.

The regulator’s assessment of Incommunities’ compliance with the financial viability elements of the Governance and Financial Viability Standard is unchanged. Based on evidence gained from the IDA, the regulator has assurance that Incommunities’ financial plans are consistent with, and support, its financial strategy. The provider has an adequately funded business plan, sufficient security in place, and is forecast to continue to meet its financial covenants under a wide range of adverse scenarios.

Other providers included in the judgement

None

About the provider

Origins

Incommunities is a charitable community benefit society. The majority of its stock transferred from Bradford Council in 2003.

Registered Entities

Incommunities is the only registered entity.

Unregistered Entities

Incommunities has four unregistered entities:

• Incommunities Treasury PLC, issues bonds to the financial markets on behalf of the parent;

• BCHT Development Company Ltd, undertakes development and VAT recovery activity;

• The Eleanor Moorhouse Homes Trust, owns and manages six bungalows on behalf of the elderly. Incommunities acts as the sole trustee; and

• Lumia Homes Ltd is a dormant subsidiary in the process of being dissolved.

Geographic Spread and Scale

Incommunities owns and manages around 22,700 homes. It operates mainly across Bradford and Kirklees in West Yorkshire.

Staffing and Turnover

Audited accounts for the year ended 31 March 2023 show the group employed 876 full-time equivalent staff and reported a turnover of £104.4m.

Development

Incommunities intends to deliver 1,200 new build completions between 2021 and 2026.

About our judgements

Key to Grades

Governance:

	Compliant
G1	The provider meets our governance requirements.
G2	The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.

	Non-compliant
G3	The provider does not meet our governance requirements. There are issues of serious regulatory concern and in agreement with us the provider is working to improve its position.
G4	The provider does not meet our governance requirements. There are issues of serious regulatory concern, and the provider is subject to regulatory intervention or enforcement action.

Viability:

	Compliant
V1	The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.
V2	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.

	Non-compliant
V3	The provider does not meet our viability requirements. There are issues of serious regulatory concern and, in agreement with us, the provider is working to improve its position.
V4	The provider does not meet our viability requirements. There are issues of serious regulatory concern, and the provider is subject to regulatory intervention or enforcement action.

Note: The use of an asterisk (*) against a grade indicates that the assessment refers to a provider that is designated as being for-profit.

Definitions of Regulatory Routes

In Depth Assessment (IDA): An IDA is a bespoke assessment of a provider’s viability and governance, including its approach to value for money. It involves on-site work and considers in detail a provider’s ability to meet its financial obligations and the effectiveness of its governance structures and processes.

Stability Checks: Based primarily on information supplied through regulatory returns, a Stability Check is an annual review of a provider’s financial position and its latest business plan. The review is focused on determining if there is evidence to indicate a provider’s current judgements merit reconsideration.

Reactive Engagement: Reactive engagement is unplanned work which is triggered by new information or a developing situation which may have implications for a provider’s current regulatory judgement.

Stability Checks and Reactive Engagement: In some cases, we will publish narrative regulatory judgements which combine evidence gained from both Stability Checks and Reactive Engagement.

For further details about these processes, please see Regulating the Standards.