Consultation outcome

Introduction to draft Statutory Guidance

Updated 29 February 2024

Applies to England

Introduction

1 - In publishing this document, the regulator is meeting its statutory duty under section 215(1)(b) of the Housing and Regeneration Act 2008 as amended (the ‘Act’), which requires the regulator to publish guidance about how it uses and intends to use its powers under chapters 6 and 7 of the Act. The regulator has also identified other relevant provisions outside of these chapters, which are featured in this guidance. As required by section 215(3) of the Act, the regulator must have regard to this guidance. 

2 - The regulator expects registered providers to identify problems and take appropriate corrective action to resolve them. If a registered provider takes responsibility for self-improvement and we conclude that it has the capacity, capability and willingness to respond to the problems, we will generally work with it to achieve the necessary corrective actions. Working with a registered provider may include instances where the regulator will deem it appropriate to use its powers, in order to support the improvement.  

3 - However, it is more likely that we will use our powers in circumstances where self-improvement has not succeeded, or where a registered provider is unable or unwilling to respond positively (in each case, within an appropriate timeline), or where the regulator concludes that such an approach is not appropriate (for instance, where urgent action is necessary or there is an immediate and significant risk to a registered provider’s tenants). 

4 - The linked guidance notes 1-19 should be read in conjunction with this introductory section and set out further detail and information about how the regulator uses, and intends to use, its statutory regulatory and enforcement powers and also certain general powers. The guidance notes use some examples, to illustrate how powers could be used. In all instances, examples should not be taken as exhaustive, nor to restrict the regulator’s discretion to use its powers as appropriate on a case-by-case basis.  

5 - Unless a contrary intention is indicated in the guidance, the regulator uses the term private registered provider to refer to not for profit organisations and for profit organisations. The term registered provider encompasses both PRPs and local authorities. 

6 - Throughout these guidance notes, we refer to the Homes and Communities Agency as Homes England, as this is its current trading name. The Greater London Authority is referred to as the GLA.  

7 - References to stakeholders mean persons with an interest or concern in a registered provider’s activities. This may include tenants, secured or unsecured creditors, Homes England, GLA, local authorities, other regulators and central government. 

8 - In the event of any conflict between (i) the guidance notes and (ii) the Act or other legislation, the latter will prevail. 

9 - This guidance should be read in conjunction with the Act and/or other referenced legislation. It is not intended to be a substitute. In the event that the Act and other legislation referred to is amended, the guidance should be read, so far as possible, and unless otherwise indicated, as referring to the updated legislation.

Legislative requirements underpinning the use of our powers  

10 - The regulator’s powers are set out in the Act, and the Act requires the regulator to:  

• perform our functions with a view to achieving (so far as possible) the economic and consumer regulation objectives ^{[footnote 1]}
• exercise our functions in a way that minimises interference and (so far as possible) is proportionate, consistent, transparent and accountable ^{[footnote 2]}  
• comply with any specific requirements set out in the Act. 
• set standards and regulate registered providers against those standards.  

11 - Before exercising a regulatory or enforcement power, the regulator must have regard to any voluntary undertaking offered or given by a registered provider. Some enforcement and regulatory powers specifically require the regulator to inform a registered provider whether it would accept a voluntary undertaking in place of, or in mitigation of it exercising the power. In considering whether a voluntary undertaking will be acceptable, the regulator will: 

• assess whether or not the terms of a voluntary undertaking are satisfactory, giving reasons for the decision 
• consider the registered provider’s past conduct such as how it has addressed past issues raised by the regulator; and 
• consider the seriousness and urgency of the matter, which the voluntary undertaking seeks to address. 

Where the regulator accepts a voluntary undertaking, it will monitor the registered provider’s progress with it. If the regulator is not satisfied with progress made, it may need to consider exercising its powers. Where the regulator rejects a voluntary undertaking, it will provide reasons for this. 

12 - Under section 218 of the Act, the regulator must also consider some specific matters before exercising an enforcement power which are: 

• the desirability of a registered provider being free to choose how to provide services and conduct business 
• the speed with which the failure or other problem needs to be addressed; and 
• whether the failure or other problem is serious or trivial. 

13 - The Act sets out the specific types of registered provider that the regulator’s powers can be used in relation to; and further information about this is contained within the guidance notes.  

14 - It is a requirement of the Legislative and Regulatory Reform Act 2006 that the regulator must have regard to the Regulators’ Code when developing policies and procedures that guide its regulatory activities. The code does not apply to the exercise by a regulator of any specific regulatory function in individual cases.  

The regulator’s objectives in using its powers  

15 - Registered providers are expected to comply with the regulatory standards and legislative requirements. Where registered providers fail to do so, the regulator’s aim will be to ensure that they return to compliance.  

16 - In order to achieve this aim, the regulator may use its powers but its specific objectives for doing so may vary from case to case or change during the course of a case.  

17 - However, broadly speaking we would want to: 

• protect the interests and safety of tenants 
• ensure that registered providers address and resolve the presenting problems and any related or contributory problems 
• ensure that registered providers address and seek to resolve any additional relevant and material matters that come to light whilst they are subject to our regulatory, enforcement or general powers 
• ensure that providers maintain their financial viability and meet acceptable standards of organisational effectiveness 
• ensure that providers use intervention as a catalyst for change and sustain any improvements in performance in the long term 
• reassure lenders and encourage investment in social housing 
• retain social housing assets in the regulated sector, as far as is possible 
• protect the reputation of registered providers of social housing as a whole; and 
• co-ordinate the approach with other regulatory bodies where necessary. 

General approach to use of powers 

18 - In most circumstances, where the regulator decides to use its enforcement powers, there will have been a period of intensive engagement with the registered provider and they will have had the opportunity to make self-improvements. 

19 - However, this may not always be possible, for example where there is a need for the regulator to act more promptly, such as an imminent risk to tenants, social housing assets or where the registered provider has shown a lack of co-operation with the regulator and/or unwillingness to make the requisite self-improvements.  

20 - Our general approach to exercising our powers is to apply the most appropriate power, or combination of powers available, taking into account the seriousness of the issue(s) under consideration. 

21 - The regulator will seek to balance the interests of the registered provider, its tenants, its key stakeholders and the impact on public funds when responding to the circumstances of each individual case. 

22 - We may use our powers either singly or in combination, depending on the circumstances of the case. 

Process for using powers  

23 - The regulator has robust internal processes to ensure that a number of checks and balances are applied before a decision is made to use its powers.  

24 - We will ensure that any decision to use our powers is made by the person who has the authority to make such decisions within the regulator.  

25 - Where the regulator uses its powers, in each case, we will give reasons for this. We will also keep our decisions about the use of powers under regular review and will, as necessary, change our approach to deal with the circumstances of the case. 

General guidance as to when the regulator may use its powers 

26 - The regulator may elect to use its powers for a range of reasons. Whilst this is not an exhaustive list, nor shall it limit the way in which the regulator uses its powers, the types of issues which may lead to the regulator using its powers include: 

• Serious failings or problems that may put tenants and or their homes at risk  
• Financial viability problems (e.g. those which disrupt or threaten to disrupt the delivery of services to tenants or place social housing assets at risk; reliance on third parties for continued trading) 
• Failures by registered providers to act on issues raised by the regulator including not honouring commitments set out in voluntary undertakings, or failing to comply with previous exercises of regulatory, enforcement or general powers 
• Serious probity concerns such as: entering into transactions which inappropriately advance third-party interests; failing to declare and appropriately deal with conflicts of interest; or misuse of assets or funds  
• Lack of robust governance arrangements (e.g. failure to comply with chosen codes of governance and internal policies; insufficient risk and control frameworks)
• Lack of evidence that the governing body and executive has sufficient skill, expertise and/or willingness to make the required changes. 
• Failure to meet the Regulatory Standards 

Expectations of registered providers  

27 - The regulator has an expectation that registered providers will work with the regulator to support the successful deployment of powers. This will include as a minimum: 

• not obstructing the use of powers
• co-operating with the regulator in the use of its powers
• providing the regulator and any persons appointed by the regulator with information and documents where requested;  
• keeping the regulator informed about progress
• co-operating with persons appointed by the regulator  
• liaising with key stakeholders where necessary, and 
• sharing any communication or statement to be issued publicly by the registered provider with the regulator ahead of time.  

Communications 

28 - The regulator may decide to issue a public statement about its decision to use powers in a particular case, and the reasons for its decision.

1. As set out at s.92K(1)-(3) of the Act. ↩

2. As set out at s.92K(5) of the Act ↩