Regulatory standards that registered housing providers must meet
The Homes and Communities Agency’s (HCA) standards are classified as either economic or consumer. All registered providers must meet our consumer standards, but only private providers (not-for-profit and for-profit providers) need to meet our economic standards.
All of our standards are set out in The regulatory framework for social housing in England from April 2012. Where necessary, they reflect directions issued to the regulator by government.
Our role is to regulate providers to:
- protect public investment in social housing
- maintain confidence of private investors to invest into the sector
- ensure that social housing continues to be available to current and future tenants
- enable landlords to be able to invest in new social housing, assuming other conditions are in place
- are open and transparent, to allow tenants and other stakeholders to form views on and influence the services delivered by providers
- enable providers to meet the regulatory standards and statutory requirements
- deliver value for money improvements to support providers to deliver their social housing objectives
- protect the reputation of the sector as a whole
These standards apply to all registered providers except for local authorities. Providers’ boards are responsible for ensuring their organisation meets the economic standards. As regulator we will proactively seek assurance from providers that they are meeting our economic standards, while meeting our duty to minimise interference. There are 3 economic standards:
- governance and financial viability standard
- value for money standard
- rent standard
We assess how well providers are meeting the economic standards by speaking to them, meeting with them, and by collecting financial and statistical data. All registered providers are required to submit various types of assurance to the regulator; including a statistical data return to the NROSH+ website. Registered providers are required to submit annual accounts. The accounting direction for social housing in England from April 2012 sets out specific requirements that registered providers must meet when producing their annual accounts.
We publish an annual sector risk profile. This sets out the main risks to their business that registered providers are facing, to help them take action to manage those risks.
These standards apply to all registered providers, including local authorities. We set consumer standards so that tenants, landlords and others know what is expected of them. This helps tenants to hold landlords to account. These standards support our approach to regulation set out below.
Providers’ boards and local authority councillors are responsible for making sure their organisation meets our consumer standards. Unlike our economic standards we do not proactively seek assurance that providers are meeting our consumer standards. Instead, the Homes and Communities Agency’s role is limited by law to setting the consumer standards and intervening only where failure to meet the standards has caused, or could have caused, serious harm to tenants. This is known as the serious detriment test.
There are 4 consumer standards:
- tenant involvement and empowerment
- neighbourhood and community
Our approach to regulation
Regulating the Standards 2014 sets out our approach to regulation including:
- what providers are expected to achieve
- what providers can expect from the HCA as regulator
- an explanation of the questions we will ask and why we ask them
Since the publication of Regulating the Standards we have published the following addendum:
- Approach to further regulatory assurance July 2014
We also publish a range of further documents to help registered providers to comply with our standards:
- Disposal Proceeds Fund
- Limit on the management element of the LSE service charge for 2015 to 2016
- Guideline rent limit for private registered providers 2015 to 2016
As regulator the HCA takes a co-regulatory approach. Co-regulation places responsibility for meeting our standards on the landlord. Boards and councillors who govern providers’ service delivery are responsible for ensuring their organisation is meeting our standards, and for being open and accountable in how their organisation meets its social housing objectives. It is for providers to support tenants in shaping and scrutinising service delivery and in holding boards and councillors to account.
The principles of co-regulation are as follows:
- boards and councillors who govern providers are responsible and accountable for delivering their organisation’s social housing objectives
- providers must meet the regulatory standards.
- transparency and accountability is central to co-regulation
- tenants should have opportunities to shape service delivery and to hold the responsible boards and councillors to account
- providers should demonstrate that they understand the particular needs of their tenants
- value for money goes to the heart of how providers ensure they meet their objectives now and in the future
Where we make an important decision that changes our approach to regulation, we record it as a decision instrument.
Regulation of small providers
While our standards apply to registered providers regardless of size, the focus of our activity is on larger, more complex organisations that own and/or manage more than 1,000 homes. As a result, providers that own and/or manage less than 1,000 homes should expect to have less contact with us as regulator. However, our regulation of small providers will always include a review of:
- annual accounts audited or reviewed by an independent accountant, if appropriate
- auditor’s management letter (not required if accounts are independently reviewed)
- a shortened Statistical Data Return
Intervention and enforcement
If we have evidence that a provider is failing to comply with our standards then we will take action. The action we take will depend on which of our standards the provider has failed to meet, and the way in which that failure has happened. Our approach to intervention and enforcement is described in detail in chapter 6 of the regulatory framework.
We expect providers to identify problems themselves and take effective action to resolve them. If a provider takes responsibility and we conclude that they are able to respond to any problems, then we will work with them to solve their problems.
If a provider has been unable to solve their own problems (or is unwilling to do so), or if we conclude that urgent action is necessary, we may need to consider the use of our enforcement and general powers. The regulatory framework sets out our powers in full, and the ways and circumstances in which we might use them.
In relation to our economic standards, our powers may range from requiring the provider to sign a voluntary undertaking to resolve any issues, to appointing new members to their board. Should we need to take action with a provider then it is likely that we will have downgraded their governance and/or viability grading in a published regulatory judgement.
In relation to our consumer standards, our powers can only be used if we think that there has been a failure to meet a consumer standard which has caused serious harm or where there are reasonable grounds to suspect that the failure could lead to serious harm if no action is taken.
This is the basis of the serious detriment test and the level at which we will intervene is intended to be significantly higher than in relation to the economic standards.
In reaching our conclusions around serious detriment, we have a duty to consider information received from a number of authorities, representative bodies and individuals, including the housing ombudsman, tenant representative bodies, MPs, local authority councillors, the Health and Safety Executive, and fire and rescue services. Information we receive in this context from these bodies is known as a statutory referral.
Failure to meet one or more of the consumer standards does not lead directly to a serious detriment judgement. Where we conclude that an issue meets the serious detriment test then we will publish a regulatory notice.
We publish an annual consumer regulation review setting out examples of the cases which we have investigated in detail under our four consumer standards. It summarises cases which we have not investigated in such detail, together with the reasons why.
In June 2014 we published an independent report into lessons learnt from the case of Cosmopolitan Housing Group, a registered provider that suffered serious governance and financial viability problems, that summarises our intervention.