Decision

Previous regulatory judgement: East Midlands Housing Group Limited (30 November 2022)

Updated 29 November 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: East Midlands Housing Group Limited
• Regulatory code: L4530
• Publication date: 30 November 2022
• Governance grade: G1
• Viability grade: V2
• Reason for publication: Viability regrade
• Regulatory route: Stability Check and Reactive Engagement

Regulatory judgement

This regulatory judgement regrades our previous published assessment of East Midlands Housing Group Limited’s viability from V1 to V2 and confirms its G1 grade for governance.

The regulator has assurance that East Midlands Housing Group Limited (EMHG) complies with the financial viability elements of the Governance and Financial Viability Standard and that its financial plans are consistent with, and support, its financial strategy. EMHG has an adequately funded business plan, sufficient security and is forecast to continue to meet its financial covenants.

EMHG is making additional investment in its stock, including improvements in energy efficiency. In combination with the current economic uncertainty in relation to inflation and interest rates, this reduces its interest cover headroom and therefore its capacity to withstand downside risks.

The regulator’s assessment of EMHG’s compliance with the governance elements of the Governance and Financial Viability Standard remains unchanged. On the basis of the Stability Check, the regulator has concluded that there is no evidence to indicate a change to EMHG’s current governance grading.

Other providers included in the judgement

EMH Housing and Regeneration Limited

About the provider

Origins

EMHG is a provider of housing and care services. It was formed in 2013 as a result of the amalgamation of four independent housing associations.

Registered Entities

EMHG is the non-asset holding group parent. It has one registered subsidiary, EMH Housing and Regeneration Limited, which is a community benefit society and the group’s main asset holding entity.

Unregistered Entities

The group contains five unregistered subsidiaries:

• EMH Treasury PLC is the group’s special purpose funding vehicle;
• EMH Care and Support Limited provides landlord and care services to adults with learning disabilities;
• EMH Development Company Limited provides design and build services to the group;
• Midlands Rural Housing and Village Development Association Limited provides management services to four rural housing associations; and
• Sharpes Garden Service Limited provides gardening and landscaping services for the group.

Geographic Spread and Scale

At 31 March 2022, the group owned and managed around 20,500 units across the East Midlands.

Staffing and Turnover

EMHG reported a turnover of £121.7m for the year ending 31 March 2022 and employs the full-time equivalent of around 1,050 staff.

Development

EMHG plans to develop around 3,000 homes between 2022 and 2027.

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.

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.