Decision

Regulatory Notice: Incommunities Limited (12 July 2022)

Updated 17 January 2024

Applies to England

RSH Regulatory Notice

• Provider: Incommunities Limited

• Regulatory code: L4476

• Publication date: 12 July 2022

• Reason for publication: Economic Standards

• Regulatory route: Reactive Engagement

Other providers included in the judgement

None

Regulatory Finding

The regulator has concluded that:

• Incommunities Limited (Incommunities) is not compliant with the Rent Standard and prior to the introduction of the Rent Standard, between 1 April 2016 to 31 March 2020, Incommunities was not compliant with the legislative requirements of the Welfare Reform and Work Act 2016 (the Act).

• Since 2008 Incommunities has incorrectly classified 801 units of general needs accommodation as supported housing, and incorrectly converted 288 properties to Affordable Rent on relet of the property without the requisite permissions, in contravention of both the Act and the Rent Standard.

• Between 2016 and 2022 Incommunities incorrectly set social housing rents above an allowed 5% tolerance to a potential 1,654 homes and up to 3,126 individual tenancies.

• Incommunities has not rebased its affordable rents lettings on relet to 80% of the market rent for 724 of its Affordable Rent properties and five properties have been identified where the formula rent is higher than the 80% value, in contravention of both the Act and the Rent Standard. It does not have assurance the total charged was below 80% of the market rent when these properties were let.

The Regulator’s Findings

We have concluded that Incommunities has not complied with the Rent Standard 2020 or the legislative requirements of the WRWA 2016 in respect of a significant number of its social rent and Affordable Rents tenancies.

Incommunities was downgraded to a governance grade G2 in October 2020 because it needed to strengthen its risk management and control framework. In response to this, its new leadership commissioned a review of its approach to rent setting. The review identified errors and a lack of assurance in its rent setting framework application. Failing to ensure that rents and service charges are correctly set is a serious matter resulting in tenants being overcharged and, as some of the cost of these rents may have been met through Housing Benefit and Universal Credit, there may also be implications for the public purse.

Incommunities has subsequently commissioned an external investigation. This is ongoing and until it has concluded it is not possible to quantify the full scale of errors, rents overcharged and impact on current and former tenants.

Once the issues were uncovered by Incommunities, it promptly reported the matter to the regulator and developed a wide-ranging action plan. The key actions which it has already identified in the plan include:

• engaging appropriate external advice on the nature of the errors, how they occurred, and the corrective actions;

• commissioning an independent review of Incommunities’ approach to rent setting;

• compensating tenants and reimbursing them and housing benefit and universal credit where there has been overcharging; and

• improving audit and validation of rent setting and annual rent changes.

Incommunities’ board and leadership has taken immediate steps to assure the regulator that is committed to addressing the failings and is engaging positively with us, with support from external advisers, to take the steps necessary to resolve these issues.

About the provider

Incommunities operates mainly in Yorkshire. It owns and manages around 22,600 homes. The majority of its homes are for general needs, but it also provides homes for supported housing, shared ownership, intermediate and affordable rent, and for market rent.

About our Regulatory Notices

Regulatory notices are issued in response to an event of regulatory importance (for example, a finding of a breach of the Rent Standard or of a consumer standard that has or may cause serious harm) that, in accordance with its obligation to be transparent, the regulator wishes to make public. More detail about Regulatory notices is set out in Regulating the Standards.