Decision

Previous regulatory judgement: The Industrial Dwellings Society (1885) Limited (31 August 2022)

Updated 13 December 2023

Applies to England

RSH Narrative Regulatory Judgement

  • Provider: The Industrial Dwellings Society (1885) Limited

  • Regulatory code: L0266

  • Publication date: 31 August 2022

  • Governance grade: G2

  • Viability grade: V2

  • Reason for publication: Governance downgrade and viability regrade

  • Regulatory route: Reactive Engagement

This regulatory judgement downgrades our previous published assessment of The Industrial Dwelling Society (1885) Limited’s governance from G1 to G2 and regrades its viability from V1 to V2.

The Industrial Dwelling Society (1885) Limited (IDS) continues to meet the requirements on governance set out in the Governance and Financial Viability Standard. However, following reactive engagement, we have concluded that it needs to improve some aspects of its governance arrangements to support continued compliance.

In February 2022, IDS made a self-referral to the regulator relating to damp, mould and condensation at its Evelyn Court estate in the London Borough of Hackney. IDS was found to have breached the Home Standard and our findings are set out in a Regulatory Notice published on 29 June 2022.

Following further engagement, we ascertained that concerns about repairs and the condition of homes first began to surface several years ago. IDS carried out some remedial action but did not fully address the problems. With over half of owned stock being built between 1895 and 1934 and including properties within conservation areas, IDS had identified the age and nature of its stock as a key risk to maintaining stock condition. However, the board did not ensure that it had sufficient assurance on stock condition and that adequate provision for asset investment had been made in its business plan. IDS had been aware since April 2021 that this risk was crystallising, but the board did not take action in a timely way.

Having undertaken a root cause analysis in February 2022, IDS is now in the process of improving board oversight of stock condition and the effectiveness of its repairs services. It has also taken steps to improve board skills and commissioned a lessons learned report.

IDS meets our viability requirements and has the financial capacity to deal with a reasonable range of adverse scenarios but has material exposures that it needs to manage to ensure continued compliance.

The provider has sufficient security in place and is forecast to continue to meet its financial covenants. However, to address the issues around its stock condition, IDS’ financial plan now contains increased levels of stock investment expenditure which is putting pressure on interest cover ratios. Those costs may increase further as the provider progresses its stock condition survey programme. In addition, the plan reflects increased revenues and exposure to the housing market through the development and sale of shared ownership properties. These factors reduce IDS’ capacity to respond to adverse events.

Other providers included in the judgement

Otto Schiff Housing Association

About the provider

Origins

IDS is a charitable registered provider of social housing. The group’s principal activities are the management and development of social housing. It also provides housing and a range of support services for people with special needs and is a specialist housing provider for Jewish communities.

Registered Entities

IDS is a registered society. It is the registered parent and majority stock holding entity within the group. It has one registered provider subsidiary, Otto Schiff Housing Association, a charitable company, which owns and manages 11 units of social housing.

Unregistered Entities

There are no unregistered entities.

Geographic Spread and Scale

IDS owns and/or manages around 1,400 homes in eight local authority areas across London.

Staffing and Turnover

At 31 March 2022, IDS employed 42 full time equivalent staff and its turnover was £10.4m

Development

IDS aims to develop 156 new homes by 2027. Its programme comprises around 50% affordable and 50% shared ownership units.

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.