Decision

Previous regulatory judgement: Longhurst Group Limited (15 November 2022)

Updated 15 November 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Longhurst Group Limited

• Regulatory code: L4277

• Publication date: 15 November 2022

• Governance grade: G1

• Viability grade: V2

• Reason for publication: Viability regrade

• Regulatory route: In Depth Assessment

Regulatory judgement

This regulatory judgement regrades Longhurst Group Limited’s financial viability from V1 to V2 and confirms its existing G1 grade for governance.

Based on evidence gained from an In Depth Assessment (IDA), the regulator has assurance that Longhurst Group Limited (Longhurst) complies with the viability elements of the Governance and Financial Viability Standard. Its financial plans are consistent with, and support, its financial strategy. It has effective treasury management arrangements and has ensured access to adequate levels of liquidity. It also forecasts ongoing compliance with financial covenants.

Longhurst continues to deliver an ambitious programme to develop new homes at the same time as investing in its existing stock. It also needs to absorb inflationary pressures that are driving increases in its costs of delivery, including its repairs and maintenance programme, together with delivering a programme of assumed efficiency savings. Additional costs will negatively impact on Longhurst’s financial performance and, alongside the current economic uncertainty in relation to wider inflation and interest rate risks, reduce its capacity to deal with downside risk.

The regulator’s assessment of Longhurst’s compliance with the governance elements of the Governance and Financial Viability Standard remains unchanged. Based on the evidence gained from the IDA, the regulator has assurance that Longhurst’s governance arrangements enable it to adequately control the organisation and to continue meeting its objectives.

Other providers included in the judgement

None

About the provider

Origins

Longhurst is a community benefit society and the registered parent of the group. It manages and develops social housing.

Registered Entities

There is one registered entity, The Teetotal Homes which is an almshouse charity.

Unregistered Entities

There are three unregistered entities in the group, comprising two treasury vehicles (Libra 1 and Libra 2) established for the purpose of issuing bonds and a development company, Keystone Developments Limited, which provides design and build services to Longhurst and develops properties for sale.

Geographic Spread and Scale

Longhurst owns and manages around 23,500 homes across the Midlands and East of England.

Staffing and Turnover

Longhurst’s turnover for the year ended 31 March 2022 was £156m. It employs the full-time equivalent of 1,013 staff.

Development

Longhurst plans to develop 3,900 homes by 2029, this includes around 3,600 units to be delivered through strategic partnership agreements with Homes England.

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.