Decision

Previous regulatory judgement: Magenta Living (31 August 2022)

Updated 13 December 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Magenta Living

• Regulatory code: L4435

• Publication date: 31 August 2022

• Governance grade: G1

• Viability grade: V1

• Reason for publication: Governance upgrade

• Regulatory route: In Depth Assessment and Reactive Engagement

This regulatory judgement upgrades the regulator’s previous published assessment of Magenta Living’s governance from G2 to G1 and confirms its existing viability grade of V1.

Our previous narrative regulatory judgement for Magenta Living (Magenta), published in August 2018, identified weaknesses in its reporting on loan covenant compliance and on the performance of subsidiaries. The judgement also highlighted that Magenta needed to strengthen its stress testing, including developing triggers and mitigation strategies. In April 2019 a Regulatory Notice was published for a breach of the Home Standard following reactive engagement on landlord health and safety compliance.

Based on the assurance gained through reactive engagement and an In Depth Assessment (IDA), the regulator now has assurance that Magenta has addressed these issues.

There have been significant changes to Magenta’s board and executive leadership over the last year. Board skills now align more closely with the activities that Magenta undertakes and this has facilitated improved scrutiny and challenge of performance. Board oversight of landlord compliance has been strengthened and Magenta has improved the quality of reporting, stress testing and mitigation planning.

The regulator’s assessment of Magenta’s compliance with the financial viability elements of the Governance and Financial Viability Standard is unchanged. Based on evidence gained from the IDA, the regulator has assurance that Magenta’s financial plans are consistent with, and support, its financial strategy. The provider has an adequately funded business plan, sufficient security in place, and is forecast to continue to meet its financial covenants under a wide range of adverse scenarios.

Other providers included in the judgement

None

About the provider

Origins

Magenta is a registered charitable company. It was established in 2005 as Wirral Partnership Homes Limited to take a transfer of the majority of the stock from Wirral Council. It changed its name to Magenta Living in April 2019.

Registered Entities

Magenta is the only registered entity in the group.

Unregistered Entities

Magenta has four unregistered entities: Wirral Partnership Homes (Developments) Limited, a development vehicle; Bamboo Estates LLP, a joint venture letting agency; Hilbre Projects LLP and WPH (Building Services) Ltd., both of which are now dormant.

Geographic Spread and Scale

Magenta owns and manages around 12,600 mainly general needs homes. It operates predominantly in the borough of Wirral.

Staffing and Turnover

Magenta reported a turnover of £69,589k the year ending 31 March 2021 and employs the full-time equivalent of 543 staff.

Development

Magenta has plans to develop 1,229 new homes over the next five years.

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.