Decision

Previous regulatory judgement: Saffron Housing Trust Limited (15 November 2022)

Updated 29 November 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Saffron Housing Trust Limited

• Regulatory code: LH4412

• Publication date: 15 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 Saffron Housing Trust Limited’s viability from V1 to V2 and confirms its G1 grade for governance.

The regulator has assurance that Saffron Housing Trust Limited (Saffron) 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. Saffron has an adequately funded business plan, sufficient security and is forecast to continue to meet its financial covenants.

Saffron’s development and sales programme gives rise to risks and exposures that it needs to manage, including housing market volatility. Saffron is also increasing investment in its existing homes and this places pressure on financial performance. These factors, together with the current economic uncertainty in relation to inflation and interest rates, reduce Saffron’s capacity to respond to adverse events.

The regulator’s assessment of Saffron’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 Saffron’s current governance grading.

Other providers included in the judgement

None

About the provider

Origins

Saffron is a charitable community benefit society formed to acquire the housing stock of South Norfolk Council in 2004. The group’s main activities are the development and management of social housing.

Registered Entities

Saffron Housing Trust Limited is the only registered entity in the group.

Unregistered Entities

There are three unregistered entities in the group:

• Crocus Contractors Limited, which builds housing for open market sale on behalf of the group;

• Crimson Development Homes Limited, which provides development services to the group; and

• Saffron Housing Finance plc, which was incorporated to issue a bond on the capital market.

Geographic Spread and Scale

Saffron owns and manages around 6,300 homes, principally in East Anglia.

Staffing and Turnover

For the year ending 31 March 2022 Saffron’s turnover was £40.6m. It employed 225 full-time equivalent staff.

Development

Saffron plans to deliver around 1,000 homes over the next five years. Most of these homes will be for social rent and shared ownership, including some supported housing.

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.