Previous regulatory judgement: Salix Homes Limited (19 June 2020)
Updated 13 December 2023
Applies to England
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RSH Narrative Regulatory Judgement
- Provider: Salix Homes Limited
- Regulatory code: 4609
- Publication date: 19 June 2020
- Governance grade: G1
- Viability grade: V2
- Reason for publication: Changed basis for Viability grade
- Regulatory route: In Depth Assessment
This regulatory judgement confirms our previous published assessment of SHL as G1/V2.
The regulator’s assessment of SHL’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 SHL’s governance arrangements enable it to adequately control the organisation and to continue meeting its objectives.
The regulator’s assessment of SHL’s compliance with the financial viability elements of the Governance and Financial Viability Standard also remains unchanged. Based on evidence gained from the IDA, the regulator has concluded that there is no evidence to indicate a change to SHL’s current viability grading. SHL’s financial plans are consistent with, and support, its financial strategy. It has an adequately funded business plan, sufficient security in place and is forecast to meet its financial covenants.
SHL has the financial capacity to deal with a range of exposures but needs to manage the material risks arising from its inherently tight covenant position to ensure continued compliance. As an early years’ stock transfer association, SHL’s financial covenants are subject to annual re-setting by its lender with little or no tolerance permitted from the revised business plan profile. This funding arrangement could restrict SHL’s ability to cope with in-year adverse variances.
Other providers included in the judgement
None
About the provider
Origins
Salix Homes Limited (SHL) is a charitable community benefit society. It is the asset holding group parent.
SHL’s main activities relate to the provision of affordable homes for rent, including managing around 200 units on behalf of private landlords under lease arrangements.
Registered Entities
SHL is the only registered entity in the group.
Unregistered Entities
SHL has two wholly owned unregistered subsidiaries: Salix Homes Development Limited which is a development vehicle; and Salix Living Limited (currently dormant).
Geographic Spread and Scale
SHL operates in the boroughs of Salford and Trafford. It owns and manages about 8,000 units.
Staffing and Turnover
In the year ended 31 March 2020 turnover was £41m (provisional outturn). SHL employs approximately 315 full time equivalent staff.
Development
SHL’s plan for the period 2020-2025 is to develop 100 units a year. Its development programme includes units for general needs (social rent and affordable rent), shared ownership and outright sale.
About our judgements
Key to Grades
Governance:
- G1 (Compliant): The provider meets our governance requirements.
- G2 (Compliant): The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.
- G3 (Non-compliant): 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 (Non-compliant): 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:
- V1 (Compliant): The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.
- V2 (Compliant): 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.
- V3 (Non-compliant): 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 (Non-compliant): 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 Processes
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’.