Decision

Sustain (UK) Ltd (4687) - Regulatory Judgement: 09 July 2025

Updated 9 July 2025

Applies to England

Our Judgement

	Grade/Judgement	Change	Date of assessment
Consumer		Not assessed yet
Governance	G3 Our judgement is that the landlord does not meet our governance requirements. There are issues of serious regulatory concern and in agreement with us the landlord is working to improve its position.	Assessed and unchanged	July 2025
Rent	There have been serious failings in the landlord delivering the outcomes of the Rent Standard and significant improvement is needed.	Assessed and unchanged	July 2025
Viability	V3 Our judgement is that the landlord does not meet our viability requirements. There are issues of serious regulatory concern and in agreement with us the landlord is working to improve its position.	Downgrade	July 2025

Reason for publication

We are publishing a regulatory judgement for Sustain (UK) Ltd (Sustain) to downgrade the financial viability grading from V2 to V3. This judgement also confirms that the existing governance grading of G3 is unchanged and that there are serious failings in how Sustain is delivering the outcomes of the Rent Standard.

Summary of the decision

It is our judgement, based on evidence gathered during intensive engagement, that there are issues of serious regulatory concern and Sustain does not meet our governance and financial viability requirements. Significant improvement is needed. Sustain’s governance is not effective to ensure adequate oversight of third parties that it relies upon to deliver services to tenants, and to ensure that it is not inappropriately advancing third-party interests. Based on this assessment we have concluded a G3 grade for Sustain.

We do not have assurance that Sustain is able to manage financial risks and that its business planning is sufficiently robust to ensure its long-term viability. Based on this assessment we have concluded a viability downgrade to V3.

There are serious failings in how Sustain is delivering the outcomes of the Rent Standard.

How we reached our judgement

This regulatory judgement is based on all the relevant information we obtained during our intensive engagement with Sustain, as well as information provided by Sustain in its regulatory returns.

Our intensive engagement with Sustain has been focused on how well Sustain is meeting the requirements of the Governance and Financial Viability Standard, and the requirements of the Rent Standard.

Summary of findings 

Sustain’s operating model is to enter into short-term leasing arrangements for properties with third-party managing agents. Sustain has landlord responsibility for its tenants while the managing agents deliver landlord, management services and support on Sustain’s behalf under an agreement.

Sustain is responsible for setting rents for its tenants in accordance with the Rent Standard. We have concluded that, despite an extensive opportunity to make improvements, Sustain has not provided adequate assurance that it is meeting the outcomes of the Rent Standard.

Sustain’s calculation of its rent and service charges is inconsistent with evidence of costs incurred and it has not adequately demonstrated that rent is being appropriately calculated in line with the formula rent. While Sustain has a rent setting policy in place there is inadequate evidence that it is adhering to it. We also do not have assurance that Sustain’s rents are below market rate.

Sustain’s primary source of income is rent and service charges that are claimed from the local authority through enhanced housing benefit. There is a lack of clarity on how Sustain calculates this claim, how it accounts for its housing management fee and that service charge claims are appropriate.

Landlords are expected to manage their resources effectively to demonstrate long-term viability. As a result of poor accounting and lack of clarity over its management fee and service charges, Sustain has not provided adequate assurance that it has an appropriate, robust and prudent business planning, risk and control framework, or that its financial forecasts are based on appropriate and reasonable assumptions. It appears Sustain is not ensuring its claims for service charges are accurate, which leaves it exposed to financial risks. We therefore lack assurance that Sustain is able to manage the downside financial risks it may face, to address how it meets the requirements of the Rent Standard.

Landlords are expected to operate effective governance arrangements that deliver their aims, objectives and intended outcomes for tenants and are expected to be accountable to tenants, the regulator and relevant stakeholders. Landlords are also expected to manage their affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence and foresight, and operate with an appropriate, robust and prudent risk and control framework.

Sustain has not demonstrated effective governance in that it has failed to take prompt action to address and resolve regulatory concerns despite intensive engagement with us over a number of years. While steps have been taken to make changes to introduce a new IT system and amend contracting terms to improve oversight of third-party managing agents, these have not as yet been fully embedded to demonstrate effectiveness.

Sustain has a heavy reliance on third parties for both its service delivery and the provision of its bedspaces. For the year ended 2024 it passed 88% of its income to third-party management agents. We do not have assurance that Sustain has sufficiently robust systems and controls in place to ensure it is managing actual and/or potential conflicts of interest and not inappropriately advancing third-party interests.

We will continue to work intensively with Sustain and expect it to take prompt and effective action to address the issues identified in this judgement. All options for further interventions remain open.

Background to the judgement

About the landlord

Sustain was registered in 2012 as a company limited by guarantee and is a not-for-profit registered provider. Sustain provides supported housing typically through three-year lease agreements with managing agents. The managing agents deliver the day-to-day tenancy and support to tenants.

Sustain has 1,684 units of supported housing on a leasehold basis across Birmingham and services to tenants are delivered by approximately 88 management agents.

Based on the audited accounts for the year ended 31 March 2024, Sustain had a total income of £19.6m, of which £17.2m was paid to managing agents. Sustain employs the full-time equivalent of 28 members of staff.

Our role and regulatory approach

We regulate for a viable, efficient, and well governed social housing sector able to deliver quality homes and services for current and future tenants.

We regulate at the landlord level to drive improvement in how landlords operate. By landlord we mean a registered provider of social housing. These can either be local authorities, or private registered providers (other organisations registered with us such as non-profit housing associations, co-operatives, or profit-making organisations).

We set standards which state outcomes that landlords must deliver. The outcomes of our standards include both the required outcomes and specific expectations we set. Where we find there are significant failures in landlords which we consider to be material to the landlord’s delivery of those outcomes, we hold them to account. Ultimately this provides protection for tenants’ homes and services and achieves better outcomes for current and future tenants. It also contributes to a sustainable sector which can attract strong investment.

We have a different role for regulating local authorities than for other landlords. This is because we have a narrower role for local authorities and the Governance and Financial Viability Standard, and Value for Money Standard do not apply. Further detail on which standards apply to different landlords can be found on our standards page.

We assess the performance of landlords through inspections and by reviewing data that landlords are required to submit to us. In Depth Assessments (IDAs) were one of our previous assessment processes, which are now replaced by our new inspections programme from 1 April 2024. We also respond where there is an issue or a potential issue that may be material to a landlord’s delivery of the outcomes of our standards. We publish regulatory judgements that describe our view of landlords’ performance with our standards. We also publish grades for landlords with more than 1,000 social housing homes.

The Housing Ombudsman deals with individual complaints. When individual complaints are referred to us, we investigate if we consider that the issue may be material to a landlord’s delivery of the outcomes of our standards.

For more information about our approach to regulation, please see Regulating the standards.

Further information

• Regulating the standards

• Regulatory standards for landlords