The social housing regulator

Successful places with homes and jobs

A NATIONAL AGENCYWORKING LOCALLY

Sector risk and future regulatory requirements

Matthew BailesDirector of Regulation, HCA

The social housing regulator

What are we worried about?

Loss of social housing assets

Most egregious failure = insolvency…and lenders enforcing security

But managed loss of “public value” owing to poor management / commercial losses also a problem

The social housing regulator

Why?

Insolvency / re-possession would be a game changer

Tenants would lose protections

Taxpayer might lose grant

Credit risk would increase

Image of sector would be changed

The social housing regulator

What’s changing

Gone: 30 year money from banks

Gone: 50% plus grant rates

Going: Welfare underwriting rents in full

The future: complex choices for Boards

Opportunities and risks

A more cyclical model?

The social housing regulator

Don’t be fooled by short-term conditions

The social housing regulator

Key risks – sector risk profile Interest rates / re-financing

Sales

Income / welfare

Cash flow

Complex finance / covenants

Commercial exposures

FRS102

Weak governance

The social housing regulator

What are we doing? Framework changes

from April 2015

Staff / structure changes…with more capacity to come

Different operating model – deeper dive, less often

Swift, decisive, transparent action on non-compliance

The social housing regulator

What should you be doing? Stress-testing…

And establishing appropriate controls

Challenging yourself on skills

Focussing on risk flows

Basic questions:

– What’s the most we can lose?

– How do we know?

The social housing regulator

Final thought

Don’t despair!

We are not against risk, we are against undue risk and weak controls

A well-run social housing provider should not get into serious difficulties