2023 was an incredibly significant year for the governance and regulation of RPs. The Social Housing Regulation Act 2023 became law, changing the landscape of consumer regulation, and the Regulator of Social Housing (RSH) began its consultation on the new consumer standards. RPs also began collecting their first year of data for the tenant satisfaction measures.

There have been persistent issues relating to safety and quality of housing, particularly issues of damp and mould and an increased number of findings of maladministration by the Housing Ombudsman.

At the same time as RPs are being expected to invest more into their stock to improve standards, we have seen a below inflation rent cap, supply chain cost and insolvency issues and a difficult housing market. This has resulted in more financial strain and an increasing number of RPs being downgraded on financial viability to V2 or worse. We expect many of these issues to persist in 2024.

Key governance issues to consider in 2024 are:

Merger Activity

The continued financial pressures on RPs are likely to lead to a continuing trend of mergers in the sector as RPs look to find efficiencies. Whilst the overwhelming majority of mergers will be voluntary, it is likely that we will see more “rescue” type mergers with the RSH being concerned about financial viability for a number of RPs. Linked to this, interest in other forms of structuring, such as group consolidations and possible for-profit structures is likely to remain high.

What you can do now

• Consider the overall financial picture and stress test appropriately to ensure your RP can withstand downward pressures.
• Create informal relationships with other local RPs to share experience and potentially services or resources.
• Keep an open mind to further opportunities that may present themselves.
• If you are actively interested in a merger, then consider whether you are ‘merger ready’ and pull together core business information to present to potential partners.

Proactive Regulation

The revised consumer standards, and the new consumer standard on provision of information to tenants, will come into force in April 2024. At the same time, we will see the removal of the “serious detriment” test, meaning that the RSH will more proactively regulate the consumer standards. Future In-Depth Assessments will include an assessment of compliance against the consumer standards and not just the economic standards. We are also expecting to see details regarding another new consumer standard on professionalism, requiring those responsible for managing social housing to obtain specific qualifications.

The RSH has a new range of powers at its disposal to assist it in its more proactive role and we will expect to see these exercised over 2024. The Housing Ombudsman’s new code on complaint handling will also apply from April 2024. Importantly, this is a statutory code, meaning that RPs must comply and that the Housing Ombudsman may investigate issues of non-compliance proactively without a complaint being made.

What you can do now

• Actively review publications from the Regulator and the Housing Ombudsman, particularly the revised consumer standards.
• Review governance procedures in light of the new requirements.
• Begin planning for upcoming In-depth assessments, including with a view to potentially a new “C” grade for consumer performance.

Tenant Satisfaction Measures

The first year of data for the Tenant Satisfaction Measures is due to be published this year which will be illuminating for the sector. The aim is to give residents of social housing information about their landlord’s performance, so that the residents can effectively scrutinise their landlord.

With the move to proactive regulation and the enhanced powers of both the RSH and the Housing Ombudsman, the publication of the tenant satisfaction measures data could lead to an increasing number of findings of non-compliance and maladministration and an increasing amount of regulatory action being taken against RPs.

What you can do now

• Actively review information you are collecting so there are no surprises later.
• Ensure your complaints handling processes are up-to-date and function as intended.

Tenant engagement

Tenant engagement is not anything new for RPs, but the revised consumer standards place more of an emphasis on “influence”. This means that the views of residents must be shown to actually be influencing decision making within an RP. RPs will therefore need to focus more on listening to their residents and feeding those views into their governance. It will also no longer be considered sufficient to simply say that the RP has tried to engage, but residents are uninterested. Insufficient engagement will be viewed as a failure by the RP to create suitable engagement structures, and so RPs may need to think more creatively about how they engage their residents.

What you can do now

• Review your current engagement structures and particularly the demographic of people that are represented.
• If engagement is not from a diverse number of tenants, then consider how others can be more actively engaged.
• Consider how you actually evidence that the board is influenced by tenants.

Rent

Rent compliance is a problem area for some RPs and we expect this to continue into 2024 as historic issues regarding rent setting come to light. On a more positive note, RPs will be pleased to return to a rent cap of Consumer Prices Index +1% after a real terms rent cut last year.

What you can do now

• Implement a rolling programme of reviewing historic rent setting, rather than only looking forwards.

Data

The RSH has specifically made the point that RPs cannot even consider complying with the consumer standards if they do not have accurate information about who their tenants are, what their needs are and what the condition of their stock is. Accurate data is going to be the foundation on which compliance with the consumer standards will be built. It is therefore absolutely vital that RPs are obtaining accurate data to inform decisions, and then handling and protecting that data appropriately.

What you can do now

• Review the data which the RP has on tenants and stock to identify potential gaps or out-of-date data.
• Consider cyber-security and whether your RP is giving this enough importance.

Competency and conduct

A key campaign plea from Grenfell United was to require that people involved in housing management are appropriately qualified. We now know that housing managers will be required to obtain specific details and the government is consulting on its draft direction to the RSH on the new standard. We are expecting the RSH to issue its draft consumer standard on competency and conduct this year to then come into effect in April 2025. It is going to be absolutely vital that RPs get their staff appropriately skilled before the standard comes into effect. A knock on effect of this is that RPs may have issues in the recruitment and then retention of staff as RPs compete over a relatively limited pool of talent.

What you can do now

• Agree an action plan for ensuring that the required staff obtain the necessary qualifications.
• More generally review processes around recruitment, on-boarding as well as the culture in your RP, the wellbeing of staff and the attractiveness as an employer.

Housing Forward View 2024

This article is part of Capsticks’ Housing Forward View 2023. Read the other articles featured in this publication below:

• Finance
• Building safety
• Housing development

How Capsticks can help

To discuss how this may affect your organisation, please get in touch with Darren Hooker.