South London landlord downgraded to non-compliant G3 grade

Elsewhere, GreenSquareAccord was downgraded from G1 to G2 and Honeycomb Group was upgraded from G2 to G1. Both retained their V2 grades.

 

Clarion Housing Group’s financial viability rating was upgraded from V2 to V1 and it retained its G1 grade. The three landlords all received a C2 rating after their first consumer inspections.

 

Kate Dodsworth, chief of regulatory engagement at the RSH, said: “Good governance is vital for managing risk properly and making the right strategic decisions.

 

“We will continue to use our regulatory powers to scrutinise the sector and hold landlords to account.” 

 

Phoenix Community Housing

 

The RSH said its regulatory judgement for Phoenix in August 2024 found that the landlord needed to increase the effectiveness of internal controls across a number of areas and test its assurance on the effectiveness of governance arrangements.

 

Now, in the latest judgement, the regulator said that although Phoenix took steps to develop a governance improvement plan, it failed to ensure that systems and controls around payments were “sufficiently robust” to ensure covenant compliance.

 

“While it has managed its position with funders to avoid default, the failings were so serious that we have concluded Phoenix does not meet our governance requirements,” the regulator said in its judgement.     

 

In addition, the RSH’s investigation found evidence that Phoenix failed to address skills gaps and make material decisions relating to board changes “in a timely manner”.

 

“A combination of vacant board positions, gaps in resourcing and oversight have resulted in Phoenix not providing adequate assurance of the effectiveness of its governance arrangements,” the regulator said.

 

“While steps have now been taken to recruit new, suitably skilled and experienced board members and a permanent chair, we will need further assurance to demonstrate that governance changes are effective particularly in relation to board oversight, challenge and scrutiny to ensure Phoenix’s affairs are managed appropriately.”

 

Phoenix has commissioned reviews to identify the root causes of failures and where changes are needed. The judgement showed that the housing association has developed an action plan and is working with the regulator to deliver the necessary improvements.

 

The housing association also had its consumer grading downgraded to C2, meaning there are some weaknesses and improvement is needed, specifically in relation to the Safety and Quality Standard.  

 

The judgement showed that while Phoenix takes reasonable steps to ensure the health and safety of its tenants and has demonstrated that it understands the condition of its homes, improvements are needed to ensure remedial actions from fire risk assessments are dealt with in “a timely manner”.

 

The RSH said that Phoenix accepts it must take steps to prioritise improvements in data integrity as well as ensuring that it provides “appropriate assurance” through its refreshed internal audit programme. 

 

“Phoenix is working with the regulator to ensure it makes the necessary improvements,” the RSH said.

 

Denise Fowler, chief executive of Phoenix, and Gavin Wallen, chair of Phoenix, said: “We recognise that there is a lot of work for our board and our organisation to do.

 

“With a new chair, strengthened board, our excellent staff team and our exceptionally high resident satisfaction and engagement, we can address the issues identified in this judgement. Our financial position also remains strong.

 

“We are committed to working with the regulator to ensure that Phoenix continues to thrive as a resident-led community gateway, delivering on our vision that ‘together, we are building a better future for our Phoenix community’.”

 

Mr Wallen became chair of Phoenix in October, having joined the board in 2023. The association’s executive team has also seen changes in recent months, with Hardeep Bhermi becoming director of finance in July and Claire Tuffin becoming director of governance, business change and performance in March. In addition, Cathy McCarthy was announced as the group’s new director of customer services at the end of September.

GreenSquareAccord’s governance downgrade

 

The regulator’s inspection found that GreenSquareAccord (GSA) needed to improve aspects of its governance arrangements to support continued compliance, specifically in relation to board oversight of operational delivery and risk, and strengthening its internal control arrangements.

 

“GSA has been proactive in commissioning appropriate external review and support, and we will monitor progress as it implements improvements,” the regulator said in its judgement.

 

The RSH also removed a regulatory notice for GSA, published in October 2021, as a result of the landlord not meeting the intended outcomes of the Home Standard, which was in place at that time.

 

GSA, which owns and manages around 26,000 homes across the West Midlands and the South West, also received C2/V2 gradings.

 

Ruth Cooke, chief executive of GSA, said: “We are thankful for the opportunity to work with the Regulator of Social Housing during our inspection. We remain compliant with the regulator’s standards and the judgement recognises our strengths and the progress we have made in core areas of service delivery.

 

“We are pleased that the regulator has removed the outstanding regulatory notice in recognition of the progress we have made in improving the safety of our homes.

 

“While we are disappointed to have our governance rating downgraded to G2, we fully accept the regulator’s findings and recommendations and recognise we still have work to do to realise the ambitions set out in our 2023-28 strategy and, most importantly, to continue to improve outcomes for our customers.

 

“As the regulator confirms in its judgement, we already have plans in place for many of the areas identified for improvement. We are committed to taking forward the recommendations and we will work closely with the regulator to demonstrate our progress.”

 

Honeycomb Group’s governance upgrade

 

The regulator said that Honeycomb has made improvements since its governance grade was downgraded in 2021 due to weaknesses in its risk management and internal control frameworks, including the integrity and management of data.

 

The landlord, which owns more than 3,000 homes across the West Midlands and the North West, also received C2/V2 ratings.

 

“Honeycomb has undertaken a range of actions in recent years to strengthen its governance, and we observed how these changes have supported improvements across the organisation, particularly in risk management, board oversight and data integrity,” the RSH said in its judgement.

 

Julie Guildford Smith, chief executive of Honeycomb, said the group was “delighted” to see the positive outcome of its inspection. “Regaining a G1 governance grading is an important milestone and clear recognition that we are a well-run and resilient organisation. Our V2 grading remains unchanged, showing we’re managing our resources wisely and investing responsibly.

 

“Our C2 grading acknowledges strong progress across numerous areas. We are already achieving fantastic results, particularly with the new repairs service, and anticipate further positive outcomes as these new services become fully embedded. As an ambitious organisation, Honeycomb remains committed to this journey and will continue working closely with customers to drive further improvements.”

 

Clarion’s financial viability upgrade

 

Clarion, which owns and manages 109,000 social homes, was upgraded from V2 to V1.

 

The RSH said that Clarion’s financial plans are consistent with, and support the delivery of, its financial strategy. 

 

“Clarion has an adequately funded business plan and sufficient security in place to support its financial plans,” the regulator said in its judgement.

 

The RSH said Clarion’s audited financial statements demonstrate a financial performance that provides “sufficient headroom over covenants and adequate operating surplus” for its financial obligations. 

 

The judgement showed that the G15 landlord’s business plan presents a forecast financial position that includes an increase in investment in existing homes to fund building safety remediation and retrofit works, alongside a “significant” development programme.

 

“We received assurance that the risks related to these programmes are being appropriately managed,” the regulator said.

 

“In the context of this increased cost base and reduced exposure to sales risks, Clarion forecasts sufficient headroom against its tightest lender interest cover covenants in the medium term.”

 

Clare Miller, chief executive of Clarion, said: “I welcome the regulator’s judgement and the constructive engagement throughout this process.

 

“I’m pleased that we continue to meet the regulator’s standards and that our financial viability grading has been upgraded. Using our resources effectively to deliver homes and services for those who need them most remains at the heart of Clarion’s mission.

 

“We recognise there is more to do, and we will continue to work closely with the regulator as we make further progress.”

 

Elsewhere, the London Borough of Barnet, North East Derbyshire District Council and the London Borough of Sutton all received the top C1 ratings. Meanwhile, the London Borough of Hounslow received a C2.

 

The RSH has also published outcomes from the first of this year’s annual stability checks.

 

Two Rivers Housing and Advance Housing & Support retained their existing G1/V1 ratings, while Teign Housing maintained its G1/V2 grades.