Judging regulatory judgments

Following on from the post on the Coastal Housing case (about the need for service of electrical condition reports without which rent is not required to be paid), it is worth going back over the regulatory judgments issued by the Housing Regulation Team on behalf of the WG, as well as the broader approach to regulation of social housing adopted in Wales.  This was also partly stimulated by yesterday’s publication of the regulatory judgment on Monmouthshire Housing Association that its governance and tenant services as well as financial viability are “Green” (being the best outcome and means that it will receive only “routine regulatory oversight”).  This post is absolutely not a comment about Monmouthshire HA about which I have no knowledge and express no opinion, although I am going to be looking at their regulatory documentation.  But, it is about regulatory judgments and their purpose, and the effect of the regulatory judgments on the players in the Coastal case.

The context for this discussion is the ongoing contestation about the purpose of the regulation of social housing, which has taken shape across the UK during this century.  Most recently, it has been recognised in England that the tenant’s voice has been largely forgotten, and that has been recognised in the building safety scandal as well as the Grenfell Inquiry. If you want an example of how relations between a housing management organisation and the people it served break down, look no further than chapters 30-33 of the Phase 2 report, pithily summarised in the Executive Summary (for example) as ” The result was a toxic atmosphere fuelled by mistrust on both sides” (para 2.55) and “The TMO lost sight of the fact that the residents were people who depended on it for a safe and decent home and the privacy and dignity that a home should provide” (2.56).  In Wales, the concern with tenant involvement and tenant voice was reflected in a review by the Regulatory Board for Wales, The Right Stuff – Hearing the Tenant’s Voice , which advises the housing regulation team.  That document argued for a values-based approach to hearing tenant’s voice and summarised what should be done as “Listen, act, learn”; it provides a high level framework for the development of tenant involvement.

So, to say there is quite a lot at stake in regulatory judgments would be an understatement. The published regulatory judgment on Monmouthshire tells the reader absolutely nothing beyond the outcome.  There are no reasons (perhaps none were needed) and it is a page long providing a little headline detail about its profile (interest cover and gearing).  It is based on an RSL’s self-assessment against the regulatory standards set by the WG (which has fairly extensive powers of regulatory oversight set out in the Housing Act 1996, Part 1, and amended by the Regulation of Social Landlords (Wales) Act 2018 (itself amended).  If you want to drill down, Monmouthshire’s own regulatory self-assessment indicates that it felt that it only partially complied with a couple of the standards (on EDI and having a diverse board), and fully complied with the rest.  The commendable level of detail is at a high level – it would be interesting to look at its new procedures on fitness for human habitation (in light of Coastal) and the fact that 92.1% say it it provides a safe and secure home (leaving 7.9% in unsafe and insecure homes?).

In the mid-1990s, it was suggested that the regulator had been “captured” by the interests of the housing providers and that published judgments were really about providing comfort to (private )investors (without whom, let’s face it, there would be little new social housing).  Hence, the WG’s risk assessment model of regulation and reliance on co-regulation look like they play in to that model.  And, that makes sense – it’s not a criticism to say that regulation provides comfort to investors (including the WG) in a form suitable to them.  We know that downgrading a regulatory judgment will affect credit ratings and have significant effects on the pricing of its debt as well as its ability to develop.

I don’t know if Monmouthshire are affected by the electrical condition report issue.  But, for sure, others are.

• Tai Calon Community Housing was one of the Claimants in Coastal.  Its regulatory judgment in October this year was “Green”.  It “estimate[s] a figure of a little over £5 million in potential loss of rent”; the regulatory judgment indicates its turnover is £33.8million, and it has 6,194 units of accommodation.  It would be interesting to know how this risk was assessed as part of that regulatory judgment (of course, the one page judgment does not help us in that regard).
• Coastal, regulatory judgment “Green” in July 2023, “estimate that between £8 million and £9.5 million might be at risk for them”.  Annual turnover £53.4million and 5,994 homes
• Valleys to Coast, regulatory judgment “Green” in December 2022, “approximate a figure of a little less than £13.4 million”. Annual turnover £32.9 million with 5,951 homes
• “Bron Afon Community Housing Ltd put the risk for them at a little under £20 million” (no regulatory judgment published since June 2021).
• Of the interveners, we don’t know what Trivallis’ potential exposure is but they are also “Green” (Trivallis, October 2023)

Are the “Green” judgments realistic still in this climate where there is a risk that they will have to repay the rent paid (and we don’t know what the legal arguments are about tenants recouping the monies paid, although for sure it will impact on any possession proceedings going on)?

In a 2022 document setting out the regulatory framework, the WG say, “The purpose of regulation of housing associations is to protect tenants and investment in housing associations. It is undertaken by the Welsh Government, and largely takes the form of oversight and monitoring with intervention only where necessary”.  But, if a purpose of Renting Homes is to enable tenants to feel safe in their homes (as suggested by the Court in Coastal), I’m not entirely sure that a page of a regulatory judgment is going to help a resident.  One alternative way to consider the performance of an RSL is to look at its approach to resident complaints.  The Public Services Ombudsman for Wales handles complaints when the internal complaints system has been exhausted.  Monmouthshire’s self-assessment tells us that “We monitor complaints and compliments and learn from them. For example; revisiting our policy around voids garden clearance and re-communicating this to the relevant departments, as well as making improvements to repair appointments by calling ahead of the visit. Lessons learnt are considered by SMT on a quarterly basis, to ensure actions are implemented”.  That is a perfectly proper reflexive, learning organisation.  And, if you go on the PSOW’s webpage, the last complaint published about them was from 2021  (which was essentially resolved early by agreement).  So, again, this is not about Monmouthshire and nor about their reporting (their report to tenants indicates that they received only 17 formal complaints, which suggests a pretty good service being provided).

There is no doubt that the regulation of social housing, in the age of building safety concerns, is becoming more complex and contested, and different interest groups with competing priorities need to have their views/concerns balanced (recognising that some might be more equal than others).  RSLs are becoming stretched across multiple regulatory regimes, which overlap and have different criteria/purposes, but all of which take up time and require focus on existing housing provision when the WG has set a target of 20,000 new low carbon homes in this Senedd term – see Jennie Bibbings’ briefing here.  Who would be a board member in this climate?