Company Secretary Snapshot - May 2024

Welcome to May’s snapshot. This month we’re looking at the latest updates resulting from the Housing Ombudsman, the Department for Levelling Up, Housing & Communities’ ‘STAIRs’ consultation, the latest reporting guidelines from the government, our takeaways from the Housing in Brighton Conference and more. Enjoy!

Select Committee publishes report on the Finances and Sustainability of the Social Housing Sector

The Levelling Up, Housing & Communities Select Committee (the Select Committee) has recently published a paper on the Finance and Sustainability of the Social Housing Sector. In the report the Select Committee makes a number of recommendations to the Government in the context of a sector which is under “serious financial pressure” but for the time being remains resilient. The Select Committee noted that the sector has been presented with substantial bills for decarbonisation, fire safety and regenerating older stock while at the same time rent has been capped by the Government.

A key recommendation from the Select Committee was that the Regulator of Social Housing (RSH) should engage with registered providers of social housing (RPs) that face more financial risk. One of the main tools that the RSH has to rescue an RP that has fallen into financial difficulties is to merge them with a larger, adequately resourced RP. However, the Select Committee noted that the sector “is concentrating into an increasingly small pool of larger providers”. As a result it may become increasingly challenging to find larger RPs necessary for a ‘rescue’ merger. 

It also raises the question of what would happen if a very large RP needed to be rescued. The RSH noted that while a very large RP would be rescuable, it would instead be “better for us all” if the RSH never found itself in a position where it had to break up a very large RP. The RSH is therefore engaging more and more with larger RPs. The Select Committee was pleased that the RSH is already engaging more regularly with larger RPs but did recommend that the RSH should specifically set out what early measures it would be able to take and by when in the event that this engagement identified any notable problems.

The other recommendations from the Select Committee included:

• A call on the Government to invest to “build the social homes the country needs”.
• Land value capture should be used as a tool to support social housing.
• RPs must have exactly the same access to funds for building safety remediation as private sector landlords.
• The Government give greater weight to the positive benefits of regeneration so more funding can be made available for regeneration, and that Homes England should increase the flexibility it offers housing providers on funding for replacing homes.

Consultation: Social Tenant Access to Information Requirements 

The Department for Levelling Up, Housing & Communities (DLUHC) has announced a consultation on the Social Tenant Access to Information Requirements (STAIRs). The Social Housing White Paper included a commitment to introduce an access to information scheme for the social housing tenants of RPs. STAIRs aims to allow social housing tenants and their designated representatives to request access to information related to the management of their housing.

The consultation seeks views on:

• the introduction of STAIRs that will allow social housing tenants and their representatives to access information related to the management of their housing. 
• the content of the policy statement, which outlines the requirements RPs will need to meet under STAIRs including, for example, names of senior members of staff, roles and organisation structure as well as the outcomes of inspections and complaint metrics.

The Secretary of State also proposes to direct the RSH to introduce requirements for RPs to comply with the requirements in the STAIRs policy statement. 

The government has said that it is “committed to building a culture of openness and transparency across the social housing sector, which is crucial in empowering tenants and ensuring they are able to hold their landlords to account for the quality of housing and services they provide”.

To participate, RPs may respond by completing the online survey. The consultation will end on 15 July 2024.

Housing Ombudsman publishes special report highlighting risks around mergers and complaints handling

On 14 May 2024, the Housing Ombudsman (HO) published a special investigation report into a RP’s complaint-handling process following its recent merger with another RP. The HO’s findings included issues and risks associated with mergers and complaint-handling, ultimately finding that the RP experienced a lack of ownership around its complaints culture. The report provides insights which are helpful to all RPs that are looking to strengthen complaint-handling. Below are the 7 key themes the HO identified in its report, including recommendations in relation to these:

1. Complaint handling

Issues identified here included:

• a lack of ownership in complaint-handling, with a tendency towards handling complaints informally
• a blurred line between complaints and service requests
• a lack of transparency about how to make a complaint 
• a generally undisciplined approach to complaint handling
• barriers to escalating complaints to stage 2

HO Recommendation: to implement a clearer, ‘one front door’ approach to receiving and recording complaints. In the case of mergers the approach should disregard which of the merged organisations the complaint ‘belonged’ to. 

2. Reasonable adjustments

Comprehensive and consistent records of resident vulnerabilities are crucial to permit the appropriate actions to be pursued and to manage the vulnerabilities identified. This will result in the ‘three Rs’ being followed: recognise, respond and record.

HO Recommendation: update Reasonable Adjustments policy to ensure there is one single, accessible, source of accurate knowledge of residents’ vulnerabilities and reasonable adjustments.

3. Unreasonable behaviour and contact restrictions

The HO noted handling of unreasonable behaviour was broadly appropriate but sometimes the RP failed to either consistently follow its own process leading to confusion, or failed to regularly review their appropriateness, with some restrictions in place for years.

HO Recommendation: revise Unacceptable Behaviour policy to set out details of when it might be appropriate to refer a landlord/tenant dispute to mediation, an advocacy service or other third party to help rebuild the relationship. 

4. Risk management 

Issues were particularly evident in complaints about anti-social behaviour, and included failing to identify the risk of further harm, or not acting on the outcome of risk assessments.

HO Recommendation: performance monitoring measures to be put in in place to ensure timely and accurate risk assessments are carried out in all anti-social behaviour cases, as well as revising its repairs, void management, and any other relevant policies.  

5. Repairs 

The repairs service was a common complaint issue because of delays, missed appointments, poor communication, and poor contractor performance. The HO noted a lack of proactive management of the repairs process and a lack of timescales given in the landlord’s repairs policy.

HO Recommendation: revise Repairs policy to include timescales for non-emergency repairs, review its record keeping practices and those of its contractors, and finally to make sure that if emergency repairs are needed, that it considers temporary accommodation. 

6. Managing agents and third parties 

The HO noted the importance of effective communication, management and chasing for updates regarding cases involving managing agents and/or third parties.

HO Recommendation: have an accessible information source which sets out which organisation is responsible for each service area on estates where it owns, manages, leases or sub-lets property. 

7. Knowledge and information management

The HO also found that repair problems were often compounded by poor record keeping, which then impacted the handling of the resulting complaint. Poor record keeping in relation to complaint handling had had a detrimental impact on resolving residents’ complaints once brought to the HO. 

HO Recommendation: review record-keeping practices to ensure accurate and timely records of inspections and repairs are available to all relevant staff, including complaint handlers.

The HO publishes its latest Maladministration Report

The HO has published its latest ‘Learning from Severe Maladministration’ report which highlights a range of failings that come from Knowledge and Information Management inadequacies. 

The key learning from the cases from the latest report indicate that RPs are often not logging complaints or key information correctly. Some RPs are also not able to obtain this information in an accessible way for other staff. There are also examples of not recording vulnerabilities which led to poorer overall responses. 

There were also systems issues and RPs should ensure that all components of any system used are able to provide a link or identify where additional information is held. Staff should be appropriately trained to use the systems to retrieve information easily. 

The importance of data management is enshrined within the report including reference to one recommendation for an RP to report to the Information Commissioner’s Office in relation to suspected data breaches. We recommend that the report is shared with your data compliance teams. 

Government publishes Implementation Update on UK sustainability disclosures

On 16 May 2024, HM Treasury, the Department for Energy Security and Net Zero (DESNZ), Department for Business and Trade and the Department for Environment, Food and Rural Affairs (Defra) have published an Implementation Update relating to economy-wide sustainability disclosure requirements (SDR).

The update includes information about:

• The UK green taxonomy - the Government continues to work at pace and expects to consult in due course on the proposed UK green taxonomy. A timeline suggests the consultation will take place in 2024. The Government will introduce a testing period for voluntary disclosures and use this for at least two reporting years before exploring mandating disclosures. The Government has not yet made a decision on whether to introduce mandatory disclosures against the taxonomy. Any decision on this will be subject to further consultation.
• Transition plan disclosures - the Government will consult in the second quarter of 2024 on its approach to transition plan disclosures for UK companies. The Financial Conduct Authority (FCA) will consult in 2025 on strengthening transition plan disclosure expectations in line with the Transition Plan Taskforce framework. The Transition Plan Taskforce was launched in April 2022 to develop the gold standard for private sector climate transition plans.
• UK Sustainability Reporting Standards - the timeline in the update sets out details of planned consultations by both the government and the FCA in 2024 and 2025 relating to the development of UK Sustainability Reporting Standards.

Non-financial reporting: DBT consultation to reduce reporting burdens on medium-sized companies 

On 16 May 2024, the Department for Business and Trade (DBT) published a consultation "Non-financial reporting review: simpler corporate reporting" as part of its smarter regulation programme. 

To reduce the regulatory burden on medium-sized companies and to ensure that reporting is proportionate and appropriate to the size of the company, the government proposes to:

• Exempt medium-sized companies from producing a strategic report. Although, the strategic report provides potentially important context for the financial statements and a review of the company's risks and uncertainties, investors have reported that they do not make significant use of this information for medium-sized private companies to justify the costs of its production.
• Amend the definition of a medium-sized company for corporate reporting so that the threshold for the maximum number of employees is increased from 250 to 500, aligning the employee threshold to a level that reflects what the government considers to be a medium-sized business. This follows the announcement of the plans to uplift the monetary elements of the company size thresholds in March 2024.

The deadline for responses is 27 June 2024.

Takeaways from Conference Season: CIH Brighton 2024

Conference season continues with pace and we recently attended Housing Brighton 2024, which took place on 8 and 9 May 2024. Topics covered this year included consumer regulation, repairs and maintenance, decarbonisation, retrofit, sustainability recruitment, resident engagement and regulation. Some of our key takeaways include:

• The political landscape is changing and housing is now much more high profile in political elections (the conference took place before the general election was announced). All parties are speaking about social housing. However, the view is that it’s going to take longer than one Parliament sitting to resolve the housing crisis.
  CIH have a ten-point-plan.pdf (cih.org) for more and better homes:

More homes
1. Invest in more social homes
2. Reduce homelessness and use of temporary accommodation
3. Improve the planning process to speed up new homes
4. Invest in more supported housing to reduce the burden on health services
5. Invest in affordable home ownership

Better homes
6. Provide sustainable funding for landlords to maintain decent homes
7. Improve security and standards for private renters
8. Accelerate a fair and equitable transition to net zero homes 
9. Prioritise building safety
10. Strengthen the safety net

• The problem of homelessness, the rise in poor quality temporary housing and the rising number of people in temporary B&B accommodation is a concern. The country needs more affordable housing rather than temporary accommodation.
• The RSH re-confirmed that perfection is not expected when it comes to measuring against the new consumer standards. Assurances will be needed from RPs as to how they are delivering the required outcomes. There continues to be patchy performance against existing standards and there are some concerns that health & safety (e.g. gas safety) is still not being complied with across the sector. The RSH will act in a collaborative way with RPs but will intervene if necessary.

Regulatory grades

The RSH has not published any gradings in the past month. We expect the RSH has turned its focus towards preparing to grade the new consumer standards and to continue with its roll out of the new inspection regime, both of which were introduced last month. We’ll continue to monitor the RSH’s oversight of the sector.

AOB

NHF Governance Conference

Will you be attending the NHF Governance Conference this year?  This popular annual event will be taking place in London on 19 June.

This year we will be hosting a breakout session on Resourcing the governance team and battling merger fatigue (at 12.15-13.00).  Join Rose Klemperer – Partner, Bevan Brittan and Sarah Cameron – General Counsel and Company Secretary, Peabody, as they discuss:

• Innovative solutions to a lack of resource in your governance team
• The increasing role of governance in coordinating changing strategic expectations
• Sector changes following merger activity and compliance requirements across large and diverse group structures.

We look forward to seeing you!

Legal Update Service

As you will be aware, all RPs are required to meet the Governance and Financial Viability Standard requirement to comply with ‘all relevant law’, and make certifications in their annual accounts in respect of this.
 
With so much change in the sector at the moment, it can be difficult to monitor, interpret and implement requirements. We offer a variety of services to enable you to demonstrate compliance, including a subscription-based legal update service covering key legal, regulatory and policy changes within the social housing sector.
 
Our approach has been created in partnership with the sector, for the sector, and moves away from a ‘tick box’ approach to a meaningful tool, enabling you to:

• integrate the product into your control and risk management frameworks
• easily and quickly identify priority actions and access tools to assist with this
• empower and inform your teams to take responsibility for effecting such actions
• confidently report back to your Board on key risks areas and how these are being addressed.

To find how you can subscribe and watch our video introduction to our legal update service, please contact Diarmaid O’Sullivan