Anda di halaman 1dari 30

The Housing Corporation

The way forward

Our approach to regulation

The Housing Corporation The way forward Our approach to regulation
 

The Housing Corporation

 

The way forward Our approach to regulation

 

1

Contents

 
 
 

2

3

46

8

11

14

16

I-X

1
1
2
2
3
3
4
4
5
5
6
6
7
7
8
8
>>
>>
     

Introduction

Our

Our

The

Delivering

Regulatory

Where

In summary

The

regulatory

regulatory

regulatory

regulation

engagement

performance

Regulatory

objectives

approach

framework

concerns are

Code

and

identified

guidance

2

1 >>
1
>>

The Housing Corporation

The way forward Our approach to regulation

Introduction

The Housing Corporation regulates registered social landlords, generally known as housing associations.

2001 saw many changes to the way the Corporation works, following

a comprehensive strategic review. We also consulted on our proposals

for replacing our expectations of housing associations set out in ‘Performance Standards’ with a Regulatory Code, which reflected our changing approach to regulation and our new strategic objectives.

The consultation was successful. We received many contributions and

a range of views on our proposals, and we published a summary of responses in November 2001.

This publication is the result. It sets out our approach to regulation.

It incorporates and puts into context the Regulatory Code and guidance

setting out the fundamental obligations of housing associations within our new regulatory system (see I-X ). We expect all associations to be

working towards these obligations from April 2002.

The Regulatory Code and guidance reflect our general powers as a regulator. We also have specific powers under Section 36 of the Housing Act 1996 to issue housing management guidance in defined areas. The particular elements issued further to Section 36 are highlighted in the guidance.

Inspection is a new feature of our regulatory system described in this document. We are also publishing a complementary paper giving more details of the inspection framework.

2 >>
2 >>

The Housing Corporation

The way forward Our approach to regulation

3

Our regulatory objectives

2.1 Our regulatory objectives derive from our responsibilities to Parliament, through statute, and to Government through the Department for Transport, Local Government and the Regions (DTLR). Our three-year corporate strategy, ’Building on Success‘ (April 2001), sets out our mission:

‘Raising the standard for homes and neighbourhoods.’ We are responsible for investing public money in housing associations, for protecting that investment and for ensuring it provides decent homes and services for tenants.

2.2 Our key aims in carrying out this mission are:

! to regulate and to promote a viable, properly governed and properly managed housing association sector;

! to invest for the creation and maintenance of safe and sustainable communities;

! to champion a tenant focus in the housing association sector; and

! to be a modern, customer-centred, forward-looking organisation, leading change in the sector.

2.3 Our objectives must reflect the policy and external environment in which we, and associations, operate, and our role of promoting Government policy in the sector. Our objectives include:

! maintaining a viable housing association sector and moving to a fairer, more understandable rent structure;

! promoting high-quality governance, probity and the reputation of the housing association sector;

! encouraging housing associations to provide decent homes and deliver high-quality and value-for-money services through continuous improvement.

2.4 In framing our regulatory requirements, we have had regard to the five principles of good regulation described by the better regulation task force:

! transparency;

! accountability;

! proportionality;

! consistency;

! targeting.

4 3 >>
4
3 >>

The Housing Corporation

The way forward Our approach to regulation

Our regulatory approach

3.1 In delivering these regulatory objectives we intend our approach to be:

! outcome-focused. There are many ways for associations to meet the standards expected of them and it is for them to demonstrate how they meet and exceed these standards;

! based on an expectation that associations will work towards continuous improvements in their services and will not fall below minimum standards;

! based on the application of objective judgements, formed on available knowledge. We will take account of the context and environment in which associations operate, the nature of their service provision, the changing expectations of their customers and the housing market, and their performance relative to other associations;

! tailored, appropriate and proportionate to the risks associations face. Small associations, such as almshouse charities or Abbeyfield societies, face different risks from larger ones. Similar-sized associations have different risk profiles. Our response will be tailored according to our judgement about the risks and performance of each association, and our knowledge of their work;

! consistent and transparent. We will be open in sharing our judgements.

3.2 Moving towards self-assessment

The launch of our new approach presents housing associations with new opportunities for assessing their own performance to help streamline the regulatory process. We hope that, over time, this will lead to our relationship with successful associations becoming less intrusive. In the past, the relationship between the Corporation and associations relied on detailed scrutiny and called on associations to provide evidence that minimum standards had been achieved.

In future we are looking to associations themselves to take primary responsibility for monitoring their compliance with the Code, referring to us details of significant problems and their plans for addressing them. We will use the information provided by the association to identify issues that may require more in-depth information, for example, through a structured visit. Two features of our new approach will be:

! an annual compliance statement: The association’s board will consider their compliance with the Code;

! a regulatory plan: The way our regulatory engagement with individual associations is managed. This is shared between the Corporation and the housing association. It will provide for a greater understanding of the Corporation’s main concerns and interests and will provide opportunities for associations to be pro-active in addressing them.

for associations to be pro-active in addressing them. Both these areas are covered in more depth

Both these areas are covered in more depth in section 6

The Housing Corporation

The way forward Our approach to regulation

3.3 Better regulation

5

The following strands will contribute to our commitment to working for better regulation:

! Evaluating regulation: Taking our objectives and approach together, we will subject ourselves to regular scrutiny – to evaluate whether we are meeting our objectives. We will commission an independent review of our regulation – to report soon after April 2003 – on the first year’s operation of the Regulatory Code. We expect this will become a regular process.

As part of this evaluation, we plan to seek the views of associations – both on our general approach and their particular experiences. The results of this will contribute to continuous improvement, and to ongoing review of our regulation processes.

! Learning lessons from regulation: We are committed to improving our processes for sharing our regulatory judgements and actions with other interested parties. This is to ensure that we and associations can learn lessons from the experiences of others. From time to time, for example, we will publish details of occasions when we actively intervened, the resolution strategies put in place and the lessons to be learned.

We will also continue to produce annual reports on regulation that will provide an assessment of the sector’s performance over the year.

! Challenging regulatory judgements: We recognise that the success of our regulation relies on staff making effective judgements that may have a far-reaching impact on housing associations. We will be developing procedures for resolving regulatory judgements that are challenged.

impact on housing associations. We will be developing procedures for resolving regulatory judgements that are challenged.
6 4 >>
6
4 >>

The Housing Corporation

The way forward Our approach to regulation

The regulatory framework

4.1 The Regulatory Code

Housing associations are independent bodies, responsible for their own performance and management.

We want associations to share with us a common agreement about the outcomes they should achieve. The regulatory outcomes we are seeking are straightforward: Viable organisations that are well governed and well managed.

An extensive round of consultation during 2001 has led us to believe there is consensus on the principles of how these outcomes are to be achieved. We have grouped the principles in a Regulatory Code – the fundamental obligations of associations under our regulatory system and the primary expression of our regulatory framework.

For the board of an association to determine whether it is complying with our regulatory requirements, it first needs to understand how far the association is meeting its obligations under the Regulatory Code.

Similarly our primary responsibility will be to make an assessment of an association’s compliance with the Regulatory Code. Any subsequent regulatory action will refer to the appropriate parts of the Regulatory Code.

4.2 Regulatory guidance

Running alongside consultation on the Regulatory Code, we also consulted on our proposals for regulatory guidance to support the Code.

We do not want our regulatory framework to stifle or limit associations’ initiative. Many associations work in geographically disparate areas, dealing with difficult problems. We do not want to add to these problems by applying rigid regulations. Nevertheless we regard the guidance as concisely defining our reasonable expectations: the ten pages of Code and guidance will replace 70 pages of performance standards.

In assessing an association’s compliance with the Regulatory Code, we will consider whether guidance has been followed or whether any alternative action by the association is appropriate to achieve the same objectives. Boards of associations will make similar judgements.

The regulatory guidance incorporates housing management guidance under s36 of the Housing Act 1996. This specifies types of guidance which, subject to consultation and approval by the Secretary of State, we may take into account in judging whether there has been mismanagement. This is so-called ‘statutory’ housing management guidance. The Corporation has other powers under which it may issue guidance and take regulatory decisions, without formal reference to the Secretary of State. To simplify presentation, all the regulatory guidance is collected in one place.

The Regulatory Code and guidance follows section

8
8

The Housing Corporation

The way forward Our approach to regulation

4.3 Bank of good practice

7

Our regulatory approach is based on an expectation that housing associations will both meet minimum standards and work towards continuous improvements in their services. Our new inspection framework, in particular, seeks to establish how associations are pursuing continuous improvement.

In addition, we believe we have an important role in supporting the development of good practice in associations – linked to the framework established by the Code and guidance.

Associations will want access to this good practice. But it also provides a reference for the Corporation as we assess an association’s progress in meeting and exceeding the obligations in the Code. To achieve both objectives we must set out how relevant and recent good practice can further the pursuit of outcomes in the Code – bearing in mind that we are only one of several organisations that produce relevant material.

To support this development, we will be establishing an internet-based bank of good practice. Under the relevant parts of the Code we will highlight publications and examples useful in supporting associations’ activities. This will inform our regulation rather than direct it: good practice must not become the new orthodoxy or stifle innovation. Where we encounter examples of good practice in inspection or other regulatory visits, we will publicise them accordingly. We will work with the National Housing Federation, the Chartered Institute of Housing, HouseMark and others in developing, and continuously improving, the bank.

4.4 Other regulatory information

From time to time we will issue information to all associations. This will be to:

! replace or amend some parts of the Regulatory Code and guidance. We will aim to make changes only where there is a strong case for change, and following consultation;

! require associations to take action to comply with the requirements of the Code and guidance. This information will fall within the Housing Corporation ‘Circular’ series;

! bring to associations’ attention something we believe they need to consider seriously, and where we recommend particular actions. This will be published in ‘good practice notes’;

! feed back information on associations’ performance from information collected from them. This will be in two principal forms: the ‘Sector study’ occasional publications; and the annual performance indicator report and website profile.

‘‘ Viable organisations that are well governed and well managed. ’’

indicator report and website profile. ‘‘ Viable organisations that are well governed and well managed. ’’
indicator report and website profile. ‘‘ Viable organisations that are well governed and well managed. ’’
8 5 >>
8
5 >>

The Housing Corporation

The way forward Our approach to regulation

Delivering regulation

5.1 During the past year, we introduced new teams equipped with new tools to deliver our new regulatory system. We have set up the following new regulation teams in new field areas:

! Lead Regulation;

! Financial Appraisal;

! Regulatory Arrangements for Small Associations (RASA);

! Inspection.

Teams will work together to ensure consistent and co-ordinated regulation. Our regulation and investment teams have also created close working links to inform each other’s work and to ensure that we have a joined up approach to the regulation of each housing association.

5.2 Lead regulation

Lead regulation teams have prime responsibility for ensuring that all aspects of our regulatory engagement with each lead-regulated housing association (i.e. those with over 250 homes) are co-ordinated and reflect our risk assessment. Each lead regulator will be responsible for a portfolio of associations. We are increasingly regulating associations within ‘group structures’. Where associations are set up within groups, the lead regulator will have responsibility for the entire group.

Lead regulators will ensure that the level of regulation reflects our assessment of risk by producing a regulatory plan for each association or group, communicating this throughout the Corporation and to the association, and by monitoring progress against the plan. The lead regulator will also collate, maintain and evaluate data about each association (relying on specialist advice from colleagues as appropriate). Assessment of an association’s governance performance will be a standard responsibility of each lead regulator.

5.3 Financial appraisal

Financial appraisal teams are responsible for assessing the overall financial position of associations, ensuring that they:

! identify key current and longer-term financial risks;

! remain viable;

! operate efficiently; and

! charge an appropriate rent to their tenants.

Financial appraisal teams will assess associations’ financial strength and exposure and their operational control mechanisms, as well as reviewing: financial returns, business plans, particularly for larger associations, focusing on short and longer-term financial viability and financial risk; and the association’s long-term financial position.

The Housing Corporation

The way forward Our approach to regulation

9

5.4 Regulatory Arrangements for Small Associations (RASA)

For associations with fewer than 250 homes, we have developed specific and separate ‘Regulatory Arrangements for Small Associations’ – though our approach is not based rigidly on this number.

To achieve effective regulation of such a diverse range of organisations, we balance our responsibilities to promote high-quality governance with an acknowledgement of the particular circumstances of a group that includes almshouse charities, Abbeyfields, supported housing providers and co-ops. We will continue to apply a scale of regulation that takes account of the size and scope of their operations and the nature of their activities, history and objectives.

Specialist RASA teams in each of our field areas will:

! process new registration and de-registration applications;

! assess small association performance against the Regulatory Code;

! assess the service delivery of small associations; and

! provide support, advice and guidance along with dissemination of best practice on issues relating to small associations.

5.5 Inspection

Inspection will inform our overall regulation and how we develop views on and assess housing associations. It will focus on the service on the ground and the consumers’ experience. We are aiming to inspect associations with 250 or more homes within three years. We will also have a small annual programme of inspections of associations with fewer than 250 homes.

The objectives of inspection are to:

! assess compliance with the parts of the Regulatory Code relating to service delivery;

! support associations’ work on continuous improvement and assess how far Best Value principles are driving it;

! place the consumer closer to the sector’s work.

Further details are set out in ‘Inspection: our approach’, published alongside this document.

‘‘ Teams will work together to ensure consistent and co-ordinated regulation. ’’

alongside this document. ‘‘ Teams will work together to ensure consistent and co-ordinated regulation. ’’
alongside this document. ‘‘ Teams will work together to ensure consistent and co-ordinated regulation. ’’
10 5 >>
10
5 >>

The Housing Corporation

The way forward Our approach to regulation

Delivering regulation continued

5.6 Regulation and investment

We aim to invest for the creation and maintenance of safe and sustainable communities – investing in new homes, regeneration and supported housing that meets local and regional needs.

Part of our regulation function is to ensure that such public investment is safe-guarded, not only in the short term but for many years, to contribute to successful communities. Our assessments of associations’ performance, across a range of their activities, will help to ensure that our substantial investment resources are not spent in a way that jeopardises the delivery of this objective. Our regulatory knowledge will contribute to making such an assessment. Furthermore, information collected on associations’ performance by our investment teams will also inform our regulation.

5.7 Regulation staff code of conduct

In all our regulation work, we expect our staff to meet the standards set out in our new code of conduct. In commissioning regular reviews of our regulation, we will be consulting stakeholders to evaluate our success and to inform our approach. The extent to which our staff have adhered to this code of conduct will form part of the evaluation process.

We expect regulation staff to be:

! courteous in all their dealings with housing association staff, board members, residents and tenants, dealing with people sensitively and in a manner that recognises and respects diversity;

! targeted and proportionate in focusing on relevant aspects of the association’s work;

! professional and efficient, acting in the best interests of present and future tenants and residents of the association and of the association itself;

! impartial and objective in the way they evaluate each housing association;

! open and transparent in communicating their judgements to association staff, in a clear and frank manner;

! timely in reporting back to associations;

! honest and fair in the way they report their findings, ensuring that their conclusions accurately and reliably reflect the association’s activities;

! consistent in the way they apply standards and make judgements;

! committed to promoting innovation and effective solutions and encouraging continuous improvement and excellence.

6 >>
6 >>

The Housing Corporation

The way forward Our approach to regulation

Regulatory engagement

6.1 The basis of our regulatory engagement will be:

11

! a housing association’s own statement of compliance in respect of the Regulatory Code and guidance;

! our cumulative knowledge of the association, based on available information;

! our assessment based on risk factors.

We will use this to develop, and review, a regulatory plan with each lead-regulated association. This will lead to an annual and public assessment of the association’s performance.

6.2 Annual compliance statement

The association’s own assessment of its compliance with the Regulatory Code will be an important part of the development of the regulatory plan. We believe that moving towards greater reliance on self-assessment is positive and consistent with our regulatory objectives.

In recent years our Regulatory and Statistical Return has required associations to certify the extent of their compliance with regulatory requirements using a tick-box self-assessment form. We believe this has been only partially successful.

To develop this approach, we will be asking the chairs of associations with more than 250 homes to confirm to the Corporation the board’s own assessment of compliance with the Regulatory Code and guidance. This may follow the board’s consideration of advice from the executive. We also expect associations to state the areas where they aim to do the most work in the coming year to address areas of weakness. We will require this to be returned by the end of June each year.

The new Code and guidance will apply from 1 April 2002. Performance information received at 31 March 2002 will be assessed against the then current regulatory requirements. However, in completing their annual compliance statement we will expect an association to look forward to April 2003 and consider which areas of work it will prioritise. This will inform our regulatory plan for the subsequent year.

6.3 Information we will use

The other main source of information we will use to plan our regulatory engagement will come from associations. We must ensure that the information we require is relevant to this – and to the association’s own management. Our requirements have changed, and in some respects have grown, over the years. We wish to be clear on the information we require, and to minimise the extent to which information needs to be produced solely for the Corporation.

We expect to seek three groups of information from associations, although the information in each group may change from time to time and is not exhaustive. This is set out on the following page.

 

The Housing Corporation

12

The way forward Our approach to regulation

 
6 >>
6
>>

Regulatory engagement continued

Group 1

Group 2

Group 3

This is information required in a format we specify and to a fixed timetable. This includes:

This is information the association produces mainly for its own business purposes but to which we also require access. The timing and frequency will be tailored to individual associations. We do not expect these necessarily to be separate documents; often the business plan may incorporate many of the other things listed.

This is information the association will have for its own purposes and which we may ask to see from time to time – we will not expect it to be supplied routinely.

" audited annual accounts;

" internal controls assurance annual report to the board;

" business plan;

" management accounts;

" external auditors’ management letter and the association’s response;

" management reports on progress and performance in key business areas, including areas in group 1 and 2;

" internal controls assurance statement;

" asset management/reinvestment strategy, incorporating progress against Decent Homes targets;

" rent restructuring plan;

" financial returns – FV3 and/or FV5 as appropriate;

" sustainable development action plan;

" risk management strategy;

" terms of reference for and delegations to board, committee and staff;

" Best Value improvement plans – or equivalent;

" COntinuous REcordings of lettings and sales (CORE data);

" BME/diversity action plan.

" Regulatory and Statistical Return, which includes the association’s performance indicators (which are in turn published by the Corporation annually);

" annual compliance statement;

" budget;

" tenant involvement action plan.

" bids for capital and revenue funding (where an association chooses to bid).

We may also request information following a significant event within the association, such as a merger or a proposed stock transfer. We will also receive and use appropriate information from third parties relating to particular associations.

 

6.4

Our assessment based on risk factors

 
 

In forming judgements about the extent of our regulation activity, we will be informed by the Corporation’s accumulation of knowledge about the housing association, its activities and operating environment.

The regulatory plan will be informed by balancing our knowledge of the association’s performance across all aspects of the Code – and coming to a judgement. In part, this will be influenced by regulatory priorities we establish.

Many associations operate complex businesses carrying out a range of activities. Respondents to our consultation raised concerns at our proposals to apply the Code and guidance to all of an association’s activities. We believe that parts of the Code can and should be applied to the association as a whole – to enable us to form an overall view. We will consult an association about those activities where parts of the Code and guidance may not apply. We will also welcome associations’ own assessments as part of the annual compliance statement.

The Housing Corporation

The way forward Our approach to regulation

6.5 The regulatory plan

13

The regulatory plan sets out our regulatory engagement with an individual housing association with more than 250 homes. Each plan will reflect an association’s unique circumstances. It also sets out the routine elements of our regulatory tasks, such as the review of business plans and accounts.

Implementing the plan will:

! address any known areas of actual or potential material non-compliance with the Code;

! review progress towards compliance, as appropriate – for example, after a new registration or after an agreement of an action plan with the association;

! enhance our knowledge of the association and how it operates.

We will put our proposed plan to the association for comments before producing an agreed plan. Our level of activity will be tailored to reflect an association’s size, activities and risks. For example, we might:

! attend an association’s board meeting;

! carry out a structured visit to examine a particular subject – for example, an association’s progress on promoting diversity in all activities or review its approach to risk management;

! bring forward or put back a proposed inspection;

! seek more information from an association after a desktop review of, say, financial returns.

6.6 Regulatory ’outputs’

We will follow up significant regulatory activity promptly with written information to the association setting out our judgement. This may be in the form of a letter or a report. We will ensure that any reports are:

! clear about any action we require the association to carry out;

! balanced, highlighting areas of good performance as well as areas of concern.

In line with our commitment to transparency, our reports will increasingly be made public. We are committed to publishing all inspection reports from April 2002. We will also seek to share our regulatory assessments with the principal stakeholders of associations, for example, partner local authorities and lenders, for their information.

We will also publish (on our website, at least) our assessment of each association’s performance that informs our investment allocation decisions.

‘‘ We believe that moving towards greater reliance on self-assessment is positive and consistent with our regulatory objectives. ’’

that moving towards greater reliance on self-assessment is positive and consistent with our regulatory objectives. ’’
that moving towards greater reliance on self-assessment is positive and consistent with our regulatory objectives. ’’
14 7 >>
14
7 >>

The Housing Corporation

The way forward Our approach to regulation

Where performance concerns are identified

7.1

If

housing associations do not comply with the Regulatory Code, we can take action to ensure that

the underlying issues are addressed. Such action can range from requiring associations to implement minor improvements to using statutory powers to enforce change. Where we consider performance failures to be significant, we place an association under ’supervision’. We aim to ensure that supervision cases are identified as early as possible, managed accountably and resolved as quickly as possible.

We use various information and techniques to assess the performance of associations across the whole range of their activities. We place importance on ensuring that our staff recognise problems and are aware of their significance and potential implications.

7.2

Categories of unacceptable performance

Our regulation now emphasises continuous improvement rather than requiring associations to meet

a large number of detailed requirements. However, if, in our judgement, housing associations do not

meet minimum standards and have no acceptable plans to do so, we will actively intervene. Where we identify such concerns, we place associations into one of three categories:

! Continuing regulation

If there are minor performance concerns, we will agree an action plan with the association to address them. Regulation teams will monitor progress towards resolution in a routine manner through the regulatory plan.

! Intervention status

This covers associations where serious concerns have been identified and we believe that an agreement can be reached between us and the association about an action plan for dealing with the issues. We may suspend funding. The association will remain in this category until we are satisfied that the agreed changes have been made.

! Enforcement status

This covers cases where serious concerns are identified, and the association is unable or unwilling to deal with them. We are likely to suspend funding and use our statutory powers (see 7.4). We publicise this information through press announcements and by informing the main stakeholders, including private lenders and local authorities. We may also instigate a statutory inquiry into an association’s affairs where we believe there may have been mismanagement or misconduct. All enforcement and other high-profile cases come under the scrutiny of our Board’s Regulation and Supervision Committee.

The term ’supervision’ covers only those cases that are categorised as intervention or enforcement.

The Housing Corporation

The way forward Our approach to regulation

7.3 Impact of supervision on investment

15

If a housing association is placed under supervision, we will always consider its suitability for continued capital and revenue funding, and will assess the risk, if any, to public funds. As a result, we may suspend funding. This will usually take the form of delaying access to previously agreed allocations. Only in extreme situations – for example, where there is major fraud – would we impose a freeze on the flow of cash to an association on committed schemes. We may also attach conditions to new allocations of money. These conditions will relate to the underlying performance failures, and will only be lifted when we are satisfied that the necessary improvements have been made.

7.4 Statutory powers

The Housing Act 1996 gives us access to a range of powers that could assist in handling supervision cases. These include general powers to obtain information and to enter premises. The following are the main powers we are most likely to use in enforcement cases:

! power to make appointments to governing bodies

We can appoint new members to the governing body of an association to give the governing body the extra support it needs to resolve problems and improve performance.

! power to direct an inquiry into the affairs of an association

We may institute a statutory inquiry into an association’s affairs if we believe there has been mismanagement or misconduct.

! power to intervene where an association is threatened with insolvency

We can intervene if an association is facing impending insolvency. Our powers are triggered when a creditor seeks to enforce debts owed by the association, or where the association resolves to wind up.

‘‘ Our regulation now emphasises continuous improvement rather than requiring associations to meet a large

continuous improvement rather than requiring associations to meet a large number of detailed requirements. ’’

number

of detailed requirements.

’’

continuous improvement rather than requiring associations to meet a large number of detailed requirements. ’’
16 8 >>
16
8 >>

The Housing Corporation

The way forward Our approach to regulation

In summary

! Our objectives are to promote viable organisations that are well governed and well managed.

! These objectives will be matched by housing associations carrying out their functions effectively.

! Our new regulatory approach and framework are now in place, ready to start in April 2002.

! Our approach will be subject to regular evaluation ensuring we continue to provide effective regulation.

Our new framework is summarised in the diagram below.

Effective housing association performance • governance • strategy • delivery • self assessment Our regulatory
Effective housing association performance
• governance
• strategy
• delivery
• self assessment
Our regulatory objectives
Viable organisations that
are well governed and
well managed
Our Regulatory Approach
Clear regulatory
Appropriate delivery
framework
of regulation
• Code
• area teams
• guidance
• management of
knowledge
• good practice
• understanding
context
• assessment of
compliance
• reporting
>>
>>

The Housing Corporation

The way forward Our approach to regulation

I

The Regulatory Code and guidance

II

The Housing Corporation

The way forward Our approach to regulation

Notes

This is the Regulatory Code – the fundamental obligations of housing associations in meeting the Housing Corporation’s regulatory requirements.

Regulatory guidance is shown alongside the Regulatory Code. In assessing an association’s compliance with the Code we will consider whether guidance has been followed or whether any alternative action taken by the association is appropriate to achieve the same objectives.

The Regulatory Code and guidance reflect our general powers as a regulator. We also have specific powers under Section 36 of the Housing Act 1996 to issue housing management guidance. This specifies types of guidance which, subject to consultation and approval by the Secretary of State, we may take into account when judging whether there has been mismanagement. This so-called ’statutory’ housing management guidance is denoted by an asterisk*.

We use the term resident to include all types of legal occupier (for example, tenant, almshouse resident, leaseholder and licensee) of the association. A tenant is a resident who pays rent and holds a secure, assured or assured shorthold tenancy or a licence to occupy accommodation.

The Housing Corporation

The way forward Our approach to regulation

III

The Regulatory Code and guidance

Housing associations must be independent (except where they are subsidiaries of other housing associations) and properly constituted not-for-profit organisations.

They must operate financially sustainable and efficient businesses and should be committed to, and primarily focused on, providing good and responsive housing and related services and amenities for those whose personal circumstances make it difficult for them to meet their housing needs in the open market. In doing so they will conduct their business according to the following principles:

Regulatory Code

Regulatory guidance

1

Viable

1

Viable

1.1

Housing associations must operate viable businesses, with adequate recourse to financial resources to meet their current and future business and financial commitments:

1.1 a

The association’s business plan demonstrates its priorities and strategy for achieving its objectives including commitments to residents, lenders and rent restructuring requirements.

1.1.1

based on a coherent and robust business plan;

b

The association’s business planning is informed by asset management information, which is reviewed regularly.

1.1.2

fulfilling their loan-agreement covenants.

 

c

Accounts and returns are submitted on time and demonstrate that the association is, and will continue to be, solvent.

d

Financial policies and procedures are evident. They ensure that the governing body has sufficient and timely financial information to inform its decision-making processes.

1.2

Housing associations must operate a framework that effectively identifies and manages risks:

1.2 a The association’s risk management framework highlights key risks and how they are to be managed.

1.2.1

identifying all major risks that might prevent them achieving their objectives;

b The governing body regularly reviews activities and policies and all new business decisions and there is

1.2.2

with the necessary arrangements to manage risks and mitigate their effects.

clear case for the proposed or existing direction of the association.

a

c Approved terms of reference for the governing body and other committees and delegated authorities for staff are in place.

d There are internal control systems. Their effectiveness

is regularly reviewed by the governing body and

reported in the annual report.

IV

The Housing Corporation

The way forward Our approach to regulation

Regulatory Code

2 Properly governed

Regulatory guidance

2 Properly governed

2.1

Housing associations must operate according to the law and their constitutions:

2.1

a The association demonstrates its independence by conducting its affairs without undue reference to or influence by any other body, unless it is part of a group structure where operating arrangements between group members are documented.

2.1.1

maintaining their independence unless they are a subsidiary of another housing association;

2.1.2

complying with all statutory and regulatory requirements.

b Membership policies and governing body composition do not compromise the association’s independence.

 

c Individual governing body members act in a personal capacity and not as nominees/representatives of any other body, unless the constitution so provides.

2.2

Housing associations should be headed by an effective board with a sufficient range of expertise – supported by appropriate governance and executive arrangements – that will give capable leadership and control.

2.2

a Effective governance arrangements can be framed around the following questions:

To what extent does the governing body perform its key governance roles well? To what extent does the governing body work well together? To what extent does the governing body comprise appropriate people?

 

b The governing body is diverse, reflecting the communities the association serves, and has a range of skills, experience and up-to-date knowledge.

c Organisational and management structures reflect the association’s business objectives.

d The governing body meets regularly. It ensures that the association acts within the terms of its constitution and relevant legislation.

2.3

Housing associations must maintain the highest standards of probity in all their dealings:

2.3

a A code of conduct for the governing body and staff, together with a payments and benefits policy, is in place. Sound procurement practices are in place and contractual arrangements or partnerships with other bodies are clearly defined and documented.

2.3.1

acting to maintain the good reputation of the sector, and not bringing it into disrepute;

2.3.2

fostering positive relations with stakeholders;

b The association maintains a dialogue about its strategic objectives with its key stakeholders.

2.3.3

conducting their business so they are accessible, accountable and transparent to residents and other stakeholders;

The Housing Corporation

The way forward Our approach to regulation

Regulatory Code

2 Properly governed

Regulatory guidance

2 Properly governed

V

2.4

Housing associations must protect public investment:

2.4 Any material changes in activities are considered by the governing body, contained in the business plan and – where necessary – reported to the Corporation.

a

2.4.1

using their social housing assets only for social housing purposes;

2.4.2

ensuring that their social housing assets are not placed at risk by non-social housing activities.

b

Public funding invested in the association is protected by, and non-social housing activities are managed within, the association’s risk management framework.

2.5

Housing associations must seek and be responsive to residents’ views and priorities:

2.5 a * The association is effectively accountable to its stakeholders. Current information about its activities is widely available to residents and other interested parties.

2.5.1

reflecting these interests in their business strategy;

2.5.2

giving residents and other stakeholders opportunities to comment on their performance;

b * Residents, housing applicants and others have ready access to an effective complaints and compensation policy, administered effectively. Independent Housing Ombudsman recommendations are actioned.

2.5.3

enabling residents to play their part in decision-making;

2.5.4

providing opportunities for residents to explore, and play their part, in how services are managed and provided.

c * The association considers a range of methods and opportunities to consult and obtain feedback from residents. It seeks to make an agreement, developed in partnership with residents, setting out how they will be involved, consulted and informed and how this will be resourced, measured, monitored and reviewed.

 

d * Where they so wish, residents are supported, enabling them to obtain the knowledge and skills to play an effective part in investment in, and management of, their homes and neighbourhoods. They are encouraged and supported to explore options.

2.6

Housing associations must deal with the Corporation in an open and co-operative manner, notifying any anticipated or actual breach of the Code or anything that might significantly affect associations’ ability to fulfil their obligations under the Code.

2.6 Any areas where the need for improvement is identified are considered by the governing body and actions agreed with the Corporation.

a

b

Annual and other returns are made promptly to the Corporation and other regulators.

*Areas that comprise statutory housing management guidance.

VI

The Housing Corporation

The way forward Our approach to regulation

Regulatory Code

2 Properly governed

2.7 Housing associations must demonstrate, when carrying out all their functions, their commitment to equal opportunity. They must work towards the elimination of discrimination and demonstrate an equitable approach to the rights and responsibilities of all individuals. They must promote good relations between people of different racial groups.

Regulatory guidance

2 Properly governed

2.7 a

The association is fair in its dealings with people, communities and organisations with which it has relationships and takes into account the diverse nature of their cultures and backgrounds.

b The governing body has adopted an equalities and diversity policy that covers all aspects of equalities and includes race, religion, gender, marital status, sexual orientation, disability or age.

c Specifically in relation to black and minority ethnic (BME) people, the policy incorporates targets associations should set in the following areas:

*

*

*

1. Lettings: are proportionate to BME housing need,

or census data where this information is deficient, in the area where the association has homes. An association specialising in particular client groups establishes different targets based on ethnicity data available for such groups.

2. Tenant satisfaction: is at least as high as for

non-BME tenants.

3. Dealing effectively with racial harassment:

the association establishes targets for reporting,

victim support and satisfaction, and action taken against perpetrators.

4. Governing body membership: the proportion of BME

new appointments and re-appointments to the governing

body is the same as under ‘Lettings’ above.

5. Staffing: new appointments and promotions achieve

the same levels of representation, at all levels of the

organisation, as under the application of the ‘Lettings’ criteria.

*

6. Representation in tenants/residents associations:

reflects the ethnic mix of the association’s tenants in

the relevant area.

7. Employment performance of suppliers, contractors

and consultants: as a criterion for award of work or contracts and a condition of doing business, associations

should pass on requirements in respect of staffing, customer satisfaction and dealing with racial harassment (set out above) to their consultants, contractors and suppliers.

*Areas that comprise statutory housing management guidance.

The Housing Corporation

The way forward Our approach to regulation

Regulatory Code

3 Properly managed

Regulatory guidance

3 Properly managed

VII

3.1

Housing associations must set rents which move towards target social rents and are, on average, below those in the private sector for similar properties and which reflect size, property value and local earnings.

3.1 a * Rents are set in accordance with the rent restructuring formula.

b * All residents have information about their landlord’s rent policy and rent levels across the association’s stock and in the relevant local authority area. All residents have information about their service charges including costs that their charges cover, how charges are budgeted and increases calculated.

3.2

Housing associations must have management arrangements, resources, skills and systems which are appropriate to their circumstances, scale and scope of operation, and ensure that their activities:

3.2 a * The governing body receives regular reports on all areas of the association’s performance. The association benchmarks its performance against other associations and organisations.

3.2.1

are adequately monitored;

b

All lettings and sales are recorded in the COntinuous REcording of lettings system (CORE).

3.2.2

are undertaken efficiently and effectively;

3.2.3

are backed by proper systems of assurance for internal control.

c * Services can be demonstrated to be relevant and accessible to customers and potential customers.

 

d * There are clear contractual arrangements, and reporting and review mechanisms for the use of partners or agents.

3.3

Housing associations must aim to deliver continuous improvements and value for money in their services:

3.3 a * Service provision is subject to challenge and change. The wishes of residents, and others, are balanced against available resources within a clear and transparent framework, according to the principles of Best Value. Progress in working towards improvements against a range of national and local performance indicators will be publicised by the association.

b * Housing services and supporting functions are reviewed to ensure continued relevance.

3.3.1

using Best Value techniques, challenging what they do and how they do it, making comparisons with others, consulting people affected by their services and establishing whether they are providing the service, either directly or through a third party, at competitive standards and prices.

*Areas that comprise statutory housing management guidance.

VIII

The Housing Corporation

The way forward Our approach to regulation

Regulatory Code

3 Properly managed

Regulatory guidance

3 Properly managed

3.4

Housing associations must develop and manage good-quality homes that seek to meet people’s needs and preferences now and in the future, ensuring that:

3.4

a

Permanent housing is sustainable, demonstrated by a commitment to effective protection of the environment and prudent use of natural resources.

3.4.1

the homes their residents live in are well maintained and in a lettable condition;

b * Housing stock is maintained in a lettable condition that exceeds statutory minimum requirements.

3.4.2

maintenance is carried out effectively and responsively and in ways that reflect residents’ preferences;

c * Progress in achieving the Decent Home Standard is monitored.

3.4.3

necessary investment in the future of their stock is made a key priority;

d * There is a responsive repair service that meets legal and contractual obligations and is efficient and effective. It has published service standards and is sensitive to the needs of vulnerable residents.

3.4.4

standards of new development provision are met.

 

e * All equipment and building components meet required legislative and regulatory standards.

f New developments comply with ‘rethinking construction’ principles, as advised by the Corporation.

g Sinking fund payments made by leaseholders are held in trust.

3.5

Housing associations must provide good-quality housing services for residents and prospective residents:

3.5

a * Services are shaped around customers’ needs.

3.5.1

by seeking to offer a choice of home, while giving reasonable preference to those in priority housing need;

b * Housing Corporation Resident Charters are provided to applicants and residents.

3.5.2

by offering the most secure form of tenure compatible with the purpose of the housing and the sustainability of the community;

 

c * Legal repossession of a property is sought as a last resort.

d * Strategies are in place to tackle antisocial behaviour.

3.5.3

with agreements that clearly set out residents’ and landlords’ rights and obligations;

e

Residents who exercise a purchase right receive timely written information about their property.

3.5.4

by being responsive to the individual characteristics and circumstances of residents;

f * Vulnerable and marginalised residents are provided with appropriate responsive housing services. Support and care arrangements (including liaison with other agencies) are in place, where appropriate.

3.5.5

by using lettings policies that are fair and reflect the diversity of their client groups;

3.5.6

by providing high standards of customer care.

*Areas that comprise statutory housing management guidance.

The Housing Corporation

The way forward Our approach to regulation

Regulatory Code

3 Properly managed

Regulatory guidance

3 Properly managed

IX

3.6

Housing associations must work with local authorities to enable the latter to fulfil their duties:

3.6 a * Lettings and sales policies are flexible, non- discriminatory and responsive to demand, while contributing to the need to be inclusive and the need

3.6.1

to the homeless and people in priority housing need;

to ensure sustainable communities.

3.6.2

to the vulnerable and those covered by the Government’s Supporting People policy.

b * Associations are able to demonstrate their co-operation with local authorities in homelessness reviews, in the formulation of homelessness strategies, and in the delivery of local authorities’ homelessness functions.

c * When requested to do so by the local authority and to such an extent as is reasonable in the circumstances, associations provide a proportion of their stock to local authority nominations and temporary accommodation to the homeless.

d * Criteria are adopted following consultation with local authorities for accepting or rejecting nominees and other applicants for housing.

e * Applicants are excluded from consideration for housing only when their unacceptable behaviour is serious enough to make them unsuitable to be a tenant and only in circumstances that are not unlawfully discriminating.

f * Lettings policies:

• are responsive to local authority housing duties;

• take account of the need to give reasonable priority to transfer applicants including applicants from other associations;

• are responsive to national, regional and local mobility and exchange schemes;

• are demonstrably fair and effectively controlled.

*Areas that comprise statutory housing management guidance.

X

The Housing Corporation

The way forward Our approach to regulation

Regulatory Code

Regulatory guidance

3

Properly managed

3

Properly managed

3.7

Housing associations must demonstrate that their strategies and policies are responsive to their economic and social environment and link into regional and local housing strategies.

3.7 a * New homes meet long-term priority needs in the area in which they are developed.

 

b * The association co-operates and contributes to local authorities’ strategic enabling role.

 

c Associations will be able to demonstrate their contribution to the objectives of neighbourhood renewal and regeneration either directly or through partnership, particularly when working in deprived areas.

d The association demonstrates a commitment to sustainable development and works towards incorporating economic, social and environmental objectives in its activities.

*Areas that comprise statutory housing management guidance.

The Housing Corporation

The way forward Our approach to regulation

Contacts

The way forward Our approach to regulation Contacts We describe our new area regulation teams in

We describe our new area regulation teams in section 5

For information on how regulation is carried out, you can contact the relevant office. Further information on any aspect of this publication can be obtained from our Regulation Policy team. We welcome all feedback.

Serving Yorkshire and the Humber, the North East and North West.from our Regulation Policy team. We welcome all feedback. North Leeds St. Paul’s House, 23 Park

North

Leeds St. Paul’s House, 23 Park Square South Leeds LS1 2ND

Telephone:0113 233 7100

Email: northeastern.info@housingcorp.gsx.gov.uk

Manchester

Elisabeth House, 16 St. Peter’s Square Manchester M2 3DF

Telephone: 0161 242 2000

Email: northwest.info@housingcorp.gsx.gov.uk

Liverpool

Colonial Chambers, 3–11 Temple Street Liverpool L2 5RH

Telephone: 0151 242 1200

Email: merseyside.info@housingcorp.gsx.gov.uk

Fax:

0113 233 7101

Fax:

0161 242 2001

Fax:

0151 242 1201

CentralFax: 0113 233 7101 Fax: 0161 242 2001 Fax: 0151 242 1201 Serving the East of

Serving the East of England, East Midlands and West Midlands.

Leicester

Attenborough House, 109/119 Charles Street Leicester LE1 1FQ

Telephone: 0116 242 4800

Email: east.info@housingcorp.gsx.gov.uk

Wolverhampton

31 Waterloo Road, Wolverhampton WV1 4DJ

Telephone: 01902 795000

Email: westmidlands.info@housingcorp.gsx.gov.uk

Fax:

Fax:

0116 242 4801

01902 795001

LondonFax: Fax: 0116 242 4801 01902 795001 Serving Greater London. Waverley House, 7–12 Noel Street,

Serving Greater London.

Waverley House, 7–12 Noel Street, London W1F 8BA

Telephone: 020 7292 4400

Email: london.info@housingcorp.gsx.gov.uk

Fax:

020 7292 4401

Southlondon.info@housingcorp.gsx.gov.uk Fax: 020 7292 4401 Serving the South East (excluding London) and South West.

Serving the South East (excluding London) and South West.

Croydon Leon House, High Street, Croydon Surrey CR9 1UH

Telephone: 020 8253 1400

Email: southeast.info@housingcorp.gsx.gov.uk

Exeter

Beaufort House, 51 New North Road, Exeter EX4 4EP

Telephone: 01392 428200

Email: southwest.info@ housingcorp.gsx.gov.uk

Fax:

Fax:

020 8253 1444

01392 428201

Regulation Policy

Maple House, 149 Tottenham Court Road, London W1T 7BN

Telephone: 020 7393 2000

Fax:

020 7393 2111

Email: enquiries@housingcorp.gsx.gov.uk

Tottenham Court Road, London W1T 7BN Telephone: 020 7393 2000 Fax: 020 7393 2111 Email: enquiries@housingcorp.gsx.gov.uk

The Housing Corporation

The way forward Our approach to regulation

Availability in other formats

This publication or summary can be provided in other languages, on audio tape or in other formats on request from the publications section of the Housing Corporation.

c
c

Copyright The Housing Corporation. Published January 2002