As we step out of the shadow of Covid-19, the economy in the UK and worldwide is encountering some turbulence with inflation, increased difficulty in funding works/business growth as well as employment and ongoing supply chain issues.
Separately, the Regulator of Social Housing (the RSH), continues to take a closer look at Registered Providers (RPs), their business models and their financial viability against the RSH’s regulatory standards.
The RSH has made clear that it takes a co-regulatory approach and holds board members and councillors responsible for ensuring that RPs are being managed effectively and meeting regulatory requirements. One such requirement is the need to meet the Rent Standard and (subject to relevant exemptions) all rents must be charged in accordance with the Government’s Policy Statement on Rents for Social Housing 2019.
In line with the RSH’s risk-based approach to regulation, it requires RPs to evidence that they have appropriate controls and assurances to ensure rents are set and increased at the correct level. However, recent high-profile cases in the sector have shown the difficulties some RPs have experienced in meeting such requirements.
We continuously update our clients in respect of these rules and provide guidance as to their impact on RPs’ businesses to ensure they are able to meet the RSH’s Standards and reporting requirements.
We have a wealth of experience in guiding RPs through these sometimes troubled waters and safely to ‘port’. Our dedicated team will help you with salient advice relating to the current status of regulatory compliance. This includes the steps you, as an RP, could take to improve your position and standing with the RSH as well as working with other stakeholders to analyse and assess how your current business model can creak under the current inflationary pressures. We have worked with a number of RPs to advise on the options available to mitigate the impact of this whilst ensuring that the RP is able to protect the interests of the permitted occupants of the relevant property and their business.
We have already seen that some of the larger landlords in the sector are seeking to engage in this mitigation process and how the risks can best be managed between the parties to a lease and the other stakeholders involved. Before Christmas, it was announced that Civitas have reached some agreement with their investors and lenders as to how the long lease model prevalent in the supported housing sector can be adapted. Other landlords are also engaging in this area and Devonshires are able to assess and advise how the divergence of income (with the CPI Standard Cap) as against an indexed linked rent review can best be managed.
Key members of our team available to support you include:
Gemma Bell – a partner in our Corporate/Governance team. She regularly advises clients and specifically their boards on changes to the legislative framework, the RSH’s regulatory requirements and charity law, as well as changes in the market/economy and how they affect the RPs and the impact this has on their relationship with the RSH. Similarly, where the RSH goes on the front foot in relation to regulatory compliance issues Gemma is able to provide proactive advice to the client as to how they can mitigate this (liaising with other members of the team depending on the relevant issue(s)) and how best to report/document the steps taken in order to right the ‘ship’.
Dan Moan – a partner in our Real Estate& Projects team. He deals with the property aspects of an RP’s business where they provide housing to those in need of additional care. Dan and his colleagues in the Real Estate team enter into new leases as well as looking at the terms of existing leases and how those contractual obligations impact on the RP. He has been involved in both advisory and transactional work in the sector and has dealt with the disposal of a number of properties for RPs. He was also involved with the property aspects of the first Company Voluntary Arrangement (CVA) in the sector and his role included dealing with various landlords and their professional advisors as well as other vested parties and the impact of the CVA on individual or portfolios of properties.
Jim Varley – a partner in our Litigation & Dispute Resolution team. He provides support and guidance to the RP from an insolvency perspective providing advice to the board where required on the steps that they should take in respect of the ongoing viability of their business and what prudent and/or legal steps to ensure compliance with the Insolvency Act they may need to take at the relevant time. In conjunction with insolvency practitioners he provides guidance on the process and the steps the Board should take when considering their options. He has also been involved in the negotiations and discussions with various landlords (who would ordinarily be a creditor in an insolvency position) when dealing with a CVA.
In the event that you have any queries in relation to this article please contact a member of the team above via their contact details listed (viewed by clicking their name).