Annex 7: Tenant Satisfaction Measures - Regulatory impact assessment (accessible)

Question 1

Policy option 1 – preferred

Accepted Answer

Summary: Analysis and evidence

Full economic assessment
Description: Amend the regulatory framework to introduce prescribed TSMs for registered providers as specified in the requirements (preferred option)

Price base year	PV base year	Time period years	Net Benefit (Present Value) (PV) (£m)
2021	2023	10	£-40.1m ^{[footnote 6]}

Costs	Total transition (Constant price)	Average annual (excl. transition) (constant price)	Net cost (£m) (present value)
Best estimate	£10.0m	£3.5m	£40.1m

Description of scale of key monetised costs by ‘main affected groups’
Private registered providers and local authority registered providers would incur transitional costs which would include additional staff training costs as well as costs associated with reviewing and adjusting organisational systems, policies and processes. PRPs and LARPs would also incur additional ongoing costs relating to carrying out tenant perception surveys in the manner required by the regulator. Overall, we consider the cost to the sector to be low relative to its turnover, but the impact on small providers is likely to be proportionately greater.
Other key non-monetised costs by ‘main affected groups’
PRPs and LARPs may incur ongoing additional costs beyond transitional costs and additional tenant perception survey activities. This may include additional costs of generating, publishing and submitting to the regulator a wider range of data than previously, or of generating the data in a different way. In general, these costs are difficult to disentangle from existing business as usual activities, such as existing regulatory data submission requirements, and therefore the regulator proposes that these costs will not be formally estimated for the purposes of the regulatory impact assessment (RIA). In addition, TSMs are intended to be used as part of our enhanced consumer regulation, which requires legislation before implementation. Where appropriate, we intend to consider the impact of any future regulatory requirements at a later date. The pilot for small providers, outlined above, would help determine any additional regulatory burden and balance this against its benefits. We anticipate that the principal source of additional costs would be actually conducting tenant surveys, and that the cost of submitting the data to the regulator would be minimal. We have therefore not costed this but will test this assumption through the pilot if the preferred option is chosen.

Benefits	Total transition (Constant price)	Average annual (excl. transition) (constant price)	Net cost (£m) (present value)
Best estimate	Not costed	Not costed	Not costed

Description and scale of key monetised benefits by ‘main affected groups’
The benefits of the TSMs have not been monetised.
Other key non-monetised benefits by ‘main affected groups’
PRPs and LARPs would derive benefits from the introduction of the TSMs, as would social housing tenants and the regulator. However, many of the benefits of the TSMs are inextricably linked to the wider White Paper proposals to strengthen the regulator’s consumer regulatory role. Due to the difficulty in trying to estimate the social value generated by the TSMs (e.g., lack of robust data and evidence, difficulty in identifying causality of single measures from the White Paper proposals) the RIA has focussed solely on monetising the costs. Amending the regulatory framework to introduce prescribed TSMs for registered providers, as outlined in our preferred option, should lead to benefits for registered providers and tenants. Clear, comparable and accessible TSMs that are collected and reported in a timely manner should lead to increased transparency about landlord performance for tenants and other stakeholders and would mean tenants should find it easier to compare the performance of their landlord with other providers. Providers would have new opportunities to scrutinise their own performance, including how it compares to other registered providers, which may help improve their performance.

Key assumptions/sensitivities/risks Discount rate (%)

3.5 ^{[footnote 7]}

- The evidence base explains how the cost estimates have been arrived at and are intended to be viewed as a sector average. It is acknowledged that there are a range of factors that will affect the costs of delivering the TSMs for different registered providers. This includes different measures to address barriers to participation and stock types. However, these differing costs would be hard to quantify with any level of accuracy.

- We assume that registered providers of social housing would bear the full resource implications of the regulatory changes. We assume that the number of registered providers in the future remains at current levels.

Is this measure likely to impact on international trade and investment?	No
Are any of these organisations in scope?	Micro	Small	Medium	Large
	Yes	Yes	Yes	Yes
What is the CO2 equivalent change in greenhouse gas emissions? (Million tonnes CO2 equivalent)	Traded:		Non-traded:
	N/A as de minimis CO2 impact anticipated.		N/A as de minimis CO2 impact anticipated.
Will the policy be reviewed?	Yes

Evidence base

1 - The impact assessment has benefitted from feedback from the TSM consultation, including input from tenants and registered providers, with a majority of respondents agreeing with the analysis in the draft RIA. We have also drawn on advice commissioned from BMG Research and wider sector intelligence in relation to tenant perception surveys.

2 - The assessment has been completed with reference to the Government’s Better Regulation Framework guidance and The Green Book guidance about how to appraise policies and the approach to the costings set out in this note conforms as far as possible to published guidance. In line with this guidance, the level of detail employed in the cost analysis is intended to be proportionate to the level of costs and risks.

3 - The evidence base of this impact assessment is structured as follows:

A. Policy objective
B. Problem under consideration and rationale for regulatory intervention
C. Description of options considered
D. Monetised and non-monetised costs and benefits of each option
E. Risks and assumptions
F. Small and Micro Business Assessment (SaMBA)
G. Description of implementation plan
H. Monitoring and evaluation

Question 2

A. Policy objective

Accepted Answer

4 - The Government published ‘The Charter for Social Housing Residents: Social Housing White Paper (the White Paper) in November 2020, which is intended to deliver ‘transformational change for social housing residents’. It set out proposals to strengthen the Regulator of Social Housing’s (the regulator’s) consumer regulation role. Introduction of a suite of performance measures, called TSMs, is one element of this, supporting one of the White Paper aims for TSMs: that residents should be able to know how their landlord is performing.

5 - The White Paper set out the Government’s expectation that the regulator will bring in a set of clear and comparable TSMs for all registered providers on things that matter to tenants, so that they can understand their landlord’s performance. The TSMs are also intended to inform the regulator about how registered providers are complying with the consumer standards under a proactive consumer regulation regime.

6 - These measures follow the original themes set out in the Social Housing Green Paper around keeping properties in good repair, maintaining building safety, effective handling of complaints, respectful and helpful engagement, and responsible neighbourhood management. The regulator will include both objective quantitative measures and tenant perception measures and will consider the best way of publishing performance data so that it is clear and accessible for all tenants.

Question 3

B. Problem under consideration and rationale for regulatory intervention

Accepted Answer

7 - The White Paper acknowledged that landlords are already required by the regulator to give tenants timely and relevant performance information, including the publication of an annual report, but that the format and content of the information can vary significantly. This means that tenants (and the regulator) are not able to easily compare the performance information of their landlord with that of other social housing landlords and this limits tenants’ ability to hold their landlord to account for their performance. In addition, landlord performance information is not currently published in one place, which means the performance data of registered providers is not as accessible to tenants as it could be.

8 - The White Paper set out an expectation that the regulator develops a process for collecting and publishing a core set of TSMs for registered providers and to ensure landlords publicise them. To bring in a set of clear and comparable performance measures, the regulator will need to address the current issues with clarity, comparability, and accessibility. In doing this, the TSMs will at least in part address the following market failures: ^{[footnote 8]}

Imperfect information: the TSMs aim to address information asymmetries that make it difficult for tenants to readily access reliable information on the absolute and relative performance of their landlord. This information asymmetry also applies to the regulator and other landlords.
Public good: by establishing a consistent set of requirements for the definition and calculation of performance measures, and by making this information available, the TSMs provide a public good for tenants (and other providers) ^{[footnote 9]}.
Market power: social housing is made available to those whose needs are not adequately served by the commercial housing market. Because social rents are below market, demand for social housing typically exceeds supply and social tenants have limited opportunities to exercise consumer choice over their landlord. Therefore, tenants’ ability to hold providers to account and regulation are key mechanisms to protect tenants and ensure services meet minimum standards – the TSMs are a tool that supports the functioning of these mechanisms.

9 - Section six of the regulator’s consultation document set out the key principles we have been mindful of in our approach to designing the TSMs.

10 - Establishing a set of clear and comparable TSMs for all social landlords has made it necessary for the regulator to propose a relatively prescriptive approach to the TSMs. The regulator has sought to do this only where it is proportionate to achieve the policy objectives of the TSMs.

Question 4

C. Description of options considered

Accepted Answer

Policy option 0 – do nothing

11 - Doing nothing to amend the current regulatory framework would mean that the problems outlined above would persist. For this reason, this policy option is not proposed.

Policy option 1 – Amend the regulatory framework to introduce prescribed TSMs for registered providers as specified in the requirements (preferred option)

12 - Under this option, the regulator would revise the regulatory framework to introduce prescribed TSMs for registered providers. The main changes include the introduction of a new consumer standard, the TSM Standard, and detailed TSM requirements that would require registered providers, among other things, (subject to the exceptions discussed below for registered providers who own fewer than 1,000 relevant homes) to:

annually collect and publish to their tenants a set of TSMs (and associated information) prescribed by the regulator around the themes set out in the White Paper that include both quantitative measures and tenant perception measures
annually submit information about their TSM performance to the regulator
publish to their tenants and submit to the regulator this data on a registered group basis and include both low-cost rental accommodation and low-cost home ownership accommodation
at least annually collect data for the tenant perception TSMs themselves through surveys with tenants using survey method(s) of their choice, and
ensure that the survey data is, as far as possible, representative of their tenant base and meets minimum levels of statistical accuracy.

13 - The regulator would analyse and publish the TSMs on a registered group basis from the data submitted to it by registered providers.

14 - The regulator acknowledges that the introduction of TSMs and the regulator’s associated requirements are likely to have a proportionately greater impact on providers who own fewer than 1,000 relevant homes (who we refer to in this document as small providers), particularly in relation to tenant perception surveys, and has sought to mitigate the impact of our proposals. Under this policy option, small providers would:

only be required to collect the tenant perception TSMs at least once every two years
not be required to submit their TSM data and associated information to the regulator but would still be required to publish it to their tenants annually
be able to report TSMs based on any reporting year and year end. This is to ensure there is not a significant extra burden for the 50% of small providers who do not have an April-March reporting year
be able to determine their population for relevant tenant perception questions (i.e., whether they sample LCRA and LCHO separately or both combined) based on a reasonable assessment of their stock (this should help them meet statistical accuracy requirements).

15 - Small providers would also be able to meet the regulator’s requirements for statistical accuracy in the perception survey by undertaking a census.

16 - Small providers would still be required to collect and publish all TSMs in accordance with the rest of the regulator’s requirements, set out in Annex 4 Tenant Satisfaction Measures: Technical requirements and Annex 5 Tenant Satisfaction Measures: Tenant survey requirements.

17 - As a result of feedback from the TSM consultation, the regulator intends to run a pilot programme with small providers which would allow them to submit data to the regulator on a voluntary basis.

Policy option 2 – Less extensive tenant perception survey requirements

18 - Equivalent to the preferred option but providers who own 1,000 or more relevant homes (which we refer to in this document as large providers) would only be required to collect tenant perception survey data at least once every two years, and small providers at least once every three years.

Policy option 3 – More extensive tenant perception survey requirements

19 - Equivalent to the preferred option but:

small providers would also need to collect tenant perception survey data at least annually
all providers could still choose their own collection method(s) for the tenant perception surveys, but online surveys would not be permitted.

Policy option 4 – National tenant survey

20 - Equivalent to the preferred option but the regulator would commission its own national tenant survey to collect the tenant perception data for large providers.

21 - The regulator would directly procure a national survey of tenants to generate representative and accurate tenant perception data for every large registered provider on a registered provider basis (rather than a registered group basis). The regulator would commission a single contractor who would collect contact details and other tenant data from providers, run a telephone and online survey of tenants, analyse the data and generate tenant perception TSMs for every large provider on an annual basis. These tenant perception TSMs would be subject to the same technical requirements as TSMs generated by providers under policy option 1, including the requirements to be representative of each provider’s tenant b ase as far as possible and to meet minimum levels of statistical accuracy. The regulator would publish the tenant perception TSMs annually.

22 - The regulatory framework would be revised to require large providers to only collect, submit to the regulator, and publish management information related TSMs prescribed by the regulator around the themes set out in the White Paper.

23 - Our approach to small providers would be the same as described in policy option 1 – small providers would be required to carry out tenant perception surveys (using survey method(s) of their choice) at least once every two years and publish the results to their tenants at least annually.

Question 5

D. Monetised and non-monetised costs and benefits of each option

Accepted Answer

Overview of the sector

24 - There are 1,377 registered provider groups (both private registered providers and local authority registered providers) that own social stock totalling 4,401,572 ^{[footnote 10]} with a sector turnover of circa £30 billion. Table 1 provides a summary of registered providers by type, stock size and turnover.

Units held by provider	No. of providers	Social stock owned	% of total stock	Turnover	No. of providers	Social stock owned	% of social stock	Turnover (£m)
	PRPs				LAs
<250	832	43,022	1.0%	226	29	944	0.0%	5
<1,000	968	110,876	2.5%	582	31	1,658	0.0%	9
> 1,000	214	2,717,178	61.7%	22,092	164	1,571,860	35.7%	8,444
Total	1,182	2,828,054	64.3%	22,674	195	1,573,518	35.7%	8,453

NB: Turnover is imputed for providers with fewer than 1,000 units using number of social units and average general needs rent for 2021 (2021 SDR), for PRPs with more than 1,000 units data is taken from the 2021 Global accounts of registered providers, and for LA providers with more than 1,000 units data is taken from the 2021 Local Authority revenue expenditure and financing England: 2020 to 2021 individual local authority data. Per unit imputed turnover for LARPs is lower than reported turnover for large PRPs since the later includes significant non-rental activities (e.g. market sales).

25 - The main groups affected by the policy options are:

Private registered providers and local authority registered providers
Social housing tenants

26 - The regulator has produced best estimates of the additional costs that the policy options are likely to result in for registered providers, taking into account variation within the sector (for example, the different sizes of providers, the different types of providers, and what different providers are already doing). Costs outlined within this RIA are to be considered as a sector average and are not intended to be applied on an individual provider basis.

27 - We have considered three categories of additional costs that registered providers would likely incur because of the TSM requirements:

Transitional costs – one-off costs of making the transition to the new TSM regime.
Tenant perception survey costs – these are ongoing additional costs associated with the requirements to conduct additional tenant perception survey activity than providers currently undertake. We judge that these are the principal source of ongoing additional costs generated by the requirements.
Wider non-survey costs – there may be wider ongoing costs beyond additional tenant perception survey activities (including generation, publishing and submission of additional data). While these may be significant for some providers, in general we consider they are difficult to disentangle from providers’ existing activities and we propose that these costs will not be estimated for the purposes of this RIA. In addition, TSMs are intended to be used as part of our enhanced consumer regulation, and where appropriate, we intend to consider the impact of any future regulatory requirements at a later date.

28 - Due to the difficulty of trying to estimate the social value generated by the TSMs (e.g., lack of robust data and evidence, difficulty in identifying causality of single measures from the White Paper proposals, and that social value would derive from a regulatory approach that has yet to be agreed) the impact assessment has focussed solely on monetising the costs. It is not within the scope of this RIA to assess or monetise impacts of the TSM regime resulting from how the regulator would use the data to inform its regulatory engagement. The regulator has therefore focussed on the qualitative benefits of the TSM regime resulting in the main from improved transparency for tenants.

29 - Below we address the costs and benefits for the groups mainly affected by our policy options.

Costs to PRPs and LARPs

Policy option 0 – do nothing

30 - The costs and benefits of the other policy options are expressed relative to this do nothing option.

Policy option 1 - Amend the regulatory framework to introduce prescribed TSMs for registered providers as specified in the requirements (preferred option)

Transitional costs

31 - We consider that registered providers would incur transitional costs which would include additional staff training costs and costs associated with reviewing and amending organisational policies, processes and systems. Table 2 presents a detailed breakdown of the transitional costs, which we consider are likely to be the same for policy options 1 to 4. These estimates reflect the regulator’s knowledge of the sector and feedback from stakeholder discussions on TSMs to date.

Table 2 – Detailed breakdown of transitional costs

Units held by provider	No. of providers	Reading, understanding and disseminating	Updating company processes	Training	Cost per provider	Total cost (£k)	% of provider turnover
<250	861	£230	£750	£220	£1,200	£1,038	0.45%
<1000	999	£250	£870	£260	£1,380	£1,384	0.23%
>1000	378	£2,150	£14,760	£5,900	£22,810	£8,624	0.04%
Total	1,377	£780	£4,680	£1,810	£7,270	£10,007	0.04%

32 - Transitional costs total £10m and are assumed to include time to read and understand the requirements and disseminate the information through organisations (£1.1m), update company processes (£6.4m), and provide training for staff (£2.5m). These costs are assumed to occur in the year prior to the first year of data collection (2022-2023).

33 - Absolute transition costs would be significantly greater for large providers due to the greater complexity of communicating requirements, updating processes, and training large numbers of staff. However, transition costs as a proportion of turnover are likely to be proportionately greater for small providers. We estimate that transition costs are likely to be on average £22,800 for large providers, or 0.04% of turnover. For small providers, estimated average transition costs are £1,400 which represents 0.23% of turnover. Overall, however, we judge that these costs are manageable and proportionate given the need to ensure that all tenants in the sector are able to access performance information on the basis set out in the White Paper.

Tenant perception survey costs

34 - Survey costs have been estimated by the regulator using information on typical survey costs in the sector supplied by BMG Research and sample sizes and survey frequency required to meet requirements associated with the policy option. We have also used other sector intelligence including information on existing survey frequency by registered providers. Table 3 presents a breakdown of the tenant perception survey costs associated with policy option 1, broken down by the size of provider.

Table 3 – Tenant perception survey costs broken down by size of provider

Providers by number of homes	Gross costs		Net additional costs
	Cost (£k)	Cost as % of turnover	Cost (£K)	Cost as % of turnover
<250	551	0.24%	317	0.14%
<1000	863	0.15%	445	0.08%
>1000	9,331	0.04%	3,032	0.01%
All providers	10,194	0.04%	3,477	0.02%

35 - The regulator estimates that the (gross) cost of generating the circa 337,000 tenant perception survey responses per annum consistent with the TSM requirements in policy option 1 would be £10.2m a year. However, providers already undertake significant tenant perception survey activity; based on sector intelligence the regulator estimates that (net) additional costs are likely to be around £3.5m a year. These costs are split with £6.3m (£2.0m additional) falling on private registered providers and £3.9m (£1.5m additional) on local authority registered providers. Additional tenant perception survey costs across the sector represent an average of 0.02% of sector turnover. The cost impact on the sector overall, appears to be low.

36 - The regulator is of the view that the main element of ongoing additional costs for providers would be tenant perception surveys and that is why we have flexed this element for small providers. Providers with fewer than 1,000 relevant homes would be disproportionately impacted. For example, these providers would face total gross costs of £0.9m and additional costs of £0.4m per annum, equivalent to 0.08% of their turnover.

37 - The equivalent figures for providers with fewer than 250 relevant homes would be 0.14% of their turnover. This is allowing for proportionate requirements specifically for small providers under option 1, principally collecting tenant perception data on a once every two-year basis rather than once every year for large providers. This is because small providers are more likely to be undertaking significantly less tenant perception survey activity, so the additionality of the measures is higher, and because small providers would be required to survey a significantly higher proportion of their stock to achieve minimum levels of statistical accuracy. However, the cost as a percentage of provider turnover would still be low. Overall, however, we judge that these costs are manageable and proportionate given the need to ensure that all tenants in the sector are able to access performance information on the basis set out in the White Paper.

38 - Feedback from the regulator’s engagement with the sector and wider sector intelligence, indicated that anything less than annual surveying for large providers may not be sufficiently responsive and transparent for tenants, and that small providers are currently carrying out tenant surveys less frequently. Taking this feedback into account, as well as the cost impact, particularly the disproportionate impact on small providers, and the policy aims of the TSMs, the regulator prefers policy option 1 which requires at least annual surveying of tenants by large providers and surveying of tenants at least once every two years by small providers.

39 - In addition, enabling providers to collect the tenant perception measures through surveys with tenants using a survey method or methods of the provider’s choice, including permitting online surveys, is potentially less costly for providers and potentially increases accessibility so that a broader range of tenants can more easily partake in the surveys.^{[footnote 11]}

40 - Whilst not requiring small providers to submit their TSM data to the regulator should reduce the regulatory burden on small providers, it means that TSM data for similar landlords would be less accessible to tenants of small providers as the regulator would not be publishing the TSM data for small providers. Small providers may also choose their population (i.e., whether they sample LCRA and LCHO separately or both combined) which might mean that the data is less comparable for small providers (although this mitigation is intended to help small providers meet statistical accuracy requirements). However, small providers would still be subject to the requirement in our existing regulatory requirements to provide timely and relevant performance information to support effective scrutiny by tenants of their landlord’s performance in a form which registered providers seek to agree with their tenants. The pilot programme with small providers would help to determine the extent and impact of these issues.

Local authority registered providers

41 - The costs for LARPs are likely to be proportionately higher than for private registered providers. Table 4 illustrates the costs to private registered providers and local authority registered providers under our preferred policy option. The average costs for LARPs are likely to be proportionately higher due to several reasons, including that local authority landlords do not currently carry out tenant perception surveys as frequently as large PRPs (see Table 8) ^{[footnote 12]} and there are fewer small LARPs.

Table 4 – Additional costs for private registered providers and local authority landlords under preferred policy option (2021 prices, 2023 present value)

	Private registered providers	Local authority registered providers	Total
Transitional costs	£6.5m	£3.5m	£10.0m
Cost per annum	£2.0m	£1.5m	£3.5m
Net present value	£-23.7m ^{[footnote 13]}	£-16.4m	£-40.1m

The other policy options

42 - As noted above, the regulator estimates that the transitional costs are the same for all policy options and has decided not to estimate the costs associated with the wider non-survey costs for reasons detailed above. Therefore, the only difference in estimated costs is in relation to the tenant perception surveys, which we outline below.

Policy options 2 and 3

43 - Table 5 presents a breakdown of the tenant perception survey costs associated with policy options 2 and 3, broken down by the size of provider.

Table 5 - Tenant perception survey costs

Option	Providers by number of homes	Cost £k	Cost as % of turnover	Cost £k	Cost as % of turnover
		Gross costs		Net additonal costs
Option 2	< 250	367	0.16%	184	0.08%
	< 1,000	575	0.10%	249	0.04%
	> 1,000	4,666	0.02%	700	0.00%
	Total	5,241	0.02%	949	0.00%
Option 3	< 250	1,102	0.48%	841	0.36%
	< 1,000	1,726	0.29%	1,191	0.20%
	> 1,000	9,414	0.04%	3,056	0.01%
	Total	11,139	0.05%	4,247	0.02%

NB: Turnover based on imputed turnover for all providers.

44 - The regulator estimates that the (gross) cost of generating tenant perception survey responses per annum consistent with the TSM requirements in policy option 2 would be £5.2m a year and (net) additional costs would likely be around £0.9m a year. Additional tenant perception survey costs across the sector represent an average of 0.00% of sector turnover. The cost impact on the sector overall, appears to be extremely low.

45 - The regulator estimates that the (gross) cost of generating tenant perception survey responses per annum consistent with the TSM requirements in policy option 3 would be £11.1m a year and (net) additional costs would likely be around £4.2m a year. Additional tenant perception survey costs across the sector represent an average of 0.02% of sector turnover (the same as policy option 1). The cost impact on the sector overall, appears to be low. However, small providers would be more disproportionately impacted compared to policy option 1. For those providers with fewer than 1,000 relevant homes, additional tenant perception survey costs represent an average of 0.20% of sector turnover and 0.36% for those with fewer than 250 relevant homes (compared to 0.08% and 0.14% respectively under policy option 1).

Policy option 4 National tenant survey

46 - The costs associated with policy option 4 are set out in Table 6 below. Estimated costs associated with the national tenant survey reflect the regulator’s estimates of required survey responses per provider and BMG Research advice on feasible costs for running this option. These are best estimates based on a broad scope of the option set out by the regulator. The national tenant survey would only cover those providers with 1,000 or more relevant homes (large providers) – providers with fewer than 1,000 relevant homes (small providers) would still conduct individual provider surveys under the same requirements and with the same costs as in option 1.

Table 6 – Policy option 4 tenant perception survey costs (annual ongoing costs)

Collection method	Providers by number of homes	Cost £k	Cost as % of turnover	Cost £k	Cost as % of turnover
		Gross costs		Net additonal costs
Individual provider surveys	< 250	551	0.24%	317	0.14%
	< 1,000	863	0.15%	445	0.08%
Centralised national tenant survey*	> 1,000	6,641	0.03%	6,641	0.03%
	Total	7,504	0.03%	7,086	0.03%

Costs of the national tenant survey would be borne by the regulator in the first instance

NB: Turnover based on imputed turnover for all providers.

47 - Total additional tenant perception survey costs associated with this option are £7.1m per annum. The largest part of this is for the national tenant survey at £6.6m per annum. All national tenant survey costs are assumed to be net additional as large providers are assumed to continue to carry out their existing tenant perception survey work and would not cease to do so if the regulator were to undertake its own survey to generate the TSMs. Under the regulator’s current TIE Standard, for example, providers must provide timely and relevant performance information to support effective scrutiny by tenants of their landlord’s performance in a form which registered providers seek to agree with their tenants. It is our judgement that this option would be likely to produce greater duplication of efforts than the other options.

48 - BMG Research estimate that the first year of running the national tenant survey could feasibly cost an additional £383k on top of the annual additional costs. These are costs of setting up, scoping the project, and working through initial issues around data transfer with providers for example. These can be considered transitional costs of this option.

49 - The regulator has estimated policy option 4 to be the costliest option overall. In addition, there are a number of disadvantages/challenges associated with this option:

It relies on accurate and consistent data transfer from registered providers (which could be a significant regulatory burden for providers).
It establishes different tenant perception survey requirements for large providers and small providers which may seem unfair and cause confusion for both providers and tenants.
It could potentially lead to two different sets of metrics for large providers if providers continue to undertake their own tenant perception surveys. This could lead to confusion and loss of trust in the data by tenants. It could also make it more difficult for providers to use the data to inform the management of their businesses.
There are significant risks and complexities associated with registered providers sharing tenants’ personal data – both large providers and the regulator would need to follow relevant privacy and data protection legislation when processing this data.

50 - We do not envisage that there would be additional costs to social housing tenants as a result of the TSM regime, except in the time taken to review and understand the TSM data and associated information. As with existing performance information, it is intended that tenants would use the TSMs as a tool to hold their landlords to account.

51 - As set out above, the regulator has decided not to monetise the benefits of our proposals. We therefore describe the more immediate benefits of our proposals and policy options qualitatively.

Policy option 1 – Amend the regulatory framework to introduce prescribed TSMs for registered providers as specified in the requirements (preferred option)

52 - There are several benefits to registered providers and social housing tenants associated with the changes under preferred policy option 1.

53 - Annual collection and publication of prescribed management information related TSMs, and annual collection and publication of tenant perception TSMs for large providers and once every two years for small providers, should result in clear, comparable, and accessible TSMs that are collected frequently and published in a timely manner. This should:

result in increased transparency about landlord performance for providers, tenants and other stakeholders and means providers and tenants would be able to more easily compare landlord performance with that of other similar providers, which may help improve a provider’s performance and result in improved services for tenants. Sector intelligence we have reviewed, and feedback from our stakeholder engagement, suggests that many large providers are already carrying out annual tenant perception surveys and so, anything less than annually may not be considered sufficiently transparent and responsive for large providers. This is different for small providers, who are less likely to already be carrying out annual tenant perception surveys
support increased tenant engagement and involvement because of the availability of this data, and
be useful for providers as a mechanism to monitor and, where necessary, improve service provision (e.g., through target setting).

54 - It is likely that some providers collect and publish this type of data more frequently than once a year, and our proposals do not prevent providers from doing this (our proposals are intended to establish a minimum baseline). Whilst some of the prescription associated with the TSM proposals (which has been necessary to make them clear and comparable) may result in the TSMs not meeting the needs of all tenants (e.g., reporting at a registered group level rather than individual provider level), registered providers would still need to meet the regulator’s existing requirements relating to performance information. For example, registered providers would continue to be required to provide tenants with timely and relevant performance information to support effective scrutiny by tenants of their landlord’s performance in a form which registered providers seek to agree with their tenants - Tenant Involvement and Empowerment Standard. Providers may also choose to publish their TSM information in other ways, in addition to that prescribed by the regulator.

55 - Allowing providers to choose the survey methods they use (including online surveys) would be likely to have a positive equality impact because they would be able to tailor their survey methods to meet the needs of their tenant profile. Similarly, tenants may benefit from potentially having available to them a wider range of survey methods through which to complete tenant perception surveys.

56 - For small providers, not including a requirement for them to submit their TSM data and associated information to the regulator (but to publish it annually) would result in a reduced regulatory burden for them. There is a greater challenge in achieving the minimum level of statistical accuracy for small providers (even assuming a census approach to the tenant perception survey with a good response rate). It is therefore likely that the tenant perception TSM data of small providers would be less comparable to providers with 1,000 or more relevant homes, as might other measures (such as the number of complaints), which are subject to random factors (such as repeated complainants) that are likely to be amplified for small providers. The pilot programme for small providers added to option 1 following the consultation would help to determine the extent and impact of these issues.

57 - The regulator has taken account of the statistical accuracy issues of the tenant perception measures associated with small providers, in addition to the general capacity of small providers. Statistical accuracy issues might be intensified through the frequency of surveys. As small providers are more likely to take a census approach to surveying, tenants may be more likely to suffer from survey request fatigue. A reduction in survey return rates would result in higher margins of error for small providers and further reduce the statistical accuracy of the tenant perception measures. We believe a requirement on small providers to conduct perception surveys at least once every two years mitigates the risk of survey fatigue and strikes the right balance between meeting the policy objectives of the TSMs and our statutory duty to minimise interference and be proportionate. The regulator acknowledges however that this would be a significant change for those small providers who undertake less tenant perception survey activity ^{[footnote 14]}.

58 - TSMs are intended to be used as part of our proactive consumer regulation, which requires legislation before implementation. Where appropriate, we intend to consider the impact of any future regulatory requirements, including the benefits, at a later date.

Policy options 2 and 3

59 - Under policy option 2, registered providers would benefit from a reduced regulatory burden – with tenant perception surveys only being required at least once every two years for large providers and once every three years for small providers – and as with policy option 1 providers and tenants would benefit from clear, comparable, and accessible TSMs which would allow them to compare performance more easily with that of other similar providers, which may help improve their performance and result in improved services for tenants. However, sector intelligence and our stakeholder engagement suggest many large providers are at least carrying out annual tenant perception surveys. Our requirements might therefore inadvertently encourage providers who are already carrying out increased tenant perception survey activity to reduce that activity to the minimum base level established by our requirements, which might therefore result in some decreased level of intelligence for providers about tenants’ views of their service performance and a reduced tenant voice.

60 - Under policy option 3, all registered providers and tenants would benefit from at least annual tenant perception survey data. However, the regulator has also taken account of the statistical accuracy issues of the tenant perception measures associated with small providers, in addition to the general capacity of small providers. We think a requirement to annually survey tenants would result in a significant and potentially disproportionate regulatory burden for small providers. It might also reduce transparency for tenants. Statistical accuracy issues might be intensified through the frequency of surveys. As small providers are more likely to take a census approach to surveying, tenants may be more likely to suffer from survey request fatigue. A reduction in survey return rates would result in higher margins of error for small providers and further reduce the statistical accuracy of the tenant perception measures.

Policy option 4

61 - Whilst estimated to be the costliest option and having some significant disadvantages, the national tenant survey would offer some benefits:

One key benefit of a national tenant survey for social housing tenants is potentially an increase in trust in the tenant perception data due to the independent role of the regulator in commissioning the survey.
It reduces the direct regulatory burden on large providers as the regulator would take responsibility for carrying out the tenant perception surveys for the TSMs and generating the results for providers (however, as noted in the costs section, it is likely that providers would continue to carry out their own tenant perception survey activity and would need to submit tenants’ personal data to the regulator for the national tenant survey).
The tenant perception TSM data would be available as standard at registered provider level – some tenants might find this data more transparent if they identify with their landlord at a registered provider level. Providers might also find this data more useful for performance management purposes and improving service delivery, as they might more easily be able to identify where issues originate; however, under the other policy options providers may choose to collect/publish TSM data and/or other performance information in a way that meets their own needs and/or the needs of tenants. Also, as noted above, registered providers are required by existing regulatory requirements to provide timely and relevant performance information to support effective tenant scrutiny by tenants of their landlord’s performance in a form which registered providers seek to agree with their tenants.

Question 6

E. Risks and assumptions

Accepted Answer

62 - To estimate additional ongoing tenant perception survey costs, we have assumed that the mix of survey collection methods (online, telephone, face-to-face etc), costs of completing surveys, and projected survey activity in the ‘do nothing’ case, all follow existing survey activity within the sector. There is a risk that new technology may alter the survey costs and collection methods, while in the ‘do nothing’ case providers may have increased tenant perception survey activity in response to the White Paper in the absence of the TSMs. Conversely, the increase in survey activity across the sector could in theory increase survey fatigue and reduce effective response rates and increase survey costs for some providers. These risk factors are difficult to model specifically, however we judge on balance they are likely to reduce rather than increase additional costs associated with delivering the TSM requirements.

63 - Assumed transition costs are broad estimates based on regulatory knowledge of the sector, detailed stakeholder discussions on TSMs, and discussions with a small group of providers using provider archetypes. There is the risk that realised transition costs could exceed the broad estimates set out. However, feasible transition costs are likely to remain small compared to sector turnover and this risk is unlikely to change the assessment of options set out.

64 - There are not assumed to be any significant additional ongoing costs from elements of the TSM requirements other than tenant perception measures. There is clearly the potential risk that there could be some additional ongoing costs from these requirements. However, as set out elsewhere, we do not judge that it is proportionate to seek to model such additional costs formally since any additional impact is very difficult to disentangle from existing provider activities. Overall, we anticipate that more extensive requirements around tenant perception surveys would be the principal source of additional ongoing costs. While there could be some risk of additional ongoing costs from other elements, we anticipate these would generally be relatively minor – especially relative to sector turnover – and hence this is unlikely to change the assessment of options set out.

65 - Overall, in monetising future costs, we have assumed that the number of registered providers in the future remain at current levels and that private registered providers and local authority registered providers fully bear the resource implications of the regulation changes. We judge that growth in the sector is likely to increase the absolute costs associated with TSMs, but not costs relative to turnover. We judge the cost impacts associated with the TSMs are unlikely to be material enough to significantly affect providers’ expenditure in other areas.

Evidence base sources

Tenant perception surveys

66 - The costings have been built up from a provider level, using data on stock holdings from the Statistical Data Return and Local Authority Data Return to generate the number of surveys each provider would be required to undertake to meet the minimum statistical accuracy.

Table 7 – Required minimum levels of statistical accuracy for overall satisfaction

Population	Required minimum statistical accuracy (margin of error at 95% confidence level)
Fewer than 2,500 homes	+/- 5%*
2,500 – 9,999 homes	+/- 4%
10,000 – 24,999 homes	+/- 3%
25,000 homes or more	+/- 2%

For small providers, employing a census approach is sufficient to meet this requirement.

67 - The costs of generating these survey responses have been estimated using assumptions based on BMG Research advice on typical costs in the market research sector for large providers and in-house set-up for small providers at standard day rates costs. Relative to their total size, costs for small providers are higher than for large providers. This is fundamentally because they would need to sample a higher proportion of their tenant base to achieve the required level of statistical accuracy. There may also be costs associated with additional chasing in order to get the necessary response rates. Finally, there may be less scope to benefit from economies of scale in set-up costs for online surveys (effectively precluding online surveys for the smallest providers). BMG Research data on analysis and reporting costs have then been added to the data collection cost to produce the gross costs for undertaking the tenant perception surveys. These are gross costs in that they do not reflect that much of this survey activity is already undertaken within the sector.

68 - The additionality associated with the tenant perception surveys has then been calculated using data and market intelligence from Housemark and Acuity on the frequency with which housing associations and local authorities currently undertake tenant perception surveys, broken down by provider size.

69 - Table 8 demonstrates how many survey responses we estimate we will need to be collected per annum under policy option 1 by the different groups of providers and what percentage of these we assume are already being collected. Information on the number of surveys currently completed, by provider size, has been derived through discussions with Housemark.

Table 8 – Survey responses required for different groups

		PRPS			LAs
Units	Total social stock	Survey responses required per annum	% required survey responses currently collected by providers	Total social stock	Survey responses per annum	% required survey responses currently collected by providers
< 250	43,022	6,485	42%	944	125	42%
<1,000	110,876	16,224	49%	1,658	200	43%
>1,000	2,717,178	200,032	72%	1,571,860	120,211	61%
Total	2,828,054	216,256	70%	1,573,518	120,411	61%

70 - It has been assumed that the requirements for tenant perception surveys within the TSMs would not lead to increased costs for providers currently undertaking tenant perception surveys.

Transitional costs

71 - Transitional costs are one-off additional costs incurred by providers to understand TSM requirements and appropriately adjust processes and systems in order that TSMs can be collected and reported on an ongoing basis. The regulator has developed broad estimates of these costs based on knowledge of the sector and detailed stakeholder discussions on TSMs. The transitional costs set out in this note have been discussed and sense checked with a small group of large and small registered providers with the use of provider archetypes.

72 - Transition costs might include time to undertake a range of activities including reviewing and revising documentation (e.g. processes and protocols), updating databases and other tools (e.g. data dashboards), and potentially amending systems such as those that record complaints or repairs. In reality, some providers might choose to contract out such activities to external contractors – however, for the purposes of simplicity and consistency this modelling has assumed that effectively all this work would be undertaken with staff time.

73 - Transition cost estimates have been constructed for a range of provider size archetypes. These are necessarily broad estimates of the short-term resource impacts of requirements. Transitional costs are defined as additional to business as usual activities. For example, there might well be some level of change to business processes or performance reporting year-on-year, but these costs are intended to be on top of that. Further, providers would clearly vary as to how far their existing processes would be refined in order to align with TSM requirements, and costs might vary in terms of their stock and tenant profile. Costs are intended to represent broad estimates of average cost impacts for a typical provider of a certain size.

74 - For example, it is assumed that best estimate for average transition costs for a provider with 10,000 relevant dwelling homes (typically with 400 full time employees) is as follows:

20 days for reading, understanding and disseminating the regulator’s TSM requirements
150 days for updating organisational processes (broken down by general performance reporting, tenant perception surveys, building safety and stock quality, repairs, complaints and anti-social behaviour)
30 days for staff training and familiarisation with new processes ^{[footnote 15]}

75 - For a provider with 10,000 relevant homes these costs total staff cost of £40,000 (or £4 per unit). In contrast for a provider with 1,000 relevant homes (typically with 40 full time employees) built up in the same way, our best estimate of average transitional costs is 40 days (£8,000, or £8 per unit).

76 - Transitional costs have been generated by assuming a daily salary of £200 for a performance officer and/or statistician. This is equivalent to a salary of £37,200 ^{[footnote 16]} with an uplift for non-wage costs of 22% included. The assumption of days required by provider size are outlined in Table 9.

77 - Staff numbers have been estimated using SDR stock data and FVA ^{[footnote 17]} data on full time employees – which indicated that the median, non-supported housing provider, had 27.6 units per FTE. For the purposes of generating broad estimates of training and familiarisation costs, it has then been assumed a third of staff are engaged in repairs and one tenth in complaints and that both groups would require two hours of training time to be able to record repairs and complaints data in a way to meet the new requirements.

78 - Further, it has been assumed that between one to five performance officers and/or statisticians, dependent on provider size, would need to attend a day long training course to be in a position to collect the data in the way required, generate the data, and produce the publication materials. Again a £200 day rate has been assumed.

Table 9 – Transitional cost assumptions

Units	Reading, understanding and disseminating		Updating company processes		Training	Cost per provider
	Days	Cost	Days	Cost	Cost
<250	1.2	£230	3.8	£750	£220	£1,205
<1000	1.3	£250	4.3	£870	£260	£1,385
>1000	10.8	£2,150	73.8	£14,760	£5,900	£22,814
Sector	3.9	£780	23.4	£4,680	£1,810	£7,267

National tenant survey

79 - It has been assumed that the survey would be run according to the detailed TSM requirements, which are set out in Annex 4 Tenant Satisfaction Measures: Technical requirements and Annex 5 Tenant Satisfaction Measures: Tenant survey requirements.

80 - As part of this survey the contractor would need to collect, as a minimum, contact details plus information on characteristics from each of the 378 large providers for all tenants, which would require receiving 4.3m records of tenant information. This would need to be updated on an annual basis.

81 - To meet the detailed TSM requirements set out in Annex 5 Tenant Satisfaction Measures: Tenant survey requirements, 298,717 LCRA surveys would be required across 378 providers and 21,516 LCHO surveys would be required across 49 providers.

82 - A blended online and telephone approach has been assumed as a feasible and appropriate approach to meeting the regulator’s requirements. It has been assumed 80% of the sample would be undertaken using a telephone method of engagement.

83 - The costs of completing these 320,000 surveys follow BMG Research advice on general costs for market research and makes up the largest part of the costs for this option (£5.3m per annum).

84 - The estimated total costs for delivering a national tenant survey are outlined in Table 6.

Question 7

F. Small and Micro Business Assessment

Accepted Answer

85 - As illustrated above, the introduction of TSMs and the associated requirements under our preferred policy option are likely to have a proportionately greater impact on small PRPs and LARPs in terms of regulatory burden. We have determined that it is not possible to exempt small providers from the TSMs and all the associated requirements whilst achieving the policy objectives of the TSMs, in particular the need to ensure that all tenants in the sector can access performance information on the basis set out in the White Paper ^{[footnote 18]}. We have therefore considered several mitigation options and built mitigations into our preferred policy option to reduce the impact of the introduction of TSMs on small providers.

86 - The regulator has specifically considered the impact of our proposals on small and micros businesses. Following Government guidance, small and micro businesses are those with fewer than 10 and 50 FTE employees respectively and only PRPs are classed as businesses. ^{[footnote 19]} For the purposes of this assessment, the regulator has used 250 homes used as the upper limit of a micro provider and 1,000 homes for a small private registered provider ^{[footnote 20]}.

87 - The regulator’s preferred proposal for small providers is outlined under the description of policy option 1. Since the vast majority of small providers are PRPs (98%) ^{[footnote 21]} the transitional and tenant perception survey costs for small and micro businesses are almost identical to those set out for all providers with fewer than 1,000 and fewer than 250 homes respectively in Tables 2 and 3. Whilst small PRPs are disproportionately impacted by our proposals, the additional cost as a proportion of provider turnover is low. The regulator is of the view that these costs are manageable and proportionate given the need to ensure that all tenants in the sector can access performance information on the basis set out in the White Paper. The pilot programme with small providers would help to determine the extent and impact of these issues.

Question 8

G. Description of implementation plan

Accepted Answer

88 - Our preferred policy option is policy option 1. The Tenant Satisfaction Measures Standard will come into effect on 1 April 2023. The regulator intends to issue technical guidance in due course, to support providers’ submission of the first year of TSM data to us in summer 2024 and to publish the first year of providers’ TSM data in Autumn 2024.

Question 9

H. Monitoring and evaluation

Accepted Answer

89 - The regulator will continue to keep the impacts of our TSM requirements under review. It is important to be mindful that the TSMs are being introduced in advance of the full regulatory regime changes to bring about a proactive consumer regulatory regime. Following legislative change, we intend to review all our consumer standards, which would include the TSM Standard.

Across a ten-year period. ↩
Due to the difficulty of trying to estimate the social value generated by the TSMs the impact assessment has focussed solely on the costs. ↩
Costs to businesses is represented by the cost implication for Private Registered Providers, as costs incurred by Local Authorities are not costs to business. ↩
Costs to businesses is represented by the cost implication for Private Registered Providers, as costs incurred by Local Authorities are not costs to business. ↩
Equivalent Annual Net Direct Cost to Business ↩
Based on a discount rate of 3.5% ↩
This is the standard Green Book (2020) discount rate. ↩
Market failures are described in the [HM Treasury Green Book] (https://www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-governent) ↩
A public good is defined in the HM Treasury Green Book as ‘non-excludable in supply’ and ‘non-rivalrous in demand’. That is, once provided it is available to all and one person’s access does not diminish that of another. Clean air is a classic example. ↩
All stock data is from the regulator’s SDR and LADR for March 2021. This stock data has been updated since the draft RIA was published in the consultation. ↩
The use of online surveys is associated with increased levels of tenant satisfaction, but so are face to face surveying methods. ↩
Based on data on the frequency with which housing associations and local authorities currently undertake tenant perception surveys. ↩
Private registered providers are considered to be businesses so the cost to them is the same as the cost to business. ↩
Based on information from Housemark ↩
Days refers to total ‘working days’ across multiple staff members (and potentially contractors), rather than the period of time providers will require to prepare for new TSM requirements ↩
Assuming 52 working weeks and 33 days holiday (incl. 8 BH) - 227 working days. Inclusive of 22% uplift for non-wage costs such as employers’ National Insurance contribution as outlined in the [RPC short guidance note – implementation costs] (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/827926/RPC_short_guidance_note_-_Implementation_costs__August_2019.pdf). ASHE wage data on call and contact centre occupations and skilled construction and building trades uplifted by 22%, have been used to generate the associated cost. ↩
Electrical Annual Accounts used to gather financial accounting information required by the regulator to inform its assessment of providers’ compliance with the Governance and Financial Viability standard. It is also a source of sector level data informing our publications, including the Global Accounts. ↩
To bring in a set of clear and comparable TSMs for all landlords on things that matter to tenants and to inform the regulator about how landlords are complying with the consumer standards under a proactive consumer regulation regime. ↩
Costs incurred by local authority registered providers are not classed as costs to business. ↩
The regulator holds data on the number of full-time employees for providers with 1,000 or more homes only. This data indicates that the median general needs provider has 27.6 homes per FTE and, rounding to conventional thresholds, this has been used to generate broad estimates of numbers of small and micro businesses for the purposes of this assessment. ↩
Small private registered providers account for 98% of all small providers. ↩

Total Net Present Social Value	Business Net Present Value ^{[footnote 2]}	Net cost to business per year	Business Impact Target Status
£-40.1m ^{[footnote 1]}	£-23.7m ^{[footnote 3]}	£2.4m ^{[footnote 4]} (EANDCB in 2019 prices) ^{[footnote 5]}	Not a qualifying provision

Policy option 2
Less extensive tenant perception survey requirements	Equivalent to the preferred option but large providers would only be required to collect tenant perception survey data at least once every two years, and small providers at least once every three years.

Policy option 3
More extensive tenant perception survey requirements	Equivalent to the preferred option but small providers would also need to collect tenant perception survey data at least annually. Providers could still choose their own collection method(s) for the tenant perception surveys, but online surveys would not be permitted.

Policy option 4
National tenant survey	Equivalent to the preferred option but the regulator would commission its own national tenant survey to collect the tenant perception data for large providers.

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Policy option 1 – preferred

Summary: Analysis and evidence

Evidence base

A. Policy objective

B. Problem under consideration and rationale for regulatory intervention

C. Description of options considered

Policy option 0 – do nothing

Policy option 1 – Amend the regulatory framework to introduce prescribed TSMs for registered providers as specified in the requirements (preferred option)

Policy option 2 – Less extensive tenant perception survey requirements

Policy option 3 – More extensive tenant perception survey requirements

Policy option 4 – National tenant survey

D. Monetised and non-monetised costs and benefits of each option

Overview of the sector

Costs to PRPs and LARPs

Policy option 0 – do nothing

Policy option 1 - Amend the regulatory framework to introduce prescribed TSMs for registered providers as specified in the requirements (preferred option)

Transitional costs

Table 2 – Detailed breakdown of transitional costs

Tenant perception survey costs

Table 3 – Tenant perception survey costs broken down by size of provider

Local authority registered providers

Table 4 – Additional costs for private registered providers and local authority landlords under preferred policy option (2021 prices, 2023 present value)

The other policy options

Policy options 2 and 3

Table 5 - Tenant perception survey costs

Policy option 4 National tenant survey

Table 6 – Policy option 4 tenant perception survey costs (annual ongoing costs)

Costs to social housing tenants

Benefits to PRPs, LARPs and social housing tenants

Policy option 1 – Amend the regulatory framework to introduce prescribed TSMs for registered providers as specified in the requirements (preferred option)

Policy options 2 and 3

Policy option 4

E. Risks and assumptions

Evidence base sources

Tenant perception surveys

Table 7 – Required minimum levels of statistical accuracy for overall satisfaction

Table 8 – Survey responses required for different groups

Transitional costs

Table 9 – Transitional cost assumptions

National tenant survey

F. Small and Micro Business Assessment

G. Description of implementation plan

H. Monitoring and evaluation

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