Decision

Current regulatory judgement: A2Dominion Housing Group Limited (3 January 2024)

Updated 3 January 2024

Applies to England

RSH Narrative Regulatory Judgement

• Provider: A2Dominion Housing Group Limited
• Regulatory code: L4240
• Publication date: 3 January 2024
• Governance grade: G3
• Viability grade: V2
• Reason for publication: Governance downgrade and changed basis for viability grade
• Regulatory route: Reactive Engagement

Regulatory judgement

This regulatory judgement downgrades our previous assessment of A2Dominion Housing Group Limited’s governance grade from G1 to G3 and confirms its existing V2 financial viability grade. This means that there are issues of serious regulatory concern that the provider is working with us to address.

The regulator has concluded that A2Dominion Housing Group Limited (A2Dominion) has not met all the required governance outcomes and specific expectations in the Governance and Financial Viability Standard.

The regulator lacks assurance that A2Dominion has an appropriate, robust and prudent business planning, risk and control framework and that it has adequately managed and addressed key risks. In addition, we lack assurance that A2Dominion has managed its affairs with an appropriate degree of diligence, prudence and foresight.

A2Dominion implemented a number of changes to its group structure, equity holding and intragroup charging. Investigations by the regulator identified that the board had not adequately managed its financial position in a timely manner nor with the rigour expected.

A2Dominion’s risk management, internal controls and assurance framework is not sufficiently robust to systematically drive the board to identify and manage all of its key risks. As a result, risks have crystalised over a breadth of areas that require addressing. This has at times resulted in poor outcomes for its tenants.

The regulator lacks assurance that A2Dominion’s data is robust and that systems and processes are adequate to ensure its plans and other key information are monitored and accurately reported. Despite attempts to address this over a significant period of time, A2Dominion has not yet been able to deliver the changes required. This has led to poor quality data, poor reporting and the board not having effective oversight.

The regulator’s assessment of A2Dominion’s compliance with the financial viability elements of the Governance and Financial Viability Standard is unchanged. The regulator has assurance that the provider has an adequately funded business plan in the short term, sufficient security in place, and is forecast to continue to meet its financial covenants.

A2Dominion’s strategy is to improve its financial strength in recognition of the amount of investment required in its stock together with the current economic environment which has seen a reduction in its capacity to respond to adverse events. It is undertaking a transformation programme that is intended to achieve future efficiencies, with plans to reduce its exposure to market sales and strategically divest assets. These changes will require close and effective management.

A2Dominion has acknowledged the regulator’s concerns and is implementing improvement plans. A2Dominion is working positively with the regulator to ensure it has the capacity and capability and, in conjunction with external advisers, the support to address the governance issues identified in this regulatory judgement. The current Chief Executive and Chair have been proactive in identifying weaknesses and communicating these with the regulator.

Other providers included in the judgement

A2Dominion Homes Limited, A2Dominion Housing Options Limited, A2Dominion South Limited

About the provider

Origins

A2Dominion is a charitable community benefit society and the non-asset holding parent of the group. The group’s strategic focus is on managing and developing social housing.

Registered Entities

There are three stock owning registered provider subsidiaries in the group: A2Dominion Homes Limited (charitable), A2Dominion South Limited (charitable) and A2Dominion Housing Options Limited (non-charitable).

Unregistered Entities

There are four active non-registered subsidiaries within the group. The most significant of these are A2Dominion Developments Limited, which develops and sells properties and A2Dominion Residential Limited, which lets properties at market rent.

The group also has an interest in 11 jointly controlled entities through A2Dominion Developments Limited.

Geographic Spread and Scale

The group owns and manages over 38,000 homes in 79 local authority areas across London, the South East and Wiltshire. Its stock is mainly general needs, alongside significant levels of shared ownership housing. It also holds supported/sheltered, student, keyworker, leasehold and private rented homes.

Staffing and Turnover

For the year ended 31 March 2023, the group reported a turnover of £389.1m and employed 1,293 full-time equivalent staff.

Development

A2Dominion has a target of delivering around 1,480 new homes between 2023 and 2025 and then 900 new homes per year for the period to 2031. This mainly comprises affordable, shared ownership and market sale homes (including via joint venture partnerships). A2Dominion is a Homes England investment partner.

About our judgements

Key to Grades

Governance:

	Compliant
G1	The provider meets our governance requirements.
G2	The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.

	Non-compliant
G3	The provider does not meet our governance requirements. There are issues of serious regulatory concern and in agreement with us the provider is working to improve its position.
G4	The provider does not meet our governance requirements. There are issues of serious regulatory concern, and the provider is subject to regulatory intervention or enforcement action.

Viability:

	Compliant
V1	The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.
V2	The provider meets our viability requirements. It has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure continued compliance.

	Non-compliant
V3	The provider does not meet our viability requirements. There are issues of serious regulatory concern and, in agreement with us, the provider is working to improve its position.
V4	The provider does not meet our viability requirements. There are issues of serious regulatory concern, and the provider is subject to regulatory intervention or enforcement action.

Note: The use of an asterisk (*) against a grade indicates that the assessment refers to a provider that is designated as being for-profit.

Definitions of Regulatory Routes

In Depth Assessment (IDA): An IDA is a bespoke assessment of a provider’s viability and governance, including its approach to value for money. It involves on-site work and considers in detail a provider’s ability to meet its financial obligations and the effectiveness of its governance structures and processes.

Stability Checks: Based primarily on information supplied through regulatory returns, a Stability Check is an annual review of a provider’s financial position and its latest business plan. The review is focused on determining if there is evidence to indicate a provider’s current judgements merit reconsideration.

Reactive Engagement: Reactive engagement is unplanned work which is triggered by new information or a developing situation which may have implications for a provider’s current regulatory judgement.

Stability Checks and Reactive Engagement: In some cases, we will publish narrative regulatory judgements which combine evidence gained from both Stability Checks and Reactive Engagement.

For further details about these processes, please see Regulating the Standards.