Decision

Current regulatory judgement: Bromsgrove District Housing Trust Limited (30 August 2023)

Updated 30 August 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Bromsgrove District Housing Trust Limited
• Regulatory code: LH4415
• Publication date: 30 August 2023
• Governance grade: G2
• Viability grade: V2
• Reason for publication: Governance downgrade and changed basis for viability grade
• Regulatory route: In Depth Assessment

Regulatory judgement

This regulatory judgement downgrades Bromsgrove District Housing Trust Limited’s governance from G1 to G2 and confirms its existing V2 grade for financial viability.

Bromsgrove District Housing Trust Limited (Bromsgrove) continues to meet the requirements for governance set out in the Governance and Financial Viability Standard. However, following an In Depth Assessment (IDA) we have concluded that it needs to improve aspects of its governance arrangements to ensure continued compliance.

Bromsgrove needs to strengthen its board to improve its capacity for providing strategic oversight and effective scrutiny of its increased financial risk profile. During the IDA the board considered and accepted the recommendations of an independent board effectiveness review, that will support Bromsgrove to make the required improvements, and strengthen its ability to manage financial risk.

The regulator’s assessment of Bromsgrove’s compliance with the financial viability elements of the Governance and Financial Viability Standard is unchanged. We have assurance that Bromsgrove complies with the financial viability elements of the Governance and Financial Viability Standard and that its financial plans are consistent with, and support, its financial strategy. It has an adequately funded business plan, sufficient security and is forecast to continue to meet its financial covenants.

Bromsgrove has material risks and exposures that it needs to manage. It is increasing investment in its existing homes while delivering a development and sales programme and is reliant on sales surpluses to remain compliant with covenants. Delivery of this investment reduces Bromsgrove’s covenant headroom. Coupled with economic uncertainty in relation to inflation and interest rates, this impacts its capacity to respond to adverse events.

Other providers included in the judgement

None

About the provider

Origins

Bromsgrove is a company limited by guarantee and a registered charity that was formed in 2004 to receive a transfer of housing stock from Bromsgrove District Council. It manages and develops social housing.

Registered Entities

Bromsgrove is the only registered entity.

Unregistered Entities

There are no unregistered entities.

Geographic Spread and Scale

Bromsgrove owns and manages around 4,300 properties, principally in Bromsgrove.

Staffing and Turnover

Bromsgrove’s turnover for the year ended 31 March 2022 was £25.4m. It employs the full-time equivalent of 150 staff.

Development

Bromsgrove plans to deliver 344 homes between 2024 and 2029. Most of these homes will be for social rent and shared ownership.

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.