Decision

Current regulatory judgement: Christian Action (Enfield) Housing Association Limited (5 April 2023)

Updated 5 April 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Christian Action (Enfield) Housing Association Limited
• Regulatory code: LH0676
• Publication date: 5 April 2023
• Governance grade: G3
• Viability grade: V3
• Reason for publication: Viability downgrade
• Regulatory route: Reactive Engagement

Regulatory judgement

This regulatory judgement downgrades our previous assessment of Christian Action (Enfield) Housing Association Limited’s (CAHA) financial viability from V2 to V3 and confirms its existing G3 grade for governance. This means there are issues of serious regulatory concern that the provider is working with us to address.

CAHA’s financial position is weak, with limited financial capacity that requires close and effective management. Despite implementing two years of reactive budgetary constraints, CAHA continues to be exposed to material risks and is adapting its operating model to ensure it can deliver its business plan and maintain its viability.

The regulator lacks assurance that CAHA has a robust financial plan that it is capable of delivering, or that it is effectively managing its financial position and performance. Furthermore, the regulator is not assured that CAHA’s mitigation strategies will be effective in ensuring the long-term viability of the organisation, and protecting social housing assets should further risks crystallise.

CAHA’s financial performance alongside the limited headroom continues to put pressure on its key financial metrics, and the regulator lacks assurance that CAHA has the financial capacity to ensure continued covenant compliance.

At the end of the 2022 financial year, limited financial headroom required CAHA to hold urgent discussions with stakeholders and deploy its mitigation strategies. The regulator is concerned that CAHA has made insufficient progress to address the underlying weaknesses in its financial plan.

The regulator’s assessment of CAHA’s compliance with the governance elements of the Governance and Financial Viability Standard remains unchanged.

In our previous regulatory judgement for CAHA, published in December 2022, we concluded that the provider needed to strengthen elements of its business planning, risk management and internal controls assurance framework and address weaknesses in financial governance. This included inadequacies in financial monitoring and board reporting.

CAHA has been open and transparent during its engagement with the regulator to date and has acknowledged the regulator’s concerns. CAHA is developing a governance improvement plan and has completed initial actions including the appointment of three co-optees to the board in March 2023.

CAHA is engaging with the regulator to address the issues raised in this judgement. It has commissioned external advisers to assist it to make the changes required to ensure its long-term viability and to address the governance and financial viability issues identified in this regulatory judgement

Other providers included in the judgement

None

About the provider

Origins

CAHA is a charitable community benefit society and the parent of the group.

Registered Entities

CAHA is the only registered entity.

Unregistered Entities

CAHA is the parent of three wholly-owned subsidiaries:

• Neighbourhood Estates Solutions is a social enterprise company providing cleaning and gardening services for CAHA’s tenants;
• Christian Action Housing Association Trust is a charitable trust responsible for bidding and receiving charitable donations; and
• Christian Action Housing Special Projects was previously responsible for undertaking development on behalf of CAHA and is soon to be made dormant.

Geographic Spread and Scale

CAHA owns and manages around 1,600 homes primarily in the north London boroughs of Enfield and Waltham Forest, but also in Haringey and Barnet.

Staffing and Turnover

CAHA reported a turnover of £15m for the year ended 31 March 2022. It employs the full-time equivalent of 77 staff.

Development

CAHA is currently reviewing its development strategy and projects for the future.

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.