Decision

Cobalt Housing Limited (L4361) - Regulatory Judgement: 14 August 2024

Updated 14 August 2024

Applies to England

Our Judgement

	Grade/Judgement	Change	Date of assessment
Consumer	C2 Our judgement is that there are some weaknesses in the landlord delivering the outcomes of the consumer standards and improvement is needed.	First grading	August 2024
Governance	G1 Our judgement is that the landlord meets our governance requirements.	Assessed and unchanged	August 2024
Viability	V2 Our judgement is that the landlord 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.	Regrade	August 2024

Reason for publication

We are publishing a regulatory judgement for Cobalt Housing Limited (Cobalt) following an inspection completed in August 2024.

This regulatory judgement confirms a consumer grading of C2, a governance grading of G1 and a financial viability grading of V2.

Prior to this regulatory judgement, the governance and financial viability grades for Cobalt were last updated in November 2023 following a stability check, to confirm grades of G1 and V1. This is the first time we have issued a consumer grade in relation to this landlord.

Summary of the decision

From the evidence and assurance gained during the inspection it is our judgement that there are some weaknesses in Cobalt’s delivery of the outcomes of the consumer standards and improvement is needed, specifically in relation to outcomes in our Safety and Quality Standard. Based on this assessment, we have concluded a C2 grade for Cobalt.

Our judgement is that Cobalt meets our governance requirements. Cobalt has provided evidence to demonstrate the effectiveness of its governance arrangements and that it continues to effectively manage the risks of its activities, allowing it to deliver its strategic and charitable objectives. Based on this assessment, we have concluded a G1 grade for Cobalt.

Our judgement is that Cobalt meets our financial viability requirements and has the financial capacity to manage a reasonable range of adverse scenarios. Cobalt has provided appropriate assurance that it has access to sufficient liquidity. However, its financial forecast shows significantly increased investment in existing homes, which reduces its capacity to respond to adverse scenarios. Based on this assessment, we have concluded a V2 grade for Cobalt.

How we reached our judgement

We carried out an inspection of Cobalt to assess how well Cobalt is delivering the outcomes of the consumer standards and meeting our governance and financial viability requirements, as part of our planned regulatory inspection programme. During the inspection, we considered all four of the consumer standards: Neighbourhood and Community Standard, Safety and Quality Standard, Tenancy Standard, and the Transparency, Influence and Accountability Standard.

During the inspection we observed a board meeting and a committee meeting, spoke to tenants, held meetings with Cobalt including with its non-executive directors, and reviewed a wide range of documents provided by Cobalt.

Our regulatory judgement is based on all the relevant information we obtained during the inspection as well as analysis of information supplied by Cobalt in its regulatory returns and other regulatory engagement activity.

Summary of findings 

Consumer – C2 – August 2024

During the inspection Cobalt provided evidence-based assurance that it has appropriate systems in place to ensure the health and safety of its tenants in their homes and associated communal areas. Cobalt has provided appropriate assurance that it has a good understanding of its compliance with landlord health and safety requirements and that it is delivering the actions arising from legally required health and safety assessments. This includes using external assurance reviews of its processes and to assess the accuracy of its data around its health and safety performance.

There is evidence that Cobalt keeps an accurate record of the condition of its homes at an individual property level through physical surveys of all homes and has a process for keeping this information up to date. Cobalt has demonstrated that it uses its understanding of the condition and safety of its tenants’ homes to make decisions on future investment to maintain and improve homes.

We found evidence of some weaknesses in the provision of the repairs and maintenance service to Cobalt’s tenants. Performance information, in combination with feedback and complaints from tenants, demonstrated that improvement is needed for Cobalt to evidence an effective, efficient and timely repairs and maintenance service. Cobalt is taking steps to manage repairs performance within the existing structure with plans for new arrangements to make the improvement Cobalt’s board has committed to. This will take time and through our ongoing engagement we will continue to seek assurance from Cobalt that progress is being made so that outcomes for tenants are improved.

In relation to the Neighbourhood and Community Standard, we gained assurance that Cobalt takes steps to prioritise the safety and security of its communities through a dedicated team of anti-social behaviour officers, it has specific performance targets on anti-social behaviour and there are regular reports to board to allow scrutiny of performance. Cobalt actively engages with tenants in this area to add context and insight to the information it holds. Cobalt provided evidence that it works with relevant organisations to deter and tackle anti-social behaviour in neighbourhoods where it provides social housing, giving examples of this happening in practice.

In relation to the Transparency, Influence and Accountability Standard, tenant engagement is well structured and supported. Cobalt has evidenced that it provides opportunities for tenants to be involved in its governance structure as well as providing a framework for tenants to scrutinise and influence its strategies, policies and services. Cobalt gathers tenants’ views and insights to inform decision making, service standards and performance improvement. We also saw evidence that Cobalt provides tenants with accessible information about its landlord services.

Cobalt was able to evidence that it has taken action to deliver fair and equitable outcomes for tenants in relation to the housing and landlord services it provides. For example, there was evidence that Cobalt had engaged with and consulted tenants to establish their diverse needs. Cobalt is also in the process of improving the tenant information it holds alongside its digital transformation programme.

We saw evidence that Cobalt regularly reviews performance information on complaints handling. It provided evidence of learning from information on complaint types and outcomes and using this information to make improvements. 

Governance – G1 – August 2024

Based on the evidence gained from the inspection, there is assurance that Cobalt’s governance arrangements enable it to effectively manage its risks and adequately control the organisation, allowing it to deliver its objectives. We saw evidence of board challenge on performance against Cobalt’s strategic objectives and robust consideration of risks in its decision making.

Cobalt has provided appropriate assurance that its board proactively reviews its approach to delivering against its purpose and regularly considers alternative options to ensure it is achieving value for money in making best use of resources.

Cobalt was able to provide evidence that it has established and maintains clear roles, responsibilities and accountabilities within its leadership and governance structure. The relationship between its board and committees is working in line with its delegations to strengthen assurance in key areas of risk and compliance.

Continuing governance improvement is evidenced through annual effectiveness reviews and an in-depth periodic review which is scoped comprehensively to provide a robust evaluation of Cobalt’s governance in practice. The most recent external review took place in November 2022 and Cobalt has implemented its recommendations.

Board member skills, experience and knowledge are aligned with the activities of the organisation and there is a structured approach to developing and appraising skills to support succession planning. We have seen evidence of this through board observation, meetings with non-executive directors and the executive team, as well as reviewing relevant documents including meeting minutes.

Cobalt has a risk management and control framework that aligns to its strategic risks. There is evidence of robust discussion and board challenge of the controls and assurance on strategic risks and of risks being managed effectively in practice.

There is evidence that Cobalt’s board actively seeks and gains an appropriate level of assurance across a range of areas. There is evidence of how this assurance has been used to inform, validate and make improvements to, stock condition and landlord health and safety information, and the approach being taken to improve the repairs and maintenance service.

Board ownership of stress testing, mitigation strategies and wider governance over risks through regular and structured review of golden rules is evident. Reporting to board provides sufficient detail for the board to ensure effective oversight.

Viability – V2 – August 2024

Based on evidence gained from this inspection, we have assurance that Cobalt’s financial plans are consistent with, and support, its financial strategy. Cobalt has provided evidence-based assurance that it has an adequately funded business plan, sufficient security in place to support its plans, and is forecast to continue to meet its financial covenants. Cobalt has also provided appropriate assurance that it is closely monitoring performance against its loan covenants, and this is reported to the board regularly.

Cobalt is increasing its investment in existing homes, while continuing to develop new homes. The increase in investment in existing homes is in response to findings from a recent physical stock condition survey, and to make homes more energy efficient. Delivering this alongside an increasing development programme means that the business plan will be funded by an increased level of debt and interest payments associated with that.  

As a result, the financial performance of the organisation will now be significantly reduced on an ongoing basis. In order to achieve the level of investment required, Cobalt has renegotiated its interest cover loan covenant to increase headroom, and we have been provided with evidence that its stress testing demonstrates the financial capacity to deal with a reasonable range of adverse scenarios

Background to the judgement

About the landlord

Cobalt is an exempt charity registered under the Co-operative and Community Benefit Societies Act 2014. Cobalt was created via stock transfer from Liverpool City Council in 2003, joining the Symphony group (now Onward Group Limited) in 2011, and subsequently de-merging in 2017.

Cobalt is the only RSH registered entity in its group and is a non-profit registered provider of social housing. It has one unregistered subsidiary, Altview Living Limited. Cobalt owns and manages around 6,000 general needs social housing homes. Cobalt’s homes are almost entirely within the Liverpool local authority area.

At 31 March 2023, Cobalt employed 145 full-time equivalent staff. Group turnover for the year ended 31 March 2023 was £31.8m. Cobalt plans to develop around 1,000 new homes by 2032.

Our role and regulatory approach

We regulate for a viable, efficient, and well governed social housing sector able to deliver quality homes and services for current and future tenants.

We regulate at the landlord level to drive improvement in how landlords operate. By landlord we mean a registered provider of social housing. These can either be local authorities, or private registered providers (other organisations registered with us such as non-profit housing associations, co-operatives, or profit-making organisations).

We set standards which state outcomes that landlords must deliver. The outcomes of our standards include both the required outcomes and specific expectations we set. Where we find there are significant failures in landlords which we consider to be material to the landlord’s delivery of those outcomes, we hold them to account. Ultimately this provides protection for tenants’ homes and services and achieves better outcomes for current and future tenants. It also contributes to a sustainable sector which can attract strong investment.

We have a different role for regulating local authorities than for other landlords. This is because we have a narrower role for local authorities and the Governance and Financial Viability Standard, and Value for Money Standard do not apply. Further detail on which standards apply to different landlords can be found on our standards page.

We assess the performance of landlords through inspections and by reviewing data that landlords are required to submit to us. In Depth Assessments (IDAs) were one of our previous assessment processes, which are now replaced by our new inspections programme from 1 April 2024. We also respond where there is an issue or a potential issue that may be material to a landlord’s delivery of the outcomes of our standards. We publish regulatory judgements that describe our view of landlords’ performance with our standards. We also publish grades for landlords with more than 1,000 social housing homes.

The Housing Ombudsman deals with individual complaints. When individual complaints are referred to us, we investigate if we consider that the issue may be material to a landlord’s delivery of the outcomes of our standards.

For more information about our approach to regulation, please see Regulating the standards.

Further information

• Regulating the standards

• Regulatory standards for landlords