Decision

Current regulatory judgement: English Rural Housing Association Limited (17 January 2024)

Updated 17 January 2024

Applies to England

RSH Narrative Regulatory Judgement

• Provider: English Rural Housing Association Limited
• Regulatory code: L4004
• Publication date: 17 January 2024
• Governance grade: G1
• Viability grade: V2
• Reason for publication: Viability regrade
• Regulatory route: Stability Check and Reactive Engagement

Regulatory judgement

This regulatory judgement regrades our previous published assessment of English Rural Housing Association Limited’s financial viability grade from V1 to V2 and confirms its existing G1 grade for governance.

The regulator has assurance that English Rural Housing Association Limited (English Rural) continues to comply 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. English Rural has an adequately funded business plan, sufficient security, and is forecast to continue to meet its financial covenants.

English Rural’s financial profile has weakened. Increased interest costs associated with continued debt funded development and ongoing investment in its existing homes have reduced margins and financial headroom on funder interest cover covenants. These factors, set in the context of economic pressures including inflation and interest rates, impact on English Rural’s capacity to respond to adverse events.

The regulator’s assessment of English Rural’s compliance with the governance elements of the Governance and Financial Viability Standard remains unchanged. On the basis of the Stability Check, the regulator has concluded that there is no evidence to indicate a change to English Rural’s current governance grading.

Other providers included in the judgement

The Cambridgeshire Cottage Housing Society Limited

About the provider

Origins

English Rural is a community benefit society and provides general needs homes for social and affordable rent and shared ownership.

Registered Entities

English Rural has one registered subsidiary, The Cambridgeshire Cottage Housing Society Limited, a small registered provider in rural Cambridgeshire.

Unregistered Entities

There is one unregistered subsidiary in the group, ER Homes Limited, which develops homes for open market sale.

Geographic Spread and Scale

English Rural owns or manages around 1,400 homes in rural areas across the south and midlands.

Staffing and Turnover

The group employs 24 full-time equivalent staff. Group turnover for the year ended 31 March 2023 was £9m.

Development

English Rural plans to develop around 180 homes between 2023 and 2028, including homes for social and affordable rent, shared ownership and market sale.

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.