Decision

Previous regulatory judgement: Home Group Limited (15 November 2022)

Updated 27 March 2024

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Home Group Limited
• Regulatory code: L3076
• Publication date: 15 November 2022
• 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 assessment of Home Group Limited’s financial viability from V1 to V2 and confirms its existing G1 grade for governance.

Based on evidence gained from a Stability Check and reactive engagement, the regulator has assurance that Home Group Limited (Home Group) 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. Home Group has an adequately funded business plan with sufficient security in place.

Home Group is investing in its existing homes, with a programme to improve energy efficiency while also continuing to develop new homes. Open market sales are included in Home Group’s development programme which exposes it to housing market risk.

The significant investment Home Group is making, coupled with the current economic uncertainty in relation to inflation and interest rates, means that it has less financial headroom than previously and its capacity to respond to adverse events is reduced.

The regulator’s assessment of Home Group’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 Home Group’s current governance grading.

Other providers included in the judgement

None

About the provider

Origins

Home Group is a community benefit society delivering housing primarily for social and affordable rent. It owns and/or manages around 55,700 properties.

Registered Entities

Home Group Limited is the only registered entity in the group.

Unregistered Entities

Home Group has four unregistered subsidiaries, and the group is involved in 12 joint venture/associate arrangements.

The unregistered subsidiaries in the group are:

• Home Scotland, a charitable subsidiary, registered with and regulated by the Scottish Housing Regulator;

• North Housing Limited, a non charitable subidiary;

• Home Group Developments Limited, a development subsidiary; and

• Live Smart @ Home Limited, manages Home Group’s market rent properties.

Home Group’s joint ventures are principally used to develop homes across a range of tenures.

Geographic Spread and Scale

Home Group’s stock is spread across the country, with the majority concentrated in the North East region.

Staffing and Turnover

The group employs the full-time equivalent of approximately 2,825 staff. Its turnover for the year ended 31 March 2022 was £420m.

Development

Home Group plans to develop around 10,600 homes over the next five years. The programme includes general needs affordable and social rental properties, homes for sale on the open market and low cost home ownership properties.

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.

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.