Decision

Incommunities Limited (L4476) - Regulatory Judgement: 13 September 2024

Updated 13 September 2024

Applies to England

Our Judgement

	Grade/Judgement	Change	Date of assessment
Consumer		Not assessed yet
Governance	G1 Our judgement is that the landlord meets our governance requirements.	Upgrade	September 2024
Rent	Our judgement is that the landlord has addressed the issues in the Regulatory Notice dated July 2022 relating to rent setting	New judgement	September 2024
Viability	V1 Our judgement is that the landlord meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios	Based on previous assessment	January 2024

Reason for publication

We are publishing a regulatory judgement for Incommunities Limited (Incommunities) to upgrade its governance grading from G2 to G1 and to confirm the removal of its regulatory notice in relation to the Rent Standard.

This is a result of our responsive engagement with Incommunities that focused on its governance arrangements and how it is meeting the requirements of the Rent Standard.

In July 2022, following responsive engagement, we published a regulatory notice that concluded that Incommunities had failed to meet the requirements of the Rent Standard and we did not have assurance that Incommunities was previously compliant with the Welfare Reform and Work Act 2016 (the Act) in respect of a significant number of its social rent and affordable rent tenancies.

In January 2024, following an in-depth assessment, we published a regulatory judgement that confirmed Incommunities’ governance grade as G2. We concluded that Incommunities still needed to improve aspects of its governance arrangements to ensure continued compliance, following a previous governance downgrade in October 2020. (In depth assessments were one of our previous assessment processes now replaced by our new regulatory inspections programme from 1 April 2024.)

Summary of the decision

Our judgement is that Incommunities meets our governance requirements. Through our responsive engagement, Incommunities has provided evidence to demonstrate that it has strengthened its governance since it was previously downgraded to G2 in October 2020. We have concluded that this has provided sufficient assurance that Incommunities has made the necessary improvements to now be assessed as a G1 grading.

Incommunities has also provided evidence that it has addressed the issues relating to the rent standard that were summarised in the regulatory notice dated July 2022 and we have concluded that we have sufficient assurance to remove the regulatory notice.

We last reviewed Incommunities’ financial viability grading in January 2024 through an in depth assessment (IDA) that concluded there was no change to Incommunities’ V1 grading.

How we reached our judgement

In response to the earlier governance downgrade and the rents issues identified in the 2022 regulatory notice, we carried out responsive engagement with Incommunities that focused on Incommunities’ governance arrangements, including its risk management and control framework. We also considered how it was meeting the requirements of the Rent Standard and the changes it has made to its approach to rent setting.

Our engagement included reviewing documents provided by Incommunities, including third party assurance reports. We held discussions with Incommunities, met with its non-executive directors and executive team, and observed board discussions. Our judgement is based on all of the relevant information we obtained during the responsive engagement process, together with information provided to us by Incommunities as part of its regular regulatory reporting.

Based on the IDA that concluded in January 2024, our assessment of Incommunities’ viability grade remains V1.

Summary of findings 

Governance – G1 – September 2024

Based on the evidence gained from our responsive engagement, we have concluded that we have appropriate assurance that Incommunities’ governance arrangements enable it to effectively manage its risks and adequately control the organisation, allowing it to deliver its objectives.

Incommunities has strengthened its governance arrangements, which together with changes in leadership has improved its oversight of risks and quality of decision making. In particular, the board has ensured that it has an appropriate level of assurance to understand the condition of its homes and use this information to inform a strategic approach to asset management. A revised data assurance framework is in place that has resulted in a more robust approach to making sure information held is correct and up to date. The strengthening of internal controls has improved the quality of information held and Incommunities has sought assurance, including through external reviews, that its systems and processes are adequate to ensure key information is monitored and accurately reported across the organisation.   

We saw evidence of an improved control environment overall and the board has demonstrated that it has a proactive understanding of existing and emerging risks to the organisation. Incommunities has a transparent and co-regulatory approach to engaging with the regulator.

Overall, we consider that Incommunities has provided appropriate assurance that it has sufficiently addressed the governance weaknesses we previously identified. Our judgement is that the landlord meets our governance requirements.

Rent – September 2024

Based on the evidence gained from our responsive engagement we have concluded that we have appropriate assurance that Incommunities has addressed the issues in the regulatory notice dated July 2022, in particular its failure to meet the requirements of the Rent Standard and legal requirements of the Act in respect of a significant number of its social rent and affordable rent tenancies.

Incommunities commissioned external reviews of its arrangements for rent setting including its policy and whether controls in place were adequate and operating effectively. Actions and recommendations from the reviews have been completed and a number of improvements implemented. As well as correcting errors and ensuring any overcharges of rent are refunded, Incommunities has gained assurance more widely that it has robust arrangements in place to avoid recurrence. Incommunities’ board has increased oversight in this area and plans are in place for periodic assurance that rent setting controls are effective.

Overall, we consider that Incommunities has provided appropriate assurance that it has sufficiently addressed the failures in rent setting.  

Viability – V1 – January 2024

Based on evidence gained from the in-depth assessment in January 2024, we have assurance that Incommunities’ financial plans are consistent with, and support, its financial strategy. Incommunities can meet its current development commitments with its existing agreed funding and has capacity to increase its funding in line with planned growth and reinvestment.

Incommunities has an adequately funded business plan, sufficient security in place, and is forecast to continue to meet its financial covenants. Incommunities has the capacity to deal with a wide range of adverse scenarios.

Background to the judgement

About the landlord

Incommunities is an exempt charitable community benefit society. It was established in 2003 to take transfer of the housing stock from Bradford Council. It owns and manages around 22,700 social housing homes and operates mainly across Bradford and Huddersfield West Yorkshire. 91% of its stock is general needs and 3% supported housing with only 20 market rent homes.

At 31 March 2023, Incommunities employed 876 full-time equivalent staff. Incommunities’ turnover for the year to 31 March 2023 was £104.4m. Incommunities’ development and regeneration strategy sets out plans for 350 to 500 new homes starting on site each year during the period 2024 to 2029.

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