Decision

Islington and Shoreditch Housing Association Limited (L0457) - Regulatory Judgement: 25 September 2024

Updated 25 September 2024

Applies to England

Our Judgement

	Grade/Judgement	Change	Date of assessment
Consumer		Not assessed yet
Governance	G2 Our judgement is that the landlord meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.	Downgrade	September 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.	Assessed and unchanged	September 2024

Reason for publication

We are publishing a regulatory judgement for Islington and Shoreditch Housing Association Limited (ISHA) as a result of our responsive engagement with ISHA that focused on its governance arrangements, following a self-referral. We have also completed a stability check review against the Governance and Financial Viability Standard.

This regulatory judgement confirms a governance downgrade to G2 and a financial viability grading of V2.

Prior to this regulatory judgement, the governance and financial viability grades for ISHA were last updated in December 2023 following a stability check, to confirm grades of G1 and V2.

Summary of the decision

Our judgement is that ISHA meets our governance requirements but needs to improve some aspects of its oversight of risk and internal controls to ensure continued compliance. Based on this assessment, we have concluded a G2 grade for ISHA.

Our judgement is that ISHA meets our financial viability requirements and has the financial capacity to deal with a reasonable range of adverse scenarios. ISHA’s financial profile reflects the investment it is making in existing tenants’ homes and to develop new homes, and it needs to manage material risks to ensure continued compliance. Based on this assessment, we have concluded a V2 grade for ISHA.

How we reached our judgement

In response to a self-referral from ISHA in October 2023, relating to fraudulent activity, we carried out responsive engagement that focused on ISHA’s risk management and internal controls assurance framework.

This responsive engagement included reviewing documents and discussions with ISHA’s non-executive directors and executive team. Our judgement is based on all of the relevant information we obtained during the responsive engagement process as well as information supplied by ISHA in its regulatory returns.

We have also carried out a stability check review to assess whether there are any material risks that may result in a change to ISHA’s financial viability grading. Our stability check review concluded in September 2024.

We have not yet assessed this landlord against the consumer standards.

Summary of findings 

Governance – G2 – September 2024

Based on the evidence gained from our responsive engagement, there is assurance that ISHA’s governance arrangements are meeting the requirements of the Governance and Financial Viability Standard, however there are weaknesses in ISHA’s internal control and risk management arrangements which increases exposure to potentially significant risks.

ISHA’s system of internal controls has not been sufficient to identify when issues have occurred. When ISHA was made aware of an issue having arisen in relation to fraudulent activity it commissioned an independent review and has responded in a timely and comprehensive way to recommendations made as a result. Although we have assurance that ISHA has made improvements in its arrangements for identifying, managing and mitigating risks to the organisation, it is evident that further improvement is needed.

ISHA has been proactive in making a self-referral and is engaging positively with us to resolve the issues identified. ISHA has made changes to further strengthen internal controls and once fully implemented will need to seek assurance that these have led to sufficient improvement in how its arrangements operate in practice.

Viability – V2 – September 2024

Based on evidence gained from the 2024 stability check review, we have assurance that ISHA’s financial plans are consistent with, and support, its financial strategy.

ISHA has an adequately funded business plan, sufficient security in place, and is forecast to continue to meet its financial covenants. However, it is operating with a low level of financial headroom and is continuing investment in its existing homes including to meet building safety requirements. ISHA also has plans to increase debt to fund the on-going development of new homes. This will mean that ISHA has the capacity to respond to a reasonable range of adverse scenarios, but it will need to manage these material risks.

Background to the judgement

About the landlord

ISHA is an exempt charity registered under the Co-operative and Community Benefit Societies Act 2014. It is a non-profit registered provider of social housing.

ISHA is the only RSH registered entity in the group and has one unregistered subsidiary that is currently dormant.

ISHA operates in North and East London. It owns and manages around 2,500 social housing homes, the majority are general needs properties, with the remainder including affordable rent, supported housing and Low Cost Home Ownership homes.

At 31 March 2023 ISHA employed 85 full-time equivalent staff. ISHA’s turnover for the year ended 31 March 2023 was £25.9m. ISHA plans to develop 115 new homes between 2025 and 2028.

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