Withdrawn Regulatory Notice: Larch Housing Association Limited (24 July 2020)
Updated 20 December 2022
Applies to England
© Crown copyright 2022
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/regulatory-judgement-larch-housing-association-limited/regulatory-notice-larch-housing-association-limited-24-july-2020--2
Withdrawn on 20 December 2022: National Community Homes CIC (previously known as Larch Housing Association Limited) was de-registered on 13 December 2022.
RSH Regulatory Notice
- Provider: Larch Housing Association Limited
- Regulatory code: 4727
- Publication date: 24 July 2020
- Governance grade: N/A
- Viability grade: N/A
- Reason for publication: Economic Standards
- Regulatory route: Reactive Engagement
Other providers included in the judgement
None
Regulatory Finding
This regulatory notice supersedes the notice published on 20 November 2019 and is a result of further intensive regulatory engagement with Larch.
The regulator has concluded that:
a) Larch remains non-compliant with the governance and viability elements of the Governance and Financial Viability Standard. Larch has not managed its resources effectively to ensure its viability can be maintained and has not ensured its governance arrangements deliver an effective risk management framework.
b) Larch has not been able to demonstrate that it has managed its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence and foresight.
c) Larch has failed to ensure that it has an appropriate, robust and prudent business planning, risk and control framework that ensures sufficient liquidity at all times.
The Case
Larch was assessed as non-compliant with the governance and viability elements of the Governance and Financial Viability Standard on 20 November 2019. It remains non-compliant and breaches of the regulatory standards persist.
Progress has been limited since the publication of the regulatory notice, and significant viability issues remain. Larch has made a new appointment to its board, but we continue to lack assurance that the board is receiving adequate information in a timely manner in order to make informed decisions. Larch predominately enters into long term indexed linked lease arrangements with the private sector to acquire homes which are then used to provide accommodation to tenants. The properties it acquires are leased on ‘Full Repairing and Insurance’ (FRI) terms which means that income collection, maintenance and repair and operating costs risks are transferred to Larch.
Larch’s business model relies on continued cash income at the right level, and at the right time, to enable it to meet its obligations. Consistent with our previous notice published in November 2019, Larch continues to be unable to achieve its income forecasts and this has placed significant stress on its cashflow. As a result, Larch remains unable to meet its obligations under its lease arrangements as and when they fall due; a situation that has been ongoing for a significant period. Larch is currently reliant on the continued support of its head landlords forgoing lease payments in order to continue to trade.
In May 2020, creditor action taken against Larch led to the provider entering into the regulator’s insolvency process and the commencement of a moratorium. A combination of subsequent creditor forbearance, and actions taken by the provider, meant that the creditor action was withdrawn. However, this is a serious failure. The Larch board has committed to working with the regulator to address the underlying issues as a priority.
The actions taken by the parties involved led to the insolvency processes that had been triggered, being halted. This has given Larch a short period to further understand its viability position and to work on restructuring its business plan. However, this is reliant on continued forbearance and support of its creditors. The regulator will continue to monitor the position closely as the restructuring plans are developed and implemented.
Based on its most recent statistical data return, Larch had fewer than 1,000 units and is classed as a small provider. The regulator does not publish regulatory judgements for providers which fall into this category. Instead, in the interests of transparency, the regulator publishes a regulatory notice where it has evidence that a small registered provider is not meeting the regulatory standards. This notice is published under those arrangements.
About the provider
Larch Housing Association Limited (Larch) (4727) was registered in July 2012 and designated as a not-for-profit provider.
The March 2019 Statistical Data Return (SDR) stated Larch owned and managed five units of social housing and 292 units of non-social housing.
About our Regulatory Notices
Regulatory notices are issued in response to an event of regulatory importance (for example, a finding of a breach of the Rent Standard or of a consumer standard that has or may cause serious harm) that, in accordance with its obligation to be transparent, the regulator wishes to make public. More detail about Regulatory notices is set out in ‘Regulating the Standards.’
Key to grades
Governance:
- G1 (Compliant): The provider meets our governance requirements
- G2 (Compliant): The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance
- G3 (Non-compliant): 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 (Non-compliant): 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:
- V1 (Compliant): The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.
- V2 (Compliant): 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.
- V3 (Non-compliant): 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 (Non-compliant): 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.