Previous regulatory judgement: London & Quadrant Housing Trust (15 November 2022)
Updated 13 December 2023
Applies to England
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RSH Narrative Regulatory Judgement
- Provider: London & Quadrant Housing Trust
- Regulatory code: L4517
- Publication date: 15 November 2022
- Governance grade: G1
- Viability grade: V2
- Reason for publication: Viability regrade
- Regulatory route: In Depth Assessment
Regulatory judgement
This regulatory judgement regrades London & Quadrant Housing Trust’s financial viability from V1 to V2 and confirms its existing G1 grade for governance.
Based on evidence gained from an In Depth Assessment (IDA), the regulator has assurance that London & Quadrant Housing Trust (L&Q) complies with the financial viability elements of the Governance and Financial Viability Standard. L&Q’s financial plans are consistent with, and support, its financial strategy. The provider has an adequately funded business plan, with sufficient asset security and liquidity, and is forecast to continue to meet its financial covenants.
L&Q is increasing investment in its existing homes, including a programme of spending on fire safety, building safety, Decent Homes Standard related works and energy efficiency improvements. L&Q is also undertaking a large and diverse development programme that includes outright market sales. Delivering the programme and managing the increased investment in existing homes, coupled with the current economic uncertainty in relation to inflation and interest rates, reduces L&Q’s capacity to respond to adverse events.
The regulator’s assessment of L&Q’s compliance with the governance elements of the Governance and Financial Viability Standard remains unchanged. Based on evidence gained from the IDA, the regulator has assurance that L&Q’s governance arrangements enable it to adequately control the organisation and to continue meeting its objectives.
Other providers included in the judgement
Trafford Housing Trust Limited, and THT and L&Q Community Limited.
About the provider
Origins
L&Q is a charitable society registered under the Co-operative and Community Benefit Societies Act 2014. L&Q is the parent of a group that comprises 65 legal entities in total. The group’s main activities relate to the management of social housing, including care and support, as well as the development of new homes.
Registered Entities
Trafford Housing Trust provides social housing in Trafford, Greater Manchester, and THT and L&Q Community Limited.
Unregistered Entities
Within the group there are 63 unregistered legal entities including 22 wholly owned subsidiaries. The most material entities are:
- L&Q New Homes Limited – property development focussing on mixed tenure development and housing for open market sale and the vehicle for the majority of L&Q’s joint venture investment;
- Quadrant Construction Services Limited – design and build services and principal contractor to the group; and
- L&Q Living Limited – care and support services for the group.
Other significant entities are:
- L&Q Estates Limited – primary focus is land holding/development plots; and
- L&Q PRS Co Limited – owns and manages L&Q’s private rented sector portfolio
Geographic Spread and Scale
L&Q owns around 107,200 units and operates in 120 local authority areas with a footprint concentrated in Greater London and a smaller pocket in the north west of England around Trafford.
Staffing and Turnover
L&Q employs 3,825 full-time equivalent staff. Its turnover for the year ended 31 March 2022 was £1,112m.
Development
L&Q plans to develop an average of 3,000 homes a year between 2022-23 and 2025-26. Its programme includes homes for social and affordable rent, shared ownership, outright market sale and market rent.
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.