Decision

Previous regulatory judgement: My Space Housing Solutions (17 December 2020)

Updated 16 January 2023

Applies to England

RSH Narrative Regulatory judgement

• Provider: My Space Housing Solutions
• Regulatory code: 4779
• Publication date: 17 December 2020
• Governance grade: G3
• Viability grade: V3
• Reason for publication: First assessment
• Regulatory route: Reactive Engagement

This regulatory judgement is the first published assessment of My Space Housing Solutions’ governance and financial viability.

The regulator has concluded that it lacks assurance and evidence that My Space Housing Solutions (My Space) is compliant with the governance and viability elements of the Governance and Financial Viability Standard. There are issues of serious regulatory concern and, in agreement with us, the provider is working to improve the position.

My Space has experienced rapid growth in recent years. The model operated by My Space means that, whilst it has landlord responsibility for its tenants, it enters into short-term and long-term leasing arrangements with a number of third parties for properties.

Following engagement undertaken with My Space and subsequent investigations the regulator has found:

• significant weaknesses in My Space’s business planning framework;
• inadequate risk management processes and internal controls; and
• that the board has failed to manage its affairs with an appropriate degree of skill, diligence, effectiveness, prudence and foresight.

The regulator has insufficient assurance that My Space’s governance, risk management and internal control frameworks are effective or that business planning is robust. The board has failed to demonstrate it understands and is managing the risks it faces or has appropriate mitigation strategies in place to ensure the long-term viability of the organisation and protect social housing assets.

My Space has been unable to provide the regulator with a business plan that is based on appropriate and reasonable assumptions. It has no information on its long-term stock investment requirements and under-pinning information on voids and income collection is limited. We lack evidence that My Space undertakes adequate stress testing against a range of scenarios, with appropriate mitigation strategies in place, to ensure its long-term viability.

To deliver its medium to long-term viability, My Space assumes its material income source (rent) being ‘excepted’ from the requirements of the Rent Standard by meeting the specialised supporting housing criteria. We lack assurance on how the board has satisfied itself that its rents are meeting the Rent Standard. The regulator has therefore concluded that My Space is unable to demonstrate that it meets the viability element of the Governance and Financial Viability Standard.

We lack assurance that My Space’s risk management process is adequate. It has an under-developed understanding of its business risks and how these impact on its business plan and long-term financial viability. It has a number of long-term leases with no break clauses and with fixed annual rent increases which may expose it to changes in the external operating environment, particularly in terms of future potential Housing Benefit changes or demand issues.

A lack of effective board oversight in these areas is a fundamental failure of governance and operational control. The regulator has therefore concluded that My Space is unable to demonstrate that it meets the governance element of the Governance and Financial Viability Standard.

In response to the regulator’s engagement, with the support of its advisors, My Space has developed a financial and governance improvement action plan. The board has provided assurance that it has sufficient liquidity to meet its short-term obligations as it considers its future strategic direction.

The board has committed to work with the regulator to address the issues outlined in this regulatory judgement. The regulator is actively working with My Space and will closely monitor the delivery of the improvement plan, adjusting its strategy accordingly while keeping the use of its intervention powers under review.

Other providers included in the judgement

None

About the provider

Origins

My Space is a not-for-profit registered provider. It is a private limited company by guarantee. It is also a registered charity.

In its 2020 Statistical Data Return (SDR) My Space reported that it has 1,274 supported housing units.

Registered Entities

My Space is the only registered entity.

Unregistered Entities

There are no unregistered entities.

Geographic Spread and Scale

My Space operates in 63 local authority areas. Most of its stock is in the north west and north east of England.

Staffing and Turnover

In its annual accounts for the year ended 31 October 2018, My Space reported that it employed 105 full time equivalent members of staff and had an annual turnover of £11.7m.

Development

My Space does not develop new housing. Its growth strategy is to acquire properties to rent under short-term leases and long-term leases.

About our judgements

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.

Definitions of Regulatory Processes

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’.