Current regulatory judgement: My Space Housing Solutions (19 December 2022)
Updated 16 January 2023
Applies to England
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RSH Narrative Regulatory Judgement
- Provider: My Space Housing Solutions
- Regulatory code: 4779
- Publication date: 19 December 2022
- Governance grade: G4
- Viability grade: V4
- Reason for publication: Governance and viability downgrades
- Regulatory route: Reactive Engagement
Regulatory judgement
This regulatory judgement downgrades the regulator’s previously published judgement for My Space Housing Solutions (My Space) from a non-compliant governance G3 grade and a non-compliant viability V3 grade to a non-compliant G4/V4 grade. This downgrade means there are issues of serious regulatory concern, and the provider is subject to regulatory intervention or enforcement action both in relation to governance and financial viability.
The regulator has been intensively engaging with My Space since the publication of the previous regulatory judgement in December 2020. Despite some early progress, more recently the situation at the provider has deteriorated considerably and we are now commencing enforcement action in relation to both governance and financial viability concerns.
To this end we are in the process of serving an Enforcement Notice on My Space under section 219 to 224 of the Housing and Regeneration Act 2008 (the Act).
Throughout our engagement, My Space has failed to provide the necessary assurance that the issues identified in the original regulatory judgement have been addressed.
Over recent months the regulator has become increasingly concerned regarding the financial viability, liquidity and governance of My Space and the lack of progress in relation to compliance with the Rent Standard.
Board oversight and internal controls have broken down with the resignation of key staff and board members. A number of more recent board appointments have been acknowledged to lack independence by My Space. The board has been unable to evidence that appropriate probity arrangements were in place to effectively manage conflicts of interest.
We also lack assurance that My Space is managing its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence and foresight, and that it is complying with its chosen code of governance. As a result, we do not consider the board can provide the effective governance to enable My Space to deliver its aims, objectives and intended outcomes for tenants in an effective, transparent and accountable manner.
The board has not managed the risks to the business effectively and has been unable to provide the regulator with financial information that is based on appropriate and reasonable assumptions. The current position is that My Space has not been able to provide assurance it is solvent and it appears to be entirely reliant on the continued financial support from third parties to be able to continue trading. This is clearly not a desirable or sustainable position nor one that meets the regulator’s standards. Whilst working closely with My Space to determine its solvency position, we consider that the progress to address the identified issues has been too slow given the gravity of the situation.
The board has been unable to demonstrate that My Space is operating with a robust business planning, risk and control framework and that it is operating with sufficient liquidity at all times. My Space does not have an adequate long-term business plan based on reasonable and appropriate assumptions, and is unable to demonstrate that it can manage and mitigate a range of reasonable scenarios to ensure its long-term viability.
We have further concerns surrounding a wide range of property transactions that have been entered into by My Space with a connected property developer, and that these have not been entered into in the best interests of My Space. The board oversight and due diligence surrounding these property transactions has not been of the required standard expected by the regulator. The extent of the property transactions and relationships between staff and board members with this property developer has raised serious questions as to whether these property transactions are inappropriately advancing the interests of third parties or are arrangements which the regulator could reasonably assume were for such purposes. My Space has also not been able to provide the assurance that it fully understands the risks before taking on new liabilities or that it can demonstrate it understands and can manage the likely impact on current and future business and regulatory compliance.
We have worked closely with My Space to understand the basis on which it is claiming an exception from the Rent Standard. Following lengthy engagement My Space has confirmed (following legal advice) it does not have the assurance that its stock meets the definition of Specialised Supported Housing, and that this exception has been mis-claimed for many of its units. We remain concerned that My Space cannot provide assurance that the accommodation offered by My Space meets the definition of Social Housing as set out in the Act.[footnote 1]
Whilst the My Space board has committed to work with the regulator to address the issues outlined in this regulatory judgement, we lack the assurance that the current board possesses the skills, capacity and ability to lead to the change required without the use of our regulatory powers.
The Charity Commission has launched a statutory inquiry under section 46 of the Charity Act 2011 to investigate My Space in relation to potential conflicts of interest and possible mismanagement of funds. We are working closely with the Charity Commission given the links between our two areas of responsibility.
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.
It provides supported housing to a range of client groups and operates the lease-based model of provision
In its 2022 Statistical Data Return, My Space reported that it has 1,817 units of Specialised Supported Housing at 31 March 2022.
Registered Entities
My Space is the only registered entity.
Unregistered Entities
There are no unregistered entities.
Geographic Spread and Scale
My Space operates in 70 local authorities nationally.
Staffing and Turnover
According to the latest full year management accounts My Space employed 237 full-time equivalent members of staff and had an annual turnover of £27.3m.
Development
My Space does not develop new housing. Its growth strategy is to acquire properties to rent under long and short-term leases.
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.