Withdrawn regulatory judgement: Network Homes Limited (15 December 2021)
Updated 29 November 2023
Applies to England
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Withdrawn on 29 November 2023: Sovereign Network Homes, formerly Network Homes Limited, became a subsidiary of Sovereign Housing Association Limited on 1 October 2023.
RSH Narrative Regulatory Judgement
- Provider: Network Homes Limited
- Regulatory code: 4825
- Publication date: 15 December 2021
- Governance grade: G1
- Viability grade: V2
- Reason for publication: Changed basis for viability grade
- Regulatory route: In Depth Assessment
This regulatory judgement confirms the regulator’s previous published assessment of Network Homes Limited’s (Network) financial and governance grades (G1/V2), following completion of an In Depth Assessment (IDA).
Based on evidence gained from the IDA, the regulator has assurance that Network continues to comply with the financial viability elements of the Governance and Viability Standard. Network has an adequately funded business plan, sufficient security in place, and is forecast to continue to meet its financial covenants under a reasonable range of scenarios.
Network continues to have an ambitious development strategy, with market and shared ownership sales. It also forecasts substantial investment in its existing properties to meet new building safety requirements, and to improve the energy efficiency of its homes. It therefore continues to need to manage the material risks arising from balancing its growth and re-investment strategies to maintain compliance.
The regulator’s assessment of Network’s compliance with the governance elements of the Governance and Financial Viability Standard remains unchanged. We issued a Regulatory Notice in November 2021 for Network as the provider had not complied with rent requirements in respect of some of its Fair Rent tenancies. However, based on the evidence gained from the IDA, the regulator has assurance that Network’s overall governance arrangements enable it to adequately control the organisation and to continue meeting its objectives.
Other providers included in the judgement
None
About the provider
Origins
Network is a charitable community benefit society, established in 1974, and the registered parent of its group.
Registered Entities
Network is the only registered entity in the group.
Unregistered Entities
Network has five active unregistered entities:
- Network Homes Investment Limited is the principal developer for the group, mainly of homes for outright sale and through joint ventures;
- Network Homes Investments (Stockwell) Limited is used for the regeneration of private homes;
- Network Treasury Services Limited is a capital funding vehicle;
- Network New Build Limited is a design and build company for the group, gift aiding surpluses back to the parent; and
- Network Affordable Developments Limited develops properties for sale.
Geographic Spread and Scale
Network owns and manages around 21,000 properties. It operates mainly in London, Hertfordshire and the South East.
Staffing and Turnover
Network’s turnover for the year ended 31 March 2021 was £247m and the group employed the full-time equivalent of 532 staff.
Development
Network plans to develop around 2,900 units between 2022 and 2026, including homes for social and affordable rent, shared ownership and market sale. Of these, around 920 will be delivered as part of the 2021 to 2026 Affordable Housing Programme.
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’.