Decision

North Devon Homes (LH4249) Regulatory Judgement: 14 August 2024

Updated 14 August 2024

Applies to England

Our Judgement

	Grade/Judgement	Change	Date of assessment
Consumer	C1 Our judgement is that overall the landlord is delivering the outcomes of the consumer standards. The landlord has demonstrated that it identifies when issues occur and puts plans in place to remedy and minimise recurrence.	First grading	August 2024
Governance	G1 Our judgement is that the landlord meets our governance requirements.	Assessed and unchanged	August 2024
Viability	V2 Our judgement is that the landlord 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.	Assessed and unchanged	August 2024

Reason for publication

We are publishing a regulatory judgement for North Devon Homes (NDH) following an inspection completed in August 2024.

This regulatory judgement confirms a consumer grading of C1, a governance grading of G1 and a financial viability grading of V2.

Prior to this regulatory judgement, the governance and financial viability grades for NDH were last updated in December 2023 following a stability check, to confirm grades of G1 and V2. This is the first time we have issued a consumer grade in relation to this landlord.

Summary of the decision

From the evidence and assurance gained during the inspection we have concluded that overall NDH is delivering the outcomes of the consumer standards. Based on this assessment, we have concluded a C1 grade for NDH.

Our judgement is that NDH meets our governance requirements. NDH has provided evidence to demonstrate the effectiveness of its governance arrangements and that it continues to effectively manage the risks of its activities, allowing it to deliver its strategic and charitable objectives. Based on this assessment, we have concluded a G1 grade for NDH.

Our judgement is that NDH meets our financial viability requirements and continues to forecast compliance with funders’ covenants. Stress testing demonstrates it has the financial capacity to deal with a reasonable range of adverse scenarios. NDH has provided appropriate assurance that it has access to sufficient liquidity and adequate funding in place. However, NDH has a weak financial profile and needs to manage material risks to its business. It relies on income from the sale of properties, including those developed for outright sale and shared ownership. With increased spending on existing homes and higher interest costs, NDH has limited capacity to manage adverse events. Based on this assessment, we have concluded a V2 grade for NDH.

How we reached our judgement

We carried out an inspection of NDH to assess how well NDH is delivering the outcomes of the consumer standards and meeting our governance and financial viability requirements, as part of our planned regulatory inspection programme. During the inspection, we considered all four of the consumer standards: Neighbourhood and Community Standard, Safety and Quality Standard, Tenancy Standard, and the Transparency, Influence and Accountability Standard.

During the inspection we observed a board meeting and tenant scrutiny panel, spoke to tenants, held meetings with NDH including with its non-executive directors, and reviewed a wide range of documents provided by NDH.

Our regulatory judgement is based on all the relevant information we obtained during the inspection, as well as analysis of information received from NDH through its regulatory returns and other regulatory engagement activity.

Summary of findings 

Consumer – C1 – August 2024

During the inspection, NDH provided evidence-based assurance that it has appropriate systems for ensuring the health and safety of its tenants in their homes and associated communal areas. NDH demonstrated that it has a good understanding of its compliance with its landlord health and safety requirements. Plans are now in place to seek regular independent and expert assurance across all statutory compliance activity including making sure the information it holds is correct, complete and up to date.

There is evidence that NDH keeps an accurate record of the condition of its homes at an individual property level through physical surveys of all homes and has a process for keeping this information up to date. NDH has demonstrated that it uses its understanding of the quality and safety of tenants’ homes to make decisions on future investment to maintain and improve homes.

NDH has demonstrated that it provides an effective, efficient and timely repairs service to tenants through an in-house repairs and maintenance team supported by specialist external contractors where appropriate. NDH takes action to improve the service and outcomes for tenants when issues occur.  

In relation to the Neighbourhood and Community Standard, NDH provided evidence that it works with relevant organisations to deter and tackle anti-social behaviour and hate crime in neighbourhoods where it provides social housing and we were provided with examples of this happening in practice. NDH’s board receives regular reports on anti-social behaviour performance and there has been scrutiny of this by tenants. This has resulted in improvements to communication with tenants impacted by anti-social behaviour and hate crime.

In relation to the Tenancy Standard, we saw evidence that NDH seeks to offer tenancies that are appropriate for the homes it lets, considering the purpose of the accommodation, the needs of individual households, the sustainability of the community and the efficient use of social housing. We gained assurance that NDH reports on and uses information on tenancy management to support tenants to sustain their tenancy.

In relation to the Transparency, Influence and Accountability Standard, NDH demonstrated that it considers tenants’ diverse needs in the design and delivery of services. NDH recognises that it needs to continue to collect and update the tenant information it holds and has plans in place to do this.

Evidence was provided to demonstrate that NDH regularly reviews performance information on complaints handling and that it uses this information to make improvements to its landlord services. 

We were assured that NDH provides a wide range of meaningful opportunities for tenants to influence and scrutinise its strategies, policies and services. There are clear arrangements in place through which tenants are able to share their views with NDH. There is also evidence that feedback from tenants has directly and positively impacted service delivery and strategic direction. NDH has provided appropriate assurance that it makes effective use of its performance information to shape services and provides a range of information to tenants to support effective scrutiny. Improvements made as a result of scrutiny reviews by customers include changes to complaints handling, carrying out works to unoccupied homes, and its approach to tackling anti-social behaviour.

Governance – G1 – August 2024

Based on the evidence gained from the inspection, there is assurance that NDH’s governance arrangements enable it to effectively manage its risks and adequately control the organisation, allowing it to deliver its objectives. We saw evidence of board challenge on performance against NDH’s strategic targets.

NDH has provided appropriate assurance that its board proactively reviews its approach to delivering against its purpose. NDH understands the need to be able to demonstrate that it regularly and robustly considers alternative options to ensure it is achieving value for money in making best use of its resources.

NDH was able to provide evidence that it has established and maintains clear roles, responsibilities and accountabilities within its leadership and governance structure.

NDH carries out annual board reviews and captures areas for improvement in a governance development plan. We have seen evidence that progress on delivery of this plan is monitored by NDH’s board. However, an in-depth external governance review has not been commissioned since 2019. This has meant that the board has not been able to test its assurance on the effectiveness of governance arrangements to ensure the quality of governance is aligned to the activities and associated risks of the organisation. 

Board member skills, experience and knowledge are aligned with the activities of the organisation and there is a structured approach to developing and appraising skills, which feeds into succession planning. We have seen evidence of this through board observation, meetings with non-executive directors and the executive team as well as reviewing relevant documents including meeting minutes.

NDH has a risk management and control framework that aligns to its strategic risks. There is evidence of risks being managed effectively in practice and NDH is taking action to ensure that the level of assurance it has against controls for key risk areas is appropriate and reviewed on a timely basis. 

NDH uses its stress testing effectively to understand which risks have the greatest impact on its financial plan and delivery of strategic objectives. Board ownership of this is demonstrated and that there is an understanding of the constraints on NDH’s capacity to deal with significant risks should they happen. There is reporting in place on clearly defined golden rules and early warning triggers to support board oversight, and a range of mitigations have been identified. NDH’s board has an increased focus on monitoring financial indicators due to its weakened financial profile. 

Viability – V2 – August 2024

Based on evidence gained from the inspection we have concluded that there is appropriate assurance that NDH’s financial plans are consistent with, and support, its financial strategy. NDH’s business plan is adequately funded with sufficient security in place to support its financial plans and it is forecast to continue to meet its financial covenants.  

NDH does, however, face material exposures which it needs to manage, including to the housing market with reliance on income from homes developed for affordable home ownership and market sale, and from the disposal of void uneconomic properties. NDH has a weakening financial performance and with increased spending on existing homes and higher interest costs on debt, NDH’s capacity to manage adverse events is reduced.   

Background to the judgement

About the landlord

NDH is a charitable company limited by guarantee formed to receive the transfer of stock from North Devon Council. Its core activities are the provision of affordable rented accommodation, housing services, and the development of new affordable homes, and homes for market sale.

NDH is the only RSH registered landlord in its group. NDH has a wholly owned commercial trading subsidiary, Anchorwood Limited. It supports the objectives of NDH with the provision of new homes for sale.

NDH manages over 3,300 homes in North Devon. At 31 March 2024, NDH employed 151 full time equivalent staff. Group turnover for the year ending 31 March 2024 was £22.3m. NDH’s development programme over the next five years aims to deliver over 62 new homes, mainly comprising affordable rent and shared ownership. In addition, Anchorwood Limited has a four year development programme to deliver 66 homes comprising homes for open market sale and affordable home ownership.

Our role and regulatory approach

We regulate for a viable, efficient, and well governed social housing sector able to deliver quality homes and services for current and future tenants.

We regulate at the landlord level to drive improvement in how landlords operate. By landlord we mean a registered provider of social housing. These can either be local authorities, or private registered providers (other organisations registered with us such as non-profit housing associations, co-operatives, or profit-making organisations).

We set standards which state outcomes that landlords must deliver. The outcomes of our standards include both the required outcomes and specific expectations we set. Where we find there are significant failures in landlords which we consider to be material to the landlord’s delivery of those outcomes, we hold them to account. Ultimately this provides protection for tenants’ homes and services and achieves better outcomes for current and future tenants. It also contributes to a sustainable sector which can attract strong investment.

We have a different role for regulating local authorities than for other landlords. This is because we have a narrower role for local authorities and the Governance and Financial Viability Standard, and Value for Money Standard do not apply. Further detail on which standards apply to different landlords can be found on our standards page.

We assess the performance of landlords through inspections and by reviewing data that landlords are required to submit to us. In-Depth Assessments (IDAs) were one of our previous assessment processes, which are now replaced by our new inspections programme from 1 April 2024. We also respond where there is an issue or a potential issue that may be material to a landlord’s delivery of the outcomes of our standards. We publish regulatory judgements that describe our view of landlords’ performance with our standards. We also publish grades for landlords with more than 1,000 social housing homes.

The Housing Ombudsman deals with individual complaints. When individual complaints are referred to us, we investigate if we consider that the issue may be material to a landlord’s delivery of the outcomes of our standards.

For more information about our approach to regulation, please see Regulating the standards.

 

Further information 

• Regulating the standards 

• Regulatory standards for landlords