Decision

Previous regulatory judgement: Notting Hill Genesis (31 August 2022)

Updated 29 November 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Notting Hill Genesis

• Regulatory code: 4880

• Publication date: 31 August 2022

• 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 Notting Hill Genesis Limited’s governance and financial grades (G1/V2), following completion of an In Depth Assessment (IDA).

Based on evidence gained from the IDA, the regulator has assurance that Notting Hill Genesis Limited (NHG) continues to comply with the financial viability elements of the Governance and Viability Standard. NHG 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 adverse scenarios.

NHG needs to manage material risks relating to planned investment in its existing stock and to its large and diverse development programme. The provider has refocussed its strategic priorities and now plans to increase investment in its current stock to meet energy efficiency, fire safety and other building safety requirements. These additional costs will negatively impact on NHG’s financial performance including interest cover from its core social housing. NHG’s significant on-going development programme exposes it to commercial sales markets.

The regulator’s assessment of NHG’s compliance with the governance elements of the Governance and Financial Viability Standard remains unchanged. Based on the evidence gained from the IDA, the regulator has assurance that NHG’s governance arrangements enable it to adequately control the organisation and to continue meeting its objectives.

Other providers included in the judgement

Notting Hill Home Ownership Limited, Springboard Two Housing Association Limited

About the provider

Origins

NHG is a charitable community benefit society. It is the asset owning parent of a group which comprises 51 legal entities including the parent. 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

Including the parent, there are three registered providers within the group. Notting Hill Home Ownership (NHHO) Limited provides shared ownership housing. Springboard Two Housing Association Limited also provides shared ownership and develops homes on behalf of other group members.

Unregistered Entities

Within the group there are 48 unregistered legal entities. In addition to NHG and NHHO, Folio Treasury Limited holds external debt and is the vehicle for funding NHG’s market rent portfolio. Within the 48 subsidiaries there are 11 joint venture partnerships and 14 special purpose vehicles. Four of the subsidiaries are dormant.

Geographic Spread and Scale

NHG operates primarily in London. The group owns and manages approximately 67,600 homes, of which just over 61,000 are in London Boroughs.

Staffing and Turnover

For the year ending 31 March 2021, NHG’s turnover was £909.1m. It employed 1,631 full-time equivalent staff.

Development

NHG plans to develop 1,400 new homes a year between 2022 and 2026. Its programme includes homes for affordable rent, shared ownership, market rent and outright market sale.

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.