Decision

Current regulatory judgement: Orbit Group Limited (27 March 2024)

Updated 27 March 2024

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Orbit Group Limited
• Regulatory code: L4123
• Publication date: 27 March 2024
• Governance grade: G1
• Viability grade: V2
• Reason for publication: Changed basis for viability grade
• Regulatory route: In Depth Assessment

Regulatory judgement

This regulatory judgement confirms the regulator’s existing assessment of Orbit Group Limited’s governance and viability grades as G1/V2.

Based on evidence gained from an In Depth Assessment (IDA), the regulator has assurance that Orbit Group Limited (Orbit) continues to comply with the financial viability elements of the Governance and Financial Viability Standard and that its financial plans are consistent with, and support, its financial strategy. Orbit 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.

Orbit is investing significantly in the quality of its existing stock, in fire safety and in developing new homes and, as a result, interest cover is reduced. These factors, set in the context of economic pressures, impact on Orbit’s capacity to respond to adverse events.

The regulator’s assessment of Orbit’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 Orbit’s governance arrangements enable it to adequately control the organisation and to continue meeting its objectives.

Other providers included in the judgement

Orbit Housing Association Limited

About the provider

Origins

Orbit is a charitable community benefit society. It manages and maintains its homes, most of these are general needs, with a small amount of supported housing for older people. Orbit also develops affordable housing and properties for sale.

Registered Entities

Orbit is the registered parent of its group. It has one registered subsidiary, Orbit Housing Association Limited, a charitable community benefit society and the main stockholding entity within the group.

Unregistered Entities

Orbit has three active unregistered entities:

• Orbit Homes (2020) Limited operates as the group’s in-house building company, building a range of tenures for different markets,

• Orbit Treasury Limited is a special purpose vehicle used to raise and manage the private finance needed to meet the group’s funding requirements, and

• Orbit Capital plc which was established to receive the proceeds of bonds issued for the group.

Geographic Spread and Scale

Orbit manages around 45,000 homes. It operates across 77 local authorities, predominantly in the midlands, the east and south east of England.

Staffing and Turnover

Orbit’s turnover for the year ended 31 March 2023 was £418.3m and the group employed the full-time equivalent of 1,238 staff.

Development

Orbit has a development programme of 5,200 homes over the period 2020/2025. This will be delivered over a range of tenures including social and affordable rent, shared ownership, private rent, retirement living and market sale. It expects to have delivered approximately 4,100 of these by March 2024 as part of its partnership with Homes England.

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.

Note: The use of an asterisk (*) against a grade indicates that the assessment refers to a provider that is designated as being for-profit.

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.