Decision

Current regulatory judgement: Peabody Trust (27 September 2023)

Updated 27 September 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Peabody Trust

• Regulatory code: 4878

• Publication date: 27 September 2023

• 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 G1/V2 assessment of Peabody Trust’s governance and financial viability, following completion of an In Depth Assessment (IDA).

The regulator has assurance that Peabody Trust (Peabody) is compliant 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. Peabody has an adequately funded business plan, sufficient security, and is forecast to continue to meet its financial covenants.

Peabody’s financial plan contains high levels of stock investment expenditure, including significant fire and building safety works, putting pressure on its interest cover ratios. Peabody is also delivering a large and diverse development and regeneration programme which exposes it to the housing market. When coupled with the current economic conditions in relation to inflation and interest rates, these reduce Peabody’s capacity to respond to adverse events.

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

Other providers included in the judgement

Charlton Triangle Homes Limited, Peabody Developments Limited, Town and Country Housing

About the provider

Origins

Peabody is a charitable community benefit society. It is the asset owning parent of a group that comprises 39 legal entities including the parent. The group’s principal activities relate to the development and management of social housing, including care and support services and community operations.

Registered Entities

Peabody is the registered parent and majority stock holding entity within the group. It has three registered provider subsidiaries:

• Charlton Triangle Homes Limited is a registered provider and an exempt charitable community benefit society. It owns and manages around 1,200 homes in the Royal Borough of Greenwich.

• Peabody Developments Limited is a registered provider and non-charitable community benefit society which engages in mixed purpose development and sale. It aims to maximise its surplus to donate to Peabody.

• Town and Country Housing is a registered provider and exempt charitable community benefit society which joined the group in 2019. It owns and manages about 13,000 homes.

Unregistered Entities

The active unregistered entities in the group include development entities, repairs and maintenance entities, finance vehicles, and charitable entities. The principal unregistered entities are:

• Peabody Construction Limited, a commercial development entity.

• Peabody Land Limited, Peabody Waterfront Limited, Tilfen Land Limited and Thamesmead Waterfront LLP which are all engaged with regeneration activities in Thamesmead.

• Peabody Capital plc, Peabody Capital No. 2 plc and TCHG Capital plc which are treasury vehicles.

• Peabody Group Maintenance Limited and Connect Property Services Limited which are the group’s repairs and maintenance subsidiary.

• Catalyst by Design Limited and Catalyst Developments (Wimbledon) Limited provide property development, including through holdings in joint ventures.

• Dagenham Green Limited, holding development land in Dagenham.

Geographic Spread and Scale

Peabody owns and manages around 107,000 homes in London and the South East. The stock is mainly general needs, alongside significant levels of shared ownership. It also holds supported housing, key worker, intermediate rent and other units.

Staffing and Turnover

At 31 March 2023, Peabody employed 3,876 full-time equivalent staff and had a turnover of £1,111 million.

Development

Peabody aims to develop around 1,500 units per year based on its 2023 long term financial plan. The units will be allocated between social or affordable rent, shared ownership and 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.

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.