Decision

Phoenix Community Housing Association (Bellingham and Downham) Limited (L4505) - Regulatory Judgement: 28 August 2024

Updated 28 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	G2 Our judgement is that the landlord meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.	Downgrade	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 Phoenix Community Housing Association (Bellingham and Downham) Limited (Phoenix) following an inspection completed in August 2024.

This regulatory judgement confirms a consumer grading of C1, a governance downgrade to G2 and a financial viability grading of V2.

Prior to this regulatory judgement, the governance and financial viability grades for Phoenix were last updated in November 2023 following a stability check, to confirm a G1 grade for governance and a regrade from V1 to V2 for financial viability. This is the first time we have issued a consumer grade in relation to this landlord.

Summary of the decision

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

Our judgement is that Phoenix meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance, specifically in relation to board effectiveness and to increase the effectiveness of internal controls across a number of areas and to strengthen strategic oversight of risk. Based on this assessment, we have concluded a G2 grade for Phoenix.

Our judgement is that Phoenix meets our financial viability requirements and has the financial capacity to deal with a reasonable range of adverse scenarios. Phoenix’s business plan is based on reasonable assumptions and it has provided appropriate assurance that it has access to sufficient funding. Phoenix’s financial profile reflects the significant investment it is making in tenants’ homes, and it needs to manage material risks to ensure continued compliance. Based on this assessment, we have concluded a V2 grade for Phoenix.

How we reached our judgement

We carried out an inspection of Phoenix to assess how well it 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 resident experience committee meeting, spoke to tenants, held meetings with Phoenix and its non-executive directors, and reviewed a wide range of documents provided by Phoenix.

Our regulatory judgement is based on all the relevant information we obtained during the inspection as well as analysis of information supplied by Phoenix in its regulatory returns and other regulatory engagement activity.

Summary of findings  

Consumer – C1 – August 2024

During the inspection Phoenix provided evidence-based assurance that it maintains an accurate record of the condition of its homes at an individual property level through physical surveys of all its homes and has a process for keeping this information up to date. Phoenix has demonstrated that it uses its understanding of the quality and safety of its tenants’ homes to make decisions on future investment to maintain and improve homes.

There is evidence that Phoenix has a good understanding of its compliance with its landlord health and safety requirements and that it has appropriate systems for ensuring the continued health and safety of tenants in their homes. We found evidence that Phoenix has made improvements in its approach to fire safety related risk management in response to internal and external assurance reviews. Phoenix has appropriately prioritised remedial actions and evidenced risk mitigations are in place.

Phoenix has evidenced that it provides an effective, efficient and timely repairs service to tenants and has implemented tenant-focused improvements to deliver better outcomes for its tenants.

In relation to the Transparency, Influence and Accountability Standard, we were assured that Phoenix’s board and tenants regularly review reporting on complaints performance and insight, including root cause analysis of complaints. There is evidence that this performance data and analysis is used by Phoenix to improve services. Phoenix’s approach to complaints has been scrutinised by tenants with improvements made as a result.

Phoenix has arrangements in place that support the involvement of tenants in decision making at all levels. Phoenix has evidenced that it provides a wide variety of opportunities for a broad range of tenants to influence and scrutinise its strategies, policies, performance and services. There is evidence that this has led to improved outcomes for tenants. We have assurance that strategies to continuously maintain and improve tenant involvement in decision-making and shaping services are well developed at Phoenix.

Phoenix has provided appropriate evidence that it is making effective use of its performance and insight information to shape services. It provides a range of information for tenants to support effective scrutiny, using neighbourhood and building level information.

Governance – G2 – August 2024

Based on the evidence gained from the inspection, there is assurance that Phoenix’s governance arrangements are meeting the requirements of the Governance and Financial Viability Standard. Phoenix’s board has clear oversight of the strategic objectives in its corporate plan and reviews performance against these. There is evidence of action being taken to improve delivery and sufficient information is provided to enable meaningful challenge by tenants. Phoenix was able to provide assurance that its board considers alternative options to deliver value for money and make best use of resources. We found evidence that when implementing new ways of delivering against its purpose, Phoenix considers the costs, benefits and risks involved, but Phoenix needs to ensure that it keeps this under regular review.

We have assurance that Phoenix has an appropriate business planning, risk and control framework in place. However, we found evidence through the inspection that improvement is needed to increase the effectiveness of internal controls across a number of areas and to strengthen strategic oversight of risk. Phoenix’s board has recognised this and is seeking additional assurance through commissioned reviews.

Phoenix needs to take action to ensure the effectiveness of its governance arrangements and ensure that its board has an appropriate level of assurance that governance documents and requirements are being complied with. This includes strengthening of internal controls in relation to core governance processes and ensuring regular review of compliance with all aspects of the board’s chosen code of governance. The board has been proactive in raising awareness of the importance of controls around key governance processes and additional training for both board and executive has been commissioned. There is also a need to formalise the arrangements in place for board recruitment, skills assessment, development and succession planning.

Phoenix has made changes to its risk framework to support the board’s role in strategic oversight of risks. Phoenix’s board has been proactive in identifying where it requires additional assurance with a review of development appraisal controls already underway.   

Phoenix was able to provide evidence that it has established and maintains clear roles, responsibilities and accountabilities within its leadership and governance structure. An in-depth external governance review has not been commissioned by Phoenix’s board since 2017. 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. There has been a more recent review of governance and resident involvement in decision making in 2022-2023 and Phoenix commissioned a full governance review in 2023-2024 which is now underway.  

Phoenix has demonstrated that it carries out robust stress testing and, with oversight from its board, has developed a range of mitigation strategies. A system of early warning triggers is in place and reported on to Phoenix’s board, although there is further development needed so that decision making on action being triggered is clearer and timeliness of reporting allows oversight aligned to the level of risk in the financial plan. 

Viability – V2 – August 2024

Based on the evidence gained through the inspection, we have concluded that there is appropriate assurance that Phoenix’s financial plans are consistent with, and support, its financial strategy. Phoenix has an adequately funded business plan, with access to sufficient liquidity and security, and no reliance on sales income to maintain funder covenant compliance. This means that the cashflows it plans to generate from rental income demonstrate that funder covenants can be met.

Phoenix is increasing investment in its existing homes and as a result its financial performance demonstrates a weakening of forecast interest cover. In the context of financial pressures including inflation and cost increases, this will mean that Phoenix has the capacity to respond to a reasonable range of adverse scenarios, but it will need to manage these material risks.

Background to the judgement

About the landlord

Phoenix was formed in 2007 as a result of a stock transfer from the London Borough of Lewisham (Lewisham) and is an exempt charity registered under the Co-operative and Community Benefit Societies Act 2014. It operates mainly in the south of Lewisham.

Phoenix is the only RSH registered entity in its group and is a non-profit registered provider of social housing. Phoenix has two unregistered subsidiaries, Home Makers The Property People Limited (Homemakers) and Phoenix Agency Services Limited (PAS). PAS previously provided repairs services to Phoenix but following the transfer of this activity to the parent entity in 2023, PAS will be wound up in due course. Homemakers provides private lettings management services.

Phoenix owns and manages around 7,700 homes. Phoenix has 5 blocks over 18m and a further 9 blocks over 11m high. Phoenix plans to develop around 290 new homes, mainly in its core area of Lewisham over the period 2025- 2029.

Group turnover at March 2024 was £45m, of which around 92% was from general needs rented stock, 2% from supported housing, 3% from the management of leaseholders and the remainder from a small number of low cost home ownership homes (31 homes) and other social and non-social housing activities. At March 2024 Phoenix had 254 full-time equivalent staff.

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