Section 219 HOUSING AND REGENERATION ACT 2008 (“the Act”)

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Accepted Answer

Introduction

A registered provider is responsible for ensuring that it manages itself effectively, achieves the standards set by the regulator, and engages positively with the regulator’s regulatory framework. Where a failure against a standard or other problem has been identified, the regulator expects a registered provider to respond in a prompt and effective manner. It may be necessary for the regulator to step in and exercise its powers under section 219 of the Act when a provider fails to do so.

Sections 219 to 225 of the Act allow the regulator to require a registered provider to take specified action to resolve a specified failure or other problem by issue of an enforcement notice. The regulator has published guidance on its use of this power which can be found here.

The Regulatory Standards that registered providers of social housing are required to meet can be found here together with our approach to regulating the standards.

Grounds for issuing this enforcement notice

On 18 March 2021, the regulator published a regulatory notice ^{[footnote 1]} concluding Pivotal Housing Association (PHA) was not meeting the Governance and Financial Viability Standard (the Standard), and the Rent Standard. The regulator has engaged intensively with PHA and assessed actions taken by PHA to address the issues raised in the regulatory notice.

The regulator has concluded that PHA has failed to deliver the outcomes of the Standard, in that PHA is unable to:

ensure effective governance arrangements that deliver its aims and objectives and intended outcomes for tenants and potential tenants in an effective, transparent and accountable manner;
manage its resources effectively to ensure its viability is maintained while ensuring that social housing assets are not put at undue risk;
manage its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence and foresight;
ensure that it has an appropriate, robust and prudent business planning, risk and control framework which ensures:

(a) there is access to sufficient liquidity at all times;

(b) financial forecasts are based on appropriate and reasonable assumptions;

(c) effective systems are in place to monitor and accurately report delivery of the registered provider’s plans; and

(d) the financial and other implications of risks to the delivery of plans are considered
assess, manage and where appropriate address risks to ensure the long-term viability of the registered provider, including ensuring that social housing assets are protected by:

(a) maintaining a thorough, accurate and up to date record of its assets and liabilities and particularly those liabilities that may have recourse to social housing assets; and

(b) carrying out detailed and robust stress testing against identified risks and combinations of risks across a range of scenarios and putting appropriate mitigation strategies in place as a result

(c) before taking on new liabilities, ensuring that it understands and manages the likely impact on current and future business and regulatory compliance
ensure that the arrangements it has entered into do not inappropriately advance the interests of third parties or are arrangements which the regulator could reasonably assume were for such purposes.

The regulator has also concluded that:

PHA’s affairs have been mismanaged as defined under 275 of the Act in that PHA has failed to submit its statutory accounts with the regulator, due 30 September 2024 in accordance with the requirements of the Act; and
PHA has failed to provide adequate assurance that it is compliant with the Rent Standard and/ or meets exceptions from the Rent Standard for Specialised Supported Housing (SSH).

The regulator is serving PHA with an enforcement notice by virtue of its powers under sections 219 to 225 of the Act. Specifically, the grounds for issuing an enforcement notice are under section 220(1) of the Act,

Case 1 – that PHA has failed to deliver the outcomes of the Standard and the Rent Standard applicable to it under section 194 of the Act.
Case 2 – that the affairs of PHA have been mismanaged.

Direction

The regulator directs that PHA takes the following actions:

1.PHA must commission an independent appraisal (the Appraisal) to be completed within 28 days of the enforcement notice (14 May 2025) by a party with relevant skills and expertise to address how it will deliver the outcomes of the standards which includes (but is not limited to) a review of:

(a) assets and liabilities register and classification of stock with a clear breakdown of its social and non-social housing properties and the methodology used in determining each stock type.

(b) the liabilities and management of risks relating to its arrangements with connected group entities including management of potential conflicts of interest and ability for PHA’s board to make independent decisions that are in the best interests of PHA.

(c) proposals and/ or draft agreements with its creditors to ensure PHA understand its liabilities and is able to manage the likely impact on current and future business and regulatory compliance. Further, that any proposals are aligned to its activities and objectives as a not-for-profit provider of social housing.

(d) PHA’s access to liquidity and ability to manage its immediate solvent position.

(e) whether PHA is meeting landlord health and safety obligations and its capacity to meet those obligations on an ongoing basis.

(f) All options for PHA including voluntary de-registration and/ or managed wind down.

2.Based on the outcome of the Appraisal PHA must within 42 days of the enforcement notice (28 May 2025) submit an action recovery plan and timetable for agreement with the regulator to address how it will deliver the outcomes of the standards and/ or a plan for managed wind down and voluntary de-registration.

Any action recovery plan on delivering the outcomes of the standards must ensure effective governance and long-term viability and include steps to address the following:

(a) Adequate skills and capacity in its leadership at board and the executive.

(b) Appropriate board reporting and record keeping in place.

(c) Adequate management of PHA’s financial risks and obligations which impact its long-term viability.

(d) Business planning, risk and control framework including:

financial forecasts based on appropriate and reasonable assumptions, within a 30-year business plan;
stress testing and mitigation strategies; and
effective systems are in place to monitor and accurately report delivery of the registered provider’s plans.

(e) Management of actual and/ or potential conflicts of interest.

(f) Compliance with the Rent Standard and/ or exceptions claimed from the Rent Standard.

The regulator expects PHA to co-operate fully with the regulator and to co-ordinate its communications strategy on all matters relating to enforcement actions with the regulator, and to give the regulator the opportunity to comment on the content and timing of any news releases or other public statements.

Further Information

In coming to the decision set out in this enforcement notice, the regulator has taken into account all relevant matters referred to in the regulatory framework ‘Statutory guidance under s215 of the HRA 2008 with particular reference to guidance note 5.
Please note that a registered provider given an enforcement notice may appeal against it to the High Court pursuant to the Housing and Regeneration Act 2008.
The regulator may withdraw the enforcement notice at any time by giving notice to PHA.
Should PHA fail to comply with this enforcement notice, the regulator will consider exercising other regulatory or enforcement powers.
The regulator may choose to publicise the serving of this enforcement notice.
Any information or correspondence pertaining to this enforcement notice should be sent to the regulator, addressed to:

Jonathan Walters

Deputy Chief Executive

Regulator of Social Housing

7 – 8 Wellington Place

Leeds

LS1 4AP

Signed on behalf of the regulator:

Jonathan Walters

Deputy Chief Executive

Date of enforcement notice: 16 April 2025

Regulatory Notice: Pivotal Housing Association (18 March 2021) – GOV.UK (www.gov.uk) ↩

Pivotal Housing Association (4747) – Enforcement Notice: 16 April 2025

Applies to England

ENFORCEMENT NOTICE