Decision

Previous regulatory judgement: Poplar Housing and Regeneration Community Association Limited (24 November 2021)

Updated 13 December 2023

Applies to England

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This publication is available at https://www.gov.uk/government/publications/regulatory-judgement-poplar-harca-limited--2/current-regulatory-judgement-poplar-housing-and-regeneration-community-association-limited-24-november-2021

RSH Narrative Regulatory Judgement

  • Provider: Poplar Housing and Regeneration Community Association Limited
  • Regulatory code: L4170
  • Publication date: 24 November 2021
  • 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 Poplar Housing and Regeneration Community Association Limited’s (Poplar HARCA) financial viability and governance grades (G1/V2), following completion of an In Depth Assessment (IDA).

Based on evidence gained from the IDA, the regulator has assurance that Poplar HARCA continues to comply with the financial viability elements of the Governance and Financial Viability Standard and can deal with a reasonable range of adverse scenarios. Poplar HARCA’s financial plans are consistent with, and support, its financial strategy. It has an adequately funded business plan, sufficient security and is forecast to continue to meet its financial covenants.

Poplar HARCA continues to have material financial risks that it needs to manage to maintain compliance. Forecast earnings from its core social housing lettings business are not sufficient on their own to cover interest payments over the medium term. In addition, increased expenditure on major repairs negatively impacts forecast performance, although elements of this are excluded from loan covenants until 2023.

Open market sales, delivered primarily through joint ventures, represent a large proportion of Poplar HARCA’s overall business activity and introduce a significant exposure to the housing market, forecast to peak in 2023. In addition, Poplar HARCA is reliant on fixed asset disposals and shared ownership sales to support its liquidity position.

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

Other providers included in the judgement

None

About the provider

Origins

Poplar HARCA was established in 1998 to receive an initial transfer of stock from the London Borough of Tower Hamlets, with further estates being transferred until 2009.

It is a community benefit society and its priority is the regeneration of estates in Poplar, an area of social deprivation in East London.

Registered Entities

Poplar HARCA is the only registered entity in the group.

Unregistered Entities

Poplar HARCA has four unregistered subsidiaries:

  • Poplar HARCA (Developments) Limited, which develops property for sale via joint ventures;
  • Poplar HARCA Projects Limited, which leases empty properties from its parent on a short-term basis to be offered as temporary housing and also develops property for sale via joint ventures;
  • Poplar HARCA Capital Plc., which was incorporated to issue a bond on the capital markets; and
  • Leaside Business Centre Management, which lets office space.

Geographic Spread and Scale

Poplar HARCA currently has around 9,900 units as well as community centres and open spaces. All its stock is located in East London.

Staffing and Turnover

Poplar HARCA’s turnover for the year ended 31 March 2021 was £65.1m. It employs the full-time equivalent of 331 staff.

Development

Poplar HARCA’s development focus is on community regeneration programmes. It intends to develop around 800 rental and shared ownership homes between 2021 and 2025. It also plans to develop properties for market sale via its joint venture activities.

About our judgements

Key to Grades

Governance:

  • G1 (Compliant): The provider meets our governance requirements.
  • G2 (Compliant): The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.
  • G3 (Non-compliant): 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 (Non-compliant): 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:

  • V1 (Compliant): The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.
  • V2 (Compliant): 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.
  • V3 (Non-compliant): 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 (Non-compliant): 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 Processes

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’.

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