Decision

Current regulatory judgement: Regenda Limited (27 March 2024)

Updated 27 March 2024

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Regenda Limited
• Regulatory code: 4653
• Publication date: 27 March 2024
• Governance grade: G2
• Viability grade: V2
• Reason for publication: Changed basis for governance and viability grades
• Regulatory route: In Depth Assessment

Regulatory judgement

This regulatory judgement confirms the regulator’s existing assessment of Regenda Limited’s governance and financial viability (G2/V2), following completion of an In-Depth Assessment (IDA).

Regenda Limited (Regenda) continues to meet the requirements on governance set out in the Governance and Financial Viability Standard. Regenda was downgraded to G2 in December 2022 following its self-referral of a breach of the Rent Standard.

We have concluded that Regenda has addressed the presenting issues. The organisation has undertaken a root cause analysis which included an independent review of its rent setting compliance framework. This has led to a programme of training and establishment of a new rents and service charge team. Two internal audits have provided assurance over the effectiveness of improved internal controls in the setting and management of rents.

However, Regenda now needs to consider the current financial performance of its diversified business streams, which has been impacted by extensive fire safety works, reflected in its group structure and its broader risk management framework. This includes undertaking a rigorous appraisal of potential options of its activities and entities, taking into account Regenda’s charitable status and the role of the board in this context. The board should provide robust challenge on the extent to which it is optimising use of resources in delivering the organisation’s purpose and strategic objectives and be able to demonstrate it has fully considered the costs and benefits of alternative structures.

Regenda also needs to further develop its approach to managing business streams with clear plans of when to trigger an intervention if weak financial performance could create risk to its social housing assets. It should further develop its stress testing and mitigation strategies to reflect a more comprehensive assessment of the costs associated with the closure or failure of individual subsidiaries or business streams. Regenda also needs to demonstrate that recent changes in its risk management framework are effective in practice.

Based on the evidence gained from the IDA, the regulator has assurance that Regenda continues to comply with the financial viability elements of the Governance and Financial Viability Standard. Regenda has an adequately funded business plan, as well as sufficient liquidity and security in place and is forecast to continue to meet its financial covenants under a reasonable range of scenarios.

Regenda continues to invest in its homes based on its analysis of stock condition information, which includes an increase in spend on fire safety work. Delivering this investment, coupled with the financial risks from its diversified business streams and set in the context of economic pressures, reduces Regenda’s capacity to respond to adverse events.

Other providers included in the judgement

Redwing Living Limited

About the provider

Origins

Regenda is a charitable community benefit society, formed in December 2001. Three other housing associations were incorporated within Regenda in 2011.

Registered Entities

Redwing Living Limited is a not-for-profit registered provider. Its activities include private rented properties, leasehold and apartment block management, shared ownership and outright sales.

Unregistered Entities

Regenda has seven active unregistered entities:

• M&Y Maintenance & Construction Limited provides responsive repairs, planned works, and build services across the North West of England;
• Eco Gee Limited is an energy and construction specialist company providing decarbonisation solutions across the North West;
• Petrus Community is a registered charity that provides residential and day support services to people who are homeless or in housing need.
• The Learning Foundry Limited is an education and training provider;
• Centre 56 Limited is a childcare provider, based in Liverpool, for women and children who have suffered, or are at risk of suffering, domestic abuse;
• The National Communities Resource Centre Limited is a training based entity covering areas such as building resilience, engaging your community and involving and empowering residents; and
• Regenda Developments Limited undertakes new development work for Regenda.

Geographic Spread and Scale

Regenda owns and manages around 13,200 homes in 24 local authorities. The majority of its stock is in the North West of England.

Staffing and Turnover

Regenda employs the full-time equivalent of 672 staff. Its turnover for the year ended 31 March 2023 was £76.6m.

Development

Regenda intends to deliver around 245 homes between 2023 and 2026. Its programme includes homes for affordable rent, low-cost home ownership and rent to buy.

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.