Decision

Withdrawn regulatory judgement: Reside Housing Association Limited (16 December 2020)

Updated 15 December 2021

This decision was withdrawn on 26 July 2023

Reside Housing Association Limited became a subsidiary of Progress Housing Association Limited.

Applies to England

Withdrawn: Reside Housing Association Limited became a subsidiary of Progress Housing Group Limited on 30 September 2021.

RSH Narrative Regulatory judgement

• Provider: Reside Housing Association Limited
• Regulatory code: 4745
• Publication date: 16 December 2020
• Governance grade: G1
• Viability grade: V2
• Reason for publication: Governance upgrade
• Regulatory route: Stability Check and Reactive Engagement

This assessment upgrades our previous published assessment of Reside Housing Association Limited’s governance. Based on the evidence gained from a Stability Check and Reactive Engagement, the regulator now has assurance that Reside Housing Association Limited’s governance arrangements enable it to adequately control the organisation and to continue meeting its objectives.

In the period since our previous narrative judgement in October 2018, Reside Housing Association Limited (Reside) has made improvements to its governance arrangements and operating procedures. Our previous judgement highlighted that Reside’s oversight of health and safety compliance, lease management and its approach to stress testing required improvement. In addition, we noted the need for enhancements to the provider’s internal control assurance framework and management reporting to board.

Reside has revised its health and safety policies and practices. It can evidence more effective oversight of performance in this area and has clarified where statutory responsibility for legislative compliance rests with another party. Reside has improved its lease management approach. Relevant data is now captured in its assets and liabilities register and there is evidence that it is monitoring its lease arrangements appropriately.

Reside has aligned stress testing to the principal risks facing the business, enabling the board to gain a more rounded understanding of the organisation’s financial resilience. Stress testing encompasses the impact of stresses on funders’ covenants, the liquidity position and features the appropriate use of triggers for mitigating actions.

Reside has strengthened its internal control assurance framework through the appointment of internal auditors and the establishment of a risk-based internal audit plan. Management reporting to the board has been improved, and a new key performance indicator dashboard has been introduced to facilitate enhanced board scrutiny of performance.

The regulator’s assessment of Reside’s compliance with the financial viability element of the Governance and Financial Viability Standard is unchanged. The provider continues to have the financial capacity to deal with a reasonable range of adverse scenarios but must manage material risks to ensure continued compliance. Reside forecasts significant headroom against lender covenants and its financial plans are based on broadly reasonable assumptions. However, there are inherent risks associated with Reside’s business model due to the nature and terms of its lease obligations. Reside has sought to mitigate this risk by entering into short term leases and applying void protection to agreements, where possible. However, effective liquidity management – informed by appropriate stress testing – remains key to protecting the provider’s financial viability.

Other providers included in the judgement

None

About the provider

Origins

Reside is a registered society under the Community Benefit Societies Act 2014. It was established in 2002 to provide housing for people with support needs. Support to tenants is provided through contracts with care and support providers and local authorities.

The majority of Reside’s properties are acquired on a leasehold basis. It also has a portfolio of properties purchased outright on a freehold basis.

Registered Entities

Reside is the only registered entity.

Unregistered Entities

There are no unregistered entities.

Geographic Spread and Scale

Reside manages approximately 1,450 units in about 360 properties spread across the UK.

Staffing and Turnover

Reside employs 34 full time equivalent staff. It reported turnover for 2019/20 of £16.4m.

Development

Development is not a key component of Reside’s current strategy, and growth is through acquisition rather than development.

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’.