Decision

Current regulatory judgement: The Riverside Group Limited (27 March 2024)

Updated 27 March 2024

Applies to England

RSH Narrative Regulatory Judgement

• Provider: The Riverside Group Limited
• Regulatory code: L4552
• Publication date: 27 March 2024
• Governance grade: G1
• Viability grade: V2
• Reason for publication: Governance upgrade and changed basis for viability grade
• Regulatory route: In Depth Assessment

Regulatory judgement

This regulatory judgement upgrades the previous published assessment of The Riverside Group Limited’s governance grade from G2 to G1 and confirms its existing V2 grade for financial viability.

In December 2021 we published an interim regulatory judgement for The Riverside Group Limited (TRGL) following the merger of TRGL with One Housing Group Limited (OHG). Our interim judgement for TRGL was a G2/V2 grade. This reflected that OHG held significant risks from longstanding, legacy business activities and decision making had not been consistently supported by accurate data, impacting OHG board’s ability to foresee and manage these risks. At the point of the merger OHG’s board was undertaking work to satisfy itself on the robustness of the assurance it had in this area. In particular, that the controls supporting financial and treasury information, planning and reporting, were operating effectively so that quality and timely information was provided on a consistent basis.

Based on the evidence gained from an In Depth Assessment (IDA), the regulator has assurance that TRGL’s governance arrangements enable it to adequately control the merged organisation and to continue meeting its objectives.

TRGL has strengthened its governance and compliance frameworks to support the enlarged group and agreed a strategy to simplify the organisation’s activities and structure. It has improved the management of risks across the group, including those relating to financial and treasury information and has actioned pre-merger due diligence findings. The board has also implemented a series of changes to improve the quality of its data and has strengthened its reporting and oversight of strategic risks.

Based on the evidence gained from the IDA, the regulator has assurance that TRGL complies with the financial viability elements of the Governance and Financial Viability Standard. It has an adequately funded business plan, sufficient security, and forecasts to continue meeting its financial covenants.

TRGL is making additional investment in existing homes to complete fire safety works and improve energy efficiency while continuing to develop new homes. Financial performance in its core business is weaker, with reliance on sales and a need to deliver against challenging assumptions to maintain interest cover covenant compliance. This combination of risks reduces TRGL’s capacity to respond to adverse events and needs managing to ensure ongoing compliance.

Other providers included in the judgement

None

About the provider

Origins

TRGL is the registered, asset owning parent of the group, set up as a charitable community benefit society.

Registered Entities

TRGL is the only active registered entity in the group. OHG and its own subsidiary (TPHA Limited) have completed transfers of engagement into TRGL and no longer hold any social housing assets.

The group also includes Irvine Housing Association Limited, registered with the Scottish Housing Regulator.

Unregistered Entities

TRGL has 37 unregistered subsidiaries, investments in 15 joint ventures and four associated entities. Activities undertaken by unregistered entities include housing development, property services and special purpose vehicles.

Geographic Spread and Scale

TRGL operates across the United Kingdom with stock in 174 local authority areas.

It owns and manages around 77,000 homes. The majority of these are for general needs, but it also provides homes for shared ownership, supported housing, housing for older people and care provision.

Staffing and Turnover

The group employs the full-time equivalent of approximately 4,121 staff. Its turnover for the year ended 31 March 2023 was £625.4m.

Development

TRGL is an investment partner with the Greater London Authority and a Homes England Strategic Partner. It plans to develop around 4,000 homes by 2026.

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.