Decision

Current regulatory judgement: Rochdale Boroughwide Housing Limited (15 December 2022)

Updated 15 December 2022

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Rochdale Boroughwide Housing Limited
• Regulatory code: 4607
• Publication date: 15 December 2022
• Governance grade: G3
• Viability grade: V2
• Reason for publication: Governance downgrade
• Regulatory route: Reactive Engagement

Regulatory judgement

This regulatory judgement downgrades Rochdale Boroughwide Housing Limited’s governance to a non-compliant G3 grade. This means there are issues of serious regulatory concern which the provider is working with us to address. The compliant viability grade is unchanged.

The regulator lacks assurance that Rochdale Boroughwide Housing Limited (RBH) has an effective risk management and internal controls framework and a board with sufficient capacity to ensure compliance with the regulatory standards. This is due to the failure of RBH’s board to act with an appropriate degree of skill, diligence, effectiveness, prudence and foresight in response to the most serious of consequences.

The regulator has published a Regulatory Notice at the same time as this judgement stating that RBH has breached consumer standards including the Home Standard and parts of the Tenant Involvement and Empowerment Standard, which has led to actual and potential serious detriment to RBH’s tenants.

The tragic death in December 2020 of Awaab Ishak, a two-year-old boy who lived on the Freehold Estate in Rochdale, and subsequent events, led to apparent action by RBH. However, RBH missed opportunities over a two-year period to act in a timely, effective and proactive manner to strengthen its risk controls and assurance relating to damp and mould hazard as more information came to light. In November 2022 the coroner’s verdict was published linking the death to damp and mould in his home.

RBH’s board failed to take appropriate steps to ensure the integrity of its data relating to the condition of its properties which adversely impacted its decision-making and scrutiny of the risks. RBH did not survey the Freehold Estate until August 2022. This survey has confirmed that almost 80% of properties inspected had damp and mould issues of varying severity. The results and timing of the survey severely undermines the credibility of the assurance upon which RBH’s board had relied.

As a result of RBH’s failure to take sufficiently swift and robust action to address material risks relating to damp and mould conditions in its properties, the regulator lacks assurance that RBH’s governance arrangements ensure that the provider is accountable to tenants, the regulator and relevant stakeholders, and that they safeguard the reputation of the sector.

Under the leadership of a newly appointed interim chief executive, RBH is increasing the pace and urgency of its response to put a recovery action plan in place. RBH’s plan will include a review of its board skills, governance and risk management arrangements to address the issues set out above.

The regulator has assurance that RBH complies with the financial viability elements of the Governance and Financial Viability Standard. Its financial plans are consistent with, and support, its financial strategy. RBH has ensured access to adequate levels of liquidity and forecasts ongoing compliance with financial covenants.

Delivery of a large-scale regeneration project that requires significant capital investment, coupled with higher inflation pressures in the current economic environment, give rise to material risks that RBH needs to continue to manage, and which reduces RBH’s capacity to respond to adverse events. In addition, the nature of the governance failings set out above and the Consumer Standards Regulatory Notice may also give rise to material risks to grant funding and covenant compliance that RBH will need to manage.

Other providers included in the judgement

None

About the provider

Origins

RBH is a community benefit society established in 2012 to receive the transfer of stock from Rochdale Borough Council.

RBH’s core business is the provision of general needs housing and housing for older people. Its strategy is focussed on the regeneration and sustainability of its neighbourhoods.

Registered Entities

RBH is the only registered entity.

Unregistered Entities

RBH has one active subsidiary, RBH (Design and Build) Limited, and one dormant subsidiary, RBH Professional Limited.

Both organisations are unregistered, non-charitable companies limited by shares.

Geographic Spread and Scale

RBH owns and manages around 12,500 properties. It operates in the local authority area of Rochdale.

Staffing and Turnover

At 31 March 2022 RBH employed 572 full-time equivalent staff. Group turnover for the year to 31 March 2022 was £57.0m.

Development

RBH’s current business plan forecasts development of around 880 units between 2022 and 2027. The units will be allocated between social or affordable rent, supported housing, shared ownership and rent to buy. RBH’s current business plan forecasts development of 1,376 units over the next 11 years. The units will be allocated between affordable rent, shared ownership, rent to buy and supported housing.

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.

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.