Decision

Salix Homes Limited (4609) - Regulatory Judgement: 14 August 2024

Updated 14 August 2024

Applies to England

Our Judgement

	Grade/Judgement	Change	Date of assessment
Consumer	C1 Our judgement is that overall the landlord is delivering the outcomes of the consumer standards. The landlord has demonstrated that it identifies when issues occur and puts plans in place to remedy and minimise recurrence.	First grading	August 2024
Governance	G1 Our judgement is that the landlord meets our governance requirements.	Assessed and unchanged	August 2024
Viability	V2 Our judgement is that the landlord 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.	Assessed and unchanged	August 2024

Reason for publication

We are publishing a regulatory judgement for Salix Homes Limited (Salix) following an inspection completed in August 2024.  

This regulatory judgement confirms a consumer grading of C1, a governance grading of G1 and a financial viability grading of V2. 

Prior to this regulatory judgement, the governance and financial viability grades for Salix were last updated in December 2023 following a stability check, to confirm grades of G1 and V2. This is the first time we have issued a consumer grade in relation to this landlord. 

Summary of the decision

From the evidence and assurance gained during the inspection we have concluded that overall Salix is delivering the outcomes of the consumer standards. Based on this assessment, we have concluded a C1 grade for Salix.  

Our judgement is that Salix meets our governance requirements. Salix has provided evidence to demonstrate the effectiveness of its governance arrangements and that it continues to effectively manage the risks of its activities, allowing it to deliver its strategic and charitable objectives. Based on this assessment, we have concluded a G1 grade for Salix. 

Our judgement is that Salix meets our financial viability requirements and continues to forecast compliance with funders’ covenants. Salix has provided appropriate assurance that it has access to sufficient liquidity and adequate funding in place. However, with increased spending on existing homes and the need to take additional debt to fund this alongside its development of new homes, Salix has limited capacity to manage adverse events. Based on this assessment, we have concluded a V2 grade for Salix.  

How we reached our judgement

We carried out an inspection of Salix to assess how well Salix is delivering the outcomes of the consumer standards and meeting our governance and financial viability requirements, as part of our planned regulatory inspection programme. During the inspection we considered all of the consumer standards: Neighbourhood and Community Standard, Safety and Quality Standard, Tenancy Standard and the Transparency, Influence and Accountability Standard.  

During the inspection we observed a board meeting and Customer Committee, a tenant scrutiny governance group, spoke to tenants, held meetings with Salix including with its non-executive directors, and reviewed a wide range of documents provided by Salix. 

Our regulatory judgement is based on all the relevant information we obtained during the inspection as well as analysis of information received from Salix through its regulatory returns and other regulatory engagement activity.  

Summary of findings 

Consumer – C1 – August 2024

During the inspection, Salix provided evidence-based assurance that it has appropriate systems in place to ensure the health and safety of its tenants in their homes and associated communal areas, including through its building safety programme.  

There is evidence that Salix keeps an accurate record of the condition of its homes at an individual property level through physical surveys of all homes and has a process for keeping this information up to date. Salix has increased its capacity to deliver its programme of stock condition surveys and has demonstrated that it uses its understanding of the quality and safety of its tenants’ homes to make decisions on future investment to maintain and improve homes.   

Salix has demonstrated that it provides an effective, efficient and timely repairs service to tenants and takes action to improve the service and outcomes for tenants when issues occur. For example, having identified an issue with the timeliness of non-emergency repairs, Salix undertook a comprehensive review while implementing mitigating actions and has made changes to the repair service to deliver improved outcomes for tenants.  

The Neighbourhood and Community Standard states that landlords must work in partnership with appropriate local authority departments, the police and other relevant organisations to deter and tackle anti-social behaviour and hate incidents in the neighbourhoods where they provide social housing. We gained assurance that Salix is working in partnership with appropriate partners to deter and tackle anti-social behaviour and hate incidents in the neighbourhoods where it provides homes. 

In relation to the Tenancy Standard, Salix provided evidence that it seeks to offer tenures that are appropriate for the homes it lets, considering the purpose of the accommodation, the needs of individual households, the sustainability of the community and the efficient use of social housing.  

Overall Salix’s approach is delivering the outcomes of the Transparency, Influence and Accountability Standard. Salix provided evidence that it treats tenants with fairness and respect and is continuing to increase its understanding of its tenants. Salix demonstrates an active approach to considering tenants’ diverse needs in the design and delivery of services and monitors its performance in continuing to deliver outcomes to tenants in this area.  

Salix regularly reviews performance information on complaints handling. It provided evidence that it learns from information on complaint types and outcomes, using this to make improvements.   

Salix has demonstrated that the design of engagement and scrutiny arrangements provides a wide range of meaningful opportunities for tenants to share their views and provide scrutiny. There is evidence that feedback from tenants and scrutiny reviews have influenced Salix’s decision making. Salix has provided assurance that it makes effective use of its performance data to improve services and provides a range of information to tenants to support effective scrutiny. Improvements made as a result of scrutiny reviews by tenants include how Salix manages anti-social behaviour cases, tenancy terminations and complaints.  

Governance – G1 – August 2024

Based on evidence gained through inspection there is assurance that Salix’s arrangements enable it to effectively manage its risk and adequately control the organisation, allowing it to deliver its objectives. Salix’s board demonstrated that it provides challenge on performance against the organisation’s strategic targets and consideration of risk appetite in strategic decision making.  

Salix has provided appropriate assurance that its board proactively reviews its approach to delivering against its purpose and is prioritising investment in existing homes and services to tenants. Salix has demonstrated that it continues to actively manage its capacity while it also delivers a development programme of new homes.  

Salix was able to provide evidence that it has established and maintains clear roles, responsibilities and accountabilities within its leadership and governance structure. The relationship between its board and committees is working in line with its delegations to strengthen assurance in key areas of risk and compliance.  

Continuing governance improvement is evidenced through annual effectiveness reviews and in-depth periodic external governance reviews. The most recent external review took place in October 2022 and we saw evidence of the recommendations being implemented as a result. 

Board member skills, experience and knowledge are aligned with the activities of the organisation and there is a structured approach to developing and appraising skills to support succession planning. We have seen evidence of this through board observation, meetings with non-executive directors and the executive team as well as reviewing relevant documents including meeting minutes.  

Salix has demonstrated that there is an appropriate risk management and control framework that aligns to its strategic risks. There is evidence that this flows from Salix’s board through the organisation with risks being managed effectively in practice. Salix’s board actively seeks and gains an appropriate level of assurance across a range of areas.  

Board ownership of stress testing and mitigation strategies is evidenced and is used to inform decisions, supplementing the wider control framework. Reporting to board provides sufficient detail for the board to ensure effective oversight.  

Viability – V2 – August 2024

Based on evidence gained through the inspection, we have concluded there is appropriate assurance that Salix’s financial plans are consistent with, and support, its financial strategy. Salix has an adequately funded business plan with sufficient security in place and is forecast to continue to meet its financial covenants.  

Salix is increasing investment in existing homes while continuing to develop new homes which requires additional debt. The costs associated with this, alongside Salix’s low operating margins means that Salix’s capacity to respond to adverse scenarios is reduced and this requires on-going management.   

Background to the judgement

About the landlord

Salix was formed following the conversion of Salford City Council’s arm’s length management organisation to a community benefit society in 2015, seeing the transfer of 8,392 homes. At 31 March 2024 Salix owned 7,964 homes. Salix’s main activities relate to the provision of affordable homes for rent, including managing around 200 units on behalf of private landlords under lease arrangements.  

Salix is the only RSH registered, asset owning parent of the group. It has two wholly owned unregistered subsidiaries, Salix Homes Developments Limited and Salix Living Limited (which is dormant), both established for the development of homes on behalf of the parent.  

Salix operates solely within Salford with one scheme in neighbouring Trafford. Based on unaudited accounts for 2023/24, Salix employed 284 staff on a full-time equivalent basis and reported turnover of £45m. Salix’s corporate plan for 2023/2025 targets the development of 100 homes per year. 

Our role and regulatory approach

We regulate for a viable, efficient, and well governed social housing sector able to deliver quality homes and services for current and future tenants.

We regulate at the landlord level to drive improvement in how landlords operate. By landlord we mean a registered provider of social housing. These can either be local authorities, or private registered providers (other organisations registered with us such as non-profit housing associations, co-operatives, or profit-making organisations).

We set standards which state outcomes that landlords must deliver. The outcomes of our standards include both the required outcomes and specific expectations we set. Where we find there are significant failures in landlords which we consider to be material to the landlord’s delivery of those outcomes, we hold them to account. Ultimately this provides protection for tenants’ homes and services and achieves better outcomes for current and future tenants. It also contributes to a sustainable sector which can attract strong investment.

We have a different role for regulating local authorities than for other landlords. This is because we have a narrower role for local authorities and the Governance and Financial Viability Standard, and Value for Money Standard do not apply. Further detail on which standards apply to different landlords can be found on our standards page.

We assess the performance of landlords through inspections and by reviewing data that landlords are required to submit to us. In Depth Assessments (IDAs) were one of our previous assessment processes, which are now replaced by our new inspections programme from 1 April 2024. We also respond where there is an issue or a potential issue that may be material to a landlord’s delivery of the outcomes of our standards. We publish regulatory judgements that describe our view of landlords’ performance with our standards. We also publish grades for landlords with more than 1,000 social housing homes.

The Housing Ombudsman deals with individual complaints. When individual complaints are referred to us, we investigate if we consider that the issue may be material to a landlord’s delivery of the outcomes of our standards.

For more information about our approach to regulation, please see Regulating the standards.

Further information

• Regulating the standards

• Regulatory standards for landlords