Salvation Army Housing Association (LH2429) - Regulatory Judgement: 18 December 2024
Updated 18 December 2024
Applies to England
© Crown copyright 2024
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/regulatory-judgement-salvation-army-housing-association/salvation-army-housing-association-lh2429-regulatory-judgement-18-december-2024
Our Judgement
| Grade/Judgement | Change | Date of assessment | |
|---|---|---|---|
| Consumer | C2 Our judgement is that there are some weaknesses in the landlord delivering the outcomes of the consumer standards and improvement is needed. |
First grading | December 2024 |
| Governance | G1 Our judgement is that the landlord meets our governance requirements. |
Upgrade | December 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 | December 2024 |
Reason for publication
We are publishing a regulatory judgement for Salvation Army Housing Association (SAHA) following an inspection completed in December 2024.
This regulatory judgement confirms a consumer grade of C2, a financial viability grading of V2 and upgrades the governance grading to G1.
Prior to this regulatory judgement, the governance and financial viability grades for SAHA were last updated in November 2023 following a stability check, to confirm grades of G2 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 it is our judgement that there are some weaknesses in SAHA’s delivering the outcomes of the consumer standards and improvement is needed, specifically in relation to outcomes in our Safety and Quality Standard and Transparency, Influence and Accountability Standard. Based on this assessment, we have concluded a C2 grade for SAHA.
Our judgement is that SAHA meets our governance requirements. Through the inspection, SAHA has provided evidence to demonstrate the effectiveness of its governance arrangements and that it effectively manages the risks of its activities, allowing it to deliver its strategic and charitable objectives. We have concluded that this has provided sufficient assurance that SAHA has made the necessary improvements to be assessed as a G1 grading.
Our judgement is that SAHA meets our financial viability requirements and has the financial capacity to deal with a reasonable range of adverse scenarios. It has access to sufficient liquidity. However, its operating model means it generates low margins and must manage ongoing risk within its business model, balancing revenue from relatively short-term contracts against the long-term leases and funding arrangements for buildings through which its services are delivered and investment in existing homes. Based on this assessment we have concluded a V2 grade.
How we reached our judgement
We carried out an inspection of SAHA to assess how well it is delivering the outcomes of the consumer standards and meeting our governance and financial viability standards, as part of our regulatory inspection programme. During our inspection, we considered all four of the consumer standards: Neighbourhood and Community Standard, Safety and Quality Standard, Tenancy Standard and the Transparency, Influence and Accountability Standard.
During our inspection we observed a board meeting, a tenant scrutiny panel, spoke to tenants, held meetings with SAHA, including non-executive directors, and reviewed a wide range of documents provided by SAHA.
Our regulatory judgement is based on a review of all the relevant information we obtained during the inspection as well as analysis of data received through its regulatory returns and other regulatory engagement activity.
Summary of findings
Consumer – C2 – December 2024
During the inspection SAHA 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 areas. SAHA has a good understanding of its landlord health and safety requirements, with external assurance obtained on its compliance processes and the accuracy of its data.
We found that fire safety risks are understood, and the highest priority risks addressed quickly. However, SAHA does have a backlog of medium priority fire remedial actions and while we saw evidence that this backlog has been reducing steadily, a material number remain outstanding.
There is evidence that SAHA has a reasonable record of the condition of its homes, however there has been a delay in delivering planned stock condition surveys which is now being addressed through the use of external surveyors. As a result the board lacks assurance that all homes have been well maintained and continue to meet the Decent Homes Standard.
We found evidence of some weakness in the provision of the repairs and maintenance service by SAHA. Performance information, in combination with feedback and complaints from tenants, demonstrates a need for it to improve the service. We have assurance that tenants have been involved in scrutiny of the service and we saw evidence of improvement in the out of hours emergency service as a result of SAHA responding to tenants’ feedback. SAHA has further plans for improvement including a transition to new contractors, and needs to ensure that these changes are delivered so that there are improved outcomes for tenants.
Our inspection found evidence that SAHA’s approach to lettings is transparent and that it has set out clearly how properties are allocated. We saw evidence of SAHA’s commitment to tenancy sustainment through a variety of ways including financial support, employment/training support, debt advice, and several support funds.
We gained assurance that SAHA works with tenants and with relevant organisations and deals effectively with anti-social behaviour and hate incidents.
We found tenant engagement to be well structured and supported. SAHA provides opportunities for tenants to scrutinise and influence and we saw evidence of recommendations from involved tenants being acted on and outcomes improved. SAHA recognises it needs to collect more information about the diverse needs of its tenants, particularly in general needs housing, and is approaching this through several initiatives. Strengthening this area will enable it to better evidence that its services are accessible, and it delivers fair and equitable outcomes for tenants.
Governance – G1 – December 2024
Based on the evidence gained from the inspection there is assurance that SAHA’s governance arrangements enable it to effectively manage its risks and adequately control the organisation, allowing it to deliver its objectives. There have been changes to SAHA’s leadership, and governance has continued to improve since it was upgraded from G3 to G2 in May 2023. It has engaged positively with us during this time.
The relationship between SAHA, its parent The Salvation Army Trustee Company Limited (SATCo) and the broader Salvation Army group was an area of focus in the inspection. We gained assurance that SAHA’s relationship with SATCo has been strengthened and enables SAHA to continue to operate with autonomy, setting its own strategy aligned to its organisational purpose. We have assurance that SAHA’s governance arrangements enable it to effectively manage its risks and adequately control the organisation, allowing it to deliver its objectives.
Board member skills, experience and knowledge are aligned with the activities of the organisation and there is a structured approach to reviewing board effectiveness, appraisal and development of members skills and succession planning supported by regular external review, most recently in early 2024.
SAHA has a risk management and control framework that aligns to its strategic risks. We have assurance of strategic oversight and that key financial risks, including lease exposures, are being managed effectively. SAHA’s approach to stress testing and mitigation strategies has improved, however it will need to ensure there is further development so that it remains appropriate.
The board actively seeks and gains an appropriate level of assurance across a range of areas. The board and executive have a good awareness of the remaining work to sustain improvements in governance, and in relation to asset management, repairs and tenant information. Realistic plans are in place to continue those improvements that should positively impact on complaints and tenant satisfaction.
Overall, we consider that SAHA has provided appropriate assurance that it has sufficiently addressed the governance weaknesses we previously identified. Our judgement is that the landlord meets our governance requirements.
Viability – V2 – December 2024
Based on evidence gained from this inspection, we have assurance that SAHA’s financial plans are consistent with, and support, its strategy.
SAHA has increased its liquidity following the disposal of student accommodation, which did not align with its core strategy. It has provided evidence-based assurance that it has an adequately funded business plan, sufficient security in place to support its plans, and is forecast to continue to meet its financial covenants.
A significant proportion of housing provided by SAHA is supported housing which is relatively low-margin, but it has a history of achieving forecasted performance. Risk of accounting adjustments from some leases remains which is reflected in our viability grade. We saw evidence of good financial controls, monitoring and reporting to board.
SAHA is working to improve its understanding of stock condition and its future maintenance and investment spend requirements, alongside plans to develop 250 units of additional housing stock by 2028. While this presents risks, SAHA demonstrates the financial capacity to deal with a reasonable range of adverse scenarios.
Background to the judgement
About the landlord
SAHA is an exempt charity registered under the Co-operative and Community Benefit Societies Act 2014. It is an independent subsidiary of SATCo and the only registered provider of social housing within the Salvation Army group.
It has three subsidiaries; Kingsown Property Limited, that leases furniture and equipment to SAHA’s supported schemes, plus two further subsidiaries SAHA Developments Limited and Chapter 1 Trading Limited, both are dormant.
SAHA owns 3,462 homes across England. These include 1,842 homes for supported housing, 922 general needs homes, 289 homes for older people and 50 care home spaces. It works with some of the most vulnerable people in society and its mission is to transform lives by providing safe homes and enabling people to develop their own potential within them.
SAHA employs 232 full-time equivalent staff and its turnover for the year ended 31 March 2024 was £38.9m.
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.