Decision

Previous regulatory judgement: Sanctuary Housing Association (17 April 2020)

Updated 13 December 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Sanctuary Housing Association
• Regulatory code: L0247
• Publication date: 17 April 2020
• Governance grade: G1
• Viability grade: V2
• Reason for publication: Viability regrade
• Regulatory route: In Depth Assessment

This regulatory judgement regrades our previous published assessment of Sanctuary’s viability from V1 to V2 following an IDA.

The regulator has assurance that Sanctuary complies with the financial viability element of the Governance and Financial Viability Standard and that its financial plans are consistent with, and support, its financial strategy. Sanctuary has an adequately funded business plan, sufficient security and is forecast to continue to meet its financial covenants.

Sanctuary is increasing its investment in existing homes and in the development of new housing for rent and outright sale. This weakens its interest cover position and in the short-term the additional investment spend means it will be reliant on income from a market sale programme to meet interest costs. The expanded development programme gives rise to risks and exposures which Sanctuary will need to manage and, combined with increased investment in existing housing, reduces its capacity to respond to adverse events.

The regulator’s assessment of Sanctuary’s compliance with the governance elements of the Governance and Financial Viability Standard remains unchanged. Based on the evidence gained from the IDA, the regulator has assurance that Sanctuary’s governance arrangements enable it to adequately control the organisation and to continue meeting its objectives.

Other providers included in the judgement

• Sanctuary Affordable Housing Limited 4684

About the provider

Origins

Sanctuary Housing Association (Sanctuary) is a charitable community benefit society. It is the asset-owning parent of a group with 50 subsidiaries and several joint ventures. The group’s main activities relate to the provision of housing for social and affordable rent, affordable home ownership and housing for older people. It provides a range of care services, including domiciliary and extra care, supported and retirement living.

Registered Entities

Sanctuary Affordable Housing Limited is a charitable community benefit society. Its principle activity is the development and management of affordable homes in England.

Unregistered Entities

Sanctuary has 49 unregistered subsidiaries established to support the group’s objectives, including treasury, development, operational and asset-owning vehicles. The most significant of these include:

• Sanctuary Scotland Housing Association Limited (Registered Social Landlord operating in Scotland);
• Beech Grove Homes Limited (development vehicle for outright sale);
• Sanctuary Care Property Limited and Sanctuary Care (North) Property Limited (asset-owing vehicles for care homes);
• Sanctuary Student Properties Limited (asset-owing vehicle for student accommodation).

The group also has an interest in five jointly controlled entities through development partnerships.

Geographic Spread and Scale

Sanctuary operates nationally across England and Scotland. It owns and manages about 101,000 homes. The majority of its homes are for general needs, but it also provides supported housing, retirement living, student accommodation, shared ownership and care homes. It operates across 226 local authorities in England.

Staffing and Turnover

The group employs the full time equivalent of 9,986 staff. Its turnover for the year ended 31 March 2019 was £735.4m.

Development

Sanctuary’s business plan includes planned development of around 11,000 units over the next five years.

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’.