Decision

Previous regulatory judgement: South Yorkshire Housing Association Limited (28 September 2022)

Updated 8 June 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: South Yorkshire Housing Association Limited
• Regulatory code: L0078
• Publication date: 28 September 2022
• Governance grade: G2
• Viability grade: V2
• Reason for publication: Governance downgrade
• Regulatory route: In Depth Assessment

Regulatory judgement

This judgement downgrades our assessment of South Yorkshire Housing Association Limited’s governance from G1 to G2 and confirms its existing V2 grade for viability.

South Yorkshire Housing Association Limited (SYHA) continues to meet the requirements on governance set out in the Governance and Financial Viability Standard. However, following an In Depth Assessment (IDA) we have concluded that it needs to improve aspects of its governance arrangements to ensure continued compliance.

The IDA has found weaknesses in the board’s oversight of risk management, strategic and financial planning, and strategic plan delivery.

Detailed monitoring of landlord health and safety and building safety risks is in place at officer level however board reporting does not allow for adequate oversight and challenge. A previous significant issue was not escalated to the board, or the regulator, in a timely and effective way. SYHA had already planned to review its risk management framework, and this should consider clearer mapping of the level of assurance the board receives to risk prioritisation.

When approving the business plan the board has not had sufficient or timely information to fully consider alignment with its risk appetite and any potential impact on SYHA’s strategy. In the context of increasing pressures reducing SYHA’s financial resilience, the quality of stress testing and mitigation work needs strengthening. Since approving the current business plan SYHA has agreed a revised business planning timetable and is undertaking additional work on modelling and mitigations. The board needs to continue this work at pace to inform strategic decision-making.

Performance reporting covers only a limited range of targets, restricting the ability of the board and other stakeholders to assess strategic performance. The board is focused on the successful delivery of SYHA’s strategy however it cannot fully evidence delivery of priorities.

The board has a reasonable range of skills and experience aligned to the services it delivers. However, SYHA needs to assure itself that board composition is appropriate in the context of current and future financial challenges. There is insufficient evidence that structured board skills appraisal informs recruitment and succession planning. There has not been an external board effectiveness review for several years.

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

While SYHA has the financial capacity to deal with some exposures, it has material risks and needs to manage these to support continued compliance. For the short to medium term, SYHA’s business plan is forecasting limited financial capacity, with weak financial operating performance and continuing low headroom against its current interest cover covenant. During this period SYHA is reliant on some uncertain cashflows, such as fixed asset disposals, to support its financial performance and covenant headroom.

Other providers included in the judgement

Alliance Housing Association (South Yorkshire) Limited

About the provider

Origins

SYHA is a charitable community benefit society. Its principal activities are the management of housing and the provision of care and support services.

Registered Entities

There are two registered providers in the group. SYHA is the parent of the group and Alliance Housing Association (South Yorkshire) Limited which is a charitable community benefit society.

Unregistered Entities

There is one active and two dormant non-registered subsidiaries in the group:

• SYHA Enterprises Limited’s primary activity is estate agent and letting services. It also undertakes purchase and resale activity, as well as a co-design consultancy service under the Co-Create brand.
• Charter Housing Limited and South Yorkshire (Second) Housing Association Limited are both dormant.

Geographic Spread and Scale

The majority of SYHA’s 5,200 homes are in the South Yorkshire Mayoral Combined Authority region, with a small number of units in Selby, Mansfield, Wakefield, and High Peak.

Staffing and Turnover

At 31 March 2021 the group employed 546 full-time equivalent employees. Group turnover for the year to 31 March 2021 was £46.4m.

Development

SYHA plans to develop 111 units between the 2022/23 and 2024/25 financial years. This includes 47 Low Cost Home Ownership units. Development is part-funded through the Homes England Affordable Homes Programme and the Recycled Capital Grant Fund.

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.