YMCA St Paul’s Group (LH4078) - Regulatory Judgement: 18 December 2024
Updated 18 December 2024
Applies to England
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Our Judgement
| Grade/Judgement | Change | Date of assessment | |
|---|---|---|---|
| Consumer | Not assessed yet | ||
| 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 YMCA St Paul’s Group (YMCA SPG) following a stability check review and responsive engagement completing in November 2024.
This regulatory judgement confirms a governance upgrade to G1 and a financial viability grading of V2.
Prior to this regulatory judgement, the governance and financial viability grades for YMCA SPG were last updated in August 2023, following an In Depth Assessment (IDA), that resulted in a governance downgrade to G2 and confirmation of its V2 grade. IDAs were one of our previous assessment processes and were replaced by a programme of regulatory inspections from 1 April 2024.
The IDA identified gaps in the board’s oversight of stress testing, risk management, and YMCA SPG’s delivery of the strategic plan outcomes. The IDA found that monitoring of landlord health and safety risks was in place, but board reporting needed strengthening to facilitate adequate oversight and challenge of performance. Board oversight of stress testing and mitigation strategies required improvement for YMCA SPG to assess and respond to changes in its financial position and inform its strategic decision-making.
Summary of the decision
From the evidence and assurance gained through the stability check review and responsive engagement our judgement is that YMCA SPG meets our governance requirements. YMCA SPG has provided evidence to demonstrate that it has strengthened its governance arrangements since August 2023. We have concluded that this has provided sufficient assurance that YMCA SPG has made the necessary improvements to be assessed as a G1 grading.
Our judgement is that YMCA SPG meets our financial viability requirements and has the financial capacity to deal with a reasonable range of adverse scenarios. Based on the stability check YMCA SPG forecasts a low operating margin and limited interest cover headroom in the short term. YMCA SPG’s financial outturn and forecast performance reflects the investment it is making in existing homes, and it needs to manage material risks to ensure continued compliance. Based on this assessment, we have concluded a V2 grade for YMCA SPG.
We have not yet assessed this landlord against the consumer standards.
How we reached our judgement
In response to the earlier governance downgrade, we carried out responsive engagement with YMCA SPG that focused on YMCA SPG’s governance arrangements.
We have also carried out a stability check review to assess whether there are any material risks that might result in a change to YMCA SPG’s financial viability grading. This assessment completed in December 2024.
Our regulatory judgement is based on all the relevant information we obtained during the stability check and responsive engagement, as well as analysis of information provided by YMCA SPG in its regulatory returns and other regulatory activity. This includes financial plans and financial statements and other regulatory returns. We also reviewed documents provided by YMCA SPG, had discussions with executive and non-executive directors, and observed YMCA SPG’s board, as part of our landlord improvement activity.
Summary of findings
Governance – G1 – December 2024
Based on the evidence gained from our landlord improvement activity and responsive engagement, we have concluded that we have appropriate assurance that YMCA SPG’s governance arrangements enable it to effectively manage its risks and adequately control the organisation, allowing it to deliver its objectives.
YMCA SPG has strengthened its governance arrangements and evidenced improvement in the quality, breadth and granularity of information going to the board. This includes information on landlord compliance with health and safety requirements, and on YMCA SPG’s financial position. Board reporting has been strengthened across all the areas of weakness identified, providing the board with oversight of performance and delivery, and enabling it to better identify issues and provide challenge when needed.
At the time of the IDA, additional work was being undertaken by YMCA SPG to improve its stress testing and mitigations, and the board needed to continue this work to better inform strategic decision-making. Through our engagement work, we have seen evidence that board oversight of stress testing and mitigation strategies is robust, and that the board is receiving regular reporting on progress against its strategic plan.
These improvements have strengthened the board’s oversight and ability to assess and respond to any presenting challenges or changes in its financial position.
Overall, we consider that YMCA SPG 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 the 2024 stability check, we have assurance that YMCA SPG’s financial plans are consistent with, and support, its financial strategy. YMCA SPG has an adequately funded business plan, sufficient security in place, and is forecast to continue to meet its financial covenants under a reasonable range of adverse scenarios.
While YMCA SPG has the financial capacity to deal with some exposures, it has material risks that it needs to manage to support continued compliance YMCA SPG is a relatively high cost, low operating margin supported housing provider. It has a range of non-housing activities that reduce its forecast financial performance. It is sensitive to operating cost pressures and has limited interest cover covenant headroom without enacting mitigations.
Background to the judgement
About the landlord
YMCA SPG is a registered charity and company limited by guarantee. It is a specialist provider delivering a range of community-based services to both its own tenants and other members of the communities in which it operates.
YMCA SPG is the registered parent of the group. It has one registered subsidiary, West London YMCA and has three unregistered entities, all are dormant.
The group owns and manages 1,197 units located in London, Surrey, and Berkshire. The majority of its stock is supported housing.
At 31 March 2024 YMCA SPG employed 307 staff. Group turnover for the year was £28.7m.
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.