Decision

Previous Regulatory notice: Expectations (UK) (22 December 2016)

Updated 26 September 2019

Applies to England

RSH Regulatory Notice

• Provider: Expectations (UK)
• Regulatory code: 4774
• Publication date: 22 December 2016
• Governance grade: N/A
• Viability grade: N/A
• Reason for publication: Consumer Standards
• Regulatory route: Reactive Engagement

Other providers included in the judgement

None

Regulatory Finding

The regulator has concluded that:

a) Expectations (UK) (Expectations) has breached the governance element of the Governance and Financial Viability Standard.

b) Expectations has breached the Home standard and risked serious harm to tenants.

The regulator is considering what further action should be taken, including whether to exercise any of its powers. In doing so, the regulator notes that formal action is being taken in parallel by the Charity Commission.

The Case

Expectations provides around 300 units of hostel / sheltered accommodation via Houses in Multiple Occupation in the Birmingham area, including to vulnerable people. It leases these properties from a head landlord.

The regulator has received information indicating that Expectations has failed to ensure properties it lets / licenses to its clients meet the requirements of the Home standard. There are concerns regarding widespread non-compliance with the Government’s Decent Homes standard including in relation to fire safety requirements. This follows other information which suggests that Expectations’ properties have significant repairs and maintenance issues. Category 1 Decent Homes hazards are, or have been, present. Expectations has provided information on how it had responded to problems brought to its attention and the systems of information, risk management and internal control it has in place to underpin compliance.

As well as seeking information from Expectations, the regulator has engaged with both the Charity Commission and Birmingham City Council to understand their positions, the evidence and information in their possession, and the actions they are taking in relation to Expectations.

The Regulator’s Findings

Home standard

The regulator considered this case as a potential breach of the Home standard. Part 1.1 of the Home standard requires registered providers to meet the requirements of the Decent Homes Standard. Part 1.2 of the standard requires registered providers to meet all applicable statutory requirements that provide for the health and safety of occupants in their homes.

Expectations set out to the regulator its understanding of its responsibilities under the leases it holds with its head landlords. It reports that it has had considerable difficulty securing appropriate repairs. It also stated that, as it has become aware of problems with properties, it has taken individual units out of use in order to ensure that clients are no longer at risk.

However, under regulatory standards, it is Expectations’ responsibility to ensure compliance with the Home standard and to have arrangements in place that delivers this for its tenants. Failure to deliver this effectively is a failure of regulatory standards. The regulator has concluded that, in light of the information available about the condition of its properties, Expectations has not complied with the requirements of the Decent Homes Standard or with fire safety requirements.

Taking into account the seriousness of these issues, the number of tenants potentially affected, and the lack of assurance provided by Expectations, the regulator has determined that it is proportionate to conclude that the Home standard has been breached in this case.

In considering risk of harm to tenants and the regulator’s statutory “serious detriment” test, the regulator notes that Expectations took individual units out of use after it was made aware of problems with them, in order to ensure clients were no longer at risk. However, on the basis of the information received by the regulator, there was an absence of effective general understanding by Expectations of the condition of its properties. Before Expectations was notified of, or otherwise discovered, problems with individual units, those units were tenanted. The regulator has not received assurance that Expectations effectively prevented tenants, including vulnerable tenants, being put at risk by poor conditions before it was made aware of problems in particular properties. The regulator has therefore concluded that this risked serious harm to Expectations’ tenants.

Governance and Financial Viability Standard

The regulator has considered the case as a potential breach of the Governance and Financial Viability standard.

Part 1.1 of the standard states that:

“Governance arrangements shall ensure registered providers:

(a) adhere to all relevant law

(b) comply with their governing documents and all regulatory requirements

(c) are accountable to tenants, the regulator and relevant stakeholders

(e) have an effective risk management internal control assurance framework”

Expectations failed to comply with the Home standard and regulatory requirements. The regulator has concluded that this was not an isolated occurrence, but the consequence of a failure to understand properly what was required of it as a Registered Provider, and a failure to put in place an effective system of risk management and internal control. This was breach of the governance elements of the Governance and Financial Viability Standard.

Expectations’ failure to respond in a timely way to the regulator’s requests for information in relation to compliance and tenant safety was also a failure to comply with the standard.

Conclusion

The regulator has concluded that Expectations has

• breached the Home standard and that this risked serious detriment to its tenants.
• breached the governance element of the Governance and Financial Viability Standard.

Actions

Section 220 of the Housing and Regeneration Act 2008 states that the regulator’s regulatory and enforcement powers may be used if a registered provider has failed to meet a standard under section 194 of the Act.

The regulator has worked, and continues to work with, Birmingham City Council and the Charity Commission. The regulator will consider what, if any, further action it will take in relation to the breach of the standards. The regulator will take Expectations’ response into account in doing this.

About our Regulatory Notices

Regulatory notices are issued in response to an event of regulatory importance (for example, a finding of a breach of the Rent Standard or of a consumer standard that has or may cause serious harm) that, in accordance with its obligation to be transparent, the regulator wishes to make public. More detail about Regulatory notices is set out in ‘Regulating the Standards.’

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.