Decision

Withdrawn Regulatory Notice: Rosewood Housing Limited (27 November 2023)

Updated 5 April 2024

Applies to England

Withdrawn on 5 April 2024: Rosewood Housing Limited became a subsidiary of Places for People Group Limited on 13 March 2024.

RSH Regulatory Notice

• Provider: Rosewood Housing Limited
• Regulatory code: 5055
• Publication date: 27 November 2023
• Reason for publication: Economic Standards
• Regulatory route: Reactive Engagement

Other providers included in the judgement

None

Regulatory Finding

The regulator has concluded that:

a) Rosewood Housing Limited (Rosewood) is non-compliant with the Governance and Financial Viability Standard. It has not managed its resources effectively to ensure its viability can be maintained and does not have effective governance arrangements.

b) Rosewood’s ability to meet the regulatory standards has been impacted by the viability of its unregistered parent company and wider group entities, which are now in administration and therefore unable to ensure appropriate support or assistance as necessary to the registered provider.

c) Rosewood has failed to demonstrate that it has an appropriate, robust and prudent risk and control framework in place that ensures access to sufficient liquidity at all times.

The Case

Rosewood self-referred to the regulator in early 2023 following a profit warning issued by the group parent, Inland Homes plc. Through engagement with Rosewood, we identified a reliance on the group for financial viability and provision of services. In September 2023 we began an investigation into potential viability and governance issues at Rosewood, and Rosewood was added to the Gradings Under Review (GUR) list on 8 September 2023.

The Regulator’s Findings

Rosewood is a registered provider and subsidiary of Inland Homes plc. Inland Homes plc entered into administration together with a number of its subsidiaries, with administrators appointed on 5 October 2023.

Rosewood itself is not in administration and is currently continuing to trade, although it is reliant upon the continued support of the group and the administrators to do so while a sale of Rosewood is concluded. The administrators, whose general duties include acting in the best interest of the creditors of the insolvent companies, support the process.

The regulator currently lacks assurance that Rosewood can remain viable, and that social housing and tenants’ homes may not be lost to the sector should a sale not transpire, or values not be achieved. Furthermore, Rosewood is currently only able to continue to operate with the support of the administrators and the regulator has limited assurance that this support will continue. It is a serious failing that there could be a potential loss of social housing assets, a loss of the benefits of being within a regulated sector and/or tenants losing their home, due to the insolvency of unregistered elements of the group.

Weaknesses in financial governance including inadequacies in financial reporting also meant that Rosewood had a short-term reliance on several planned transactions over which it had little or no control of timing. Planned sales of properties fell through which left Rosewood reliant on funding from group entities, which are now in administration, to meet its liabilities.

The regulator sets out expectations that registered providers have governance arrangements and mechanisms in place, where registered providers have unregistered parents, to ensure that the registered provider’s ability to meet the regulator’s standards and other regulatory requirements is not and cannot be prejudiced by the activities or influence of the parent company or another part of the group.

The governance arrangements and mechanisms have not demonstrated such effectiveness and the regulator lacks assurance that the robustness of the arrangements in place would ensure that the value of the social housing assets is not lost in the circumstances.

In addition, following delays in the completion of the audit of Inland Homes plc’s annual report and accounts for the year ended 30 September 2022, Rosewood’s accounts are now significantly overdue.

We have concluded that Rosewood has not been able to demonstrate that it has managed its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence and foresight.

The regulator continues to engage intensively with Rosewood. Since being added to the GUR, Rosewood has taken steps to initiate several planned remedial actions to address the issues identified, and is in discussions with administrators to try to protect its viability in the longer term. It intends to file the 2022 audited accounts by January 2024. The regulator is considering what further action should be taken, including whether to exercise any more of its powers.

Based on the most recent Statistical Data Return (SDR), Rosewood had fewer than 1,000 social housing units and is classed as a small provider. The regulator does not publish regulatory judgements for providers that fall into this category. Instead, in the interests of transparency, the regulator publishes a Regulatory Notice where it has evidence that a small registered provider is not meeting the regulatory standards. This notice is published under those arrangements.

About the provider

Rosewood is a small for-profit provider and is a wholly owned subsidiary of Inland Limited.

The affairs, business and property of Inland Limited, part of the Inland Homes plc Group, are being managed by David Hudson and Philip Lewis Armstrong of FRP Advisory Trading Limited who were appointed Joint Administrators on 5 October 2023.

The 2023 SDR showed that Rosewood held 9 affordable rent and 13 shared ownership properties. There is a pipeline of a further 11 affordable rent and 29 shared ownership properties in development, due for completion in December 2023 and early 2024.

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.