Our approach to inspections
How we carry out inspections of landlords
Applies to England
Introduction
Inspections are an integral part of our regulatory approach. We use inspections of landlords to help us form our view about how well a landlord is delivering the outcomes of some or all of our standards. Each inspection is a snapshot at a particular time.
We carry out a programme of inspections of large landlords. We aim to carry out a programmed inspection at least every four years, as set out in our inspection plan. We may also carry out inspections outside of this programme, for example one on small landlords.
Inspections are carried out under s201 to s203A of the Housing and Regeneration Act 2008.
Scope of our programmed inspections
In line with our integrated approach to regulation, programmed inspections for private registered providers can cover both the economic and consumer standards.
Our programmed inspections of local authority landlords may assess how well they are delivering the outcomes of the consumer standards. However, if appropriate, we may also consider issues relating to the Rent Standard because this also applies to local authority landlords. This reflects our legal remit.
We use the model set out in the table below for most of our programmed inspections of landlords. This is made up of seven components. While this model underpins most of our programmed inspections, we tailor individual programmed inspections to enable us to focus on what we consider to be the key issues and risks in that landlord. We may also decide that the scope of some programmed inspections or inspections that are not programmed may be narrower in focus. For example, where we want to focus on a particular issue.
- All the components apply to programmed inspections of private registered providers.
- Only the ‘service outcomes’ and ‘transparency, influence and accountability’ components apply to programmed inspections of local authority landlords.
Outline of the inspection model
| Component | Key areas of focus | |
|---|---|---|
| Strategy | The delivery of the landlord’s short and medium-term priorities and its strategic approach to delivering value for money in meeting its objectives. | - Evidence that the landlord has clearly articulated its strategic objectives and priorities for delivering its purpose. - Extent to which achieving strategic value for money is reflected in the landlord’s objectives. - Evidence that the landlord considers the risks and returns to delivery of its purpose and strategic objectives, of any non-social housing activities. - Evidence that demonstrates the landlord understands different markets and activities and has the skills needed to operate in them. |
| Structure | The corporate, financial and governance structures and the interaction between the landlord and the various organisations connected to it, and how risks flow between them. | - Evidence that the board and executive have sufficient understanding and oversight of the risks associated with the landlord’s structural arrangements. - Evidence that the board has robust reporting on the performance of activities the landlord is engaged in across the group and plans are in place so that the impact of potential adverse events can be mitigated. - Evidence that the role and responsibilities of the board and its committees are clearly defined and understood. |
| Service outcomes | Delivery of outcomes relating to stock quality, repairs and maintenance, health and safety compliance, local co-operation, anti-social behaviour and hate incidents, the management of domestic abuse and tenancy sustainment. | - Evidence that the landlord is collecting and using stock condition data. - Evidence that landlord health and safety compliance risks are being properly managed with robust systems in place and operating effectively. - Assessing the effectiveness of the repairs service. - Evidence that boards, councillors, and senior officers gain assurance that ASB (anti-social behaviour) and hate incidents are being dealt with appropriately. - Extent to which landlords can evidence that they have a good understanding of their role with regard to handling domestic abuse. - Evidence that homes are being let fairly. |
| Risk management | The alignment of the landlord’s risk appetite with the risks associated with delivery of its strategy. The board’s assurance on key risks and compliance areas and the overall adequacy of the landlord’s risk and control framework, including the quality of its stress testing and associated mitigation strategies. | - Evidence that the landlord’s stated risk appetite is reflected in its strategic decision making. - Exploring the extent to which the landlord identifies and takes proper account of the risks that flow from its operating environment, strategic direction, landlord-related and other activities, financial position, and organisational structure, including subsidiaries and joint ventures. In doing so that the landlord is not putting social housing assets at undue risk. - Assessing how the landlord ensures that it has sufficient assurance that its controls are effective in managing key risks and compliance. - Evidence of detailed and robust stress testing against identified risks and combinations of risks across a range of scenarios, with credible mitigations identified and in place. |
| Transparency, Influence and Accountability | The extent to which the landlord treats all tenants with fairness and respect, takes action to meet the diverse needs of tenants, provides meaningful opportunities for tenant-led engagement, collects, and uses performance information (including the TSMs), and handles complaints. | - Extent to which the landlord ensures that tenants have fair access to landlord services and that equitable outcomes are being achieved. - How the landlord seeks to obtain and maintain tenant information, and the use it makes of data and insight to improve services. - Evidence that there is a range of meaningful opportunities for tenants to influence and scrutinise the landlord’s strategies, policies, and services. - Approach to collecting, processing, and publishing tenant satisfaction measures (TSMs) and extent to which this meets our requirements. - Assessing how the board, councillors and senior officers seek to understand performance and satisfaction information and can demonstrate action taken as a result. - Evidence that complaints are dealt with fairly and promptly, including the landlord’s self-assessment against the Housing Ombudsman’s Complaint Handling Code. |
| Financial resilience | The landlord’s financial performance (its inherent financial strength); debt levels, sources of liquidity and future funding requirements; and its costs and the main drivers for those costs. | - Extent to which operating cash flows cover interest costs, in particular cash flow from social housing lettings activity. - Evidence that financial plans are based on reasonable, informed assumptions and a robust evidence basis for investment forecasts. - Consideration of the performance of different entities within group structures and different income streams. - Extent to which the landlord maintains access to sufficient liquidity at all times, understanding the debt dynamics of the business and loan covenants. - Understanding the landlord’s costs, including any identified efficiency savings, cost reductions or performance improvements assumed in relation to specific functions. |
| Governance | The role of the board in ensuring delivery of strategic outcomes that promote the long term, sustainable success of the organisation. Alignment of leadership capacity and governance arrangements with the activities of the organisation and overall effectiveness of those arrangements. | - Evidence that the board oversees and monitors delivery against its purpose, strategic objectives and priorities and evidence that timely corrective action is taken where there is underperformance. - Evidence that the landlord has the required skills, knowledge, and experience to effectively manage current and future risk exposures and has robust succession planning in place. - Extent to which the board can demonstrate it is meeting the requirements of the Value for Money (VFM) Standard including that value for money considerations have informed the landlord’s strategy and structure in practice. - Evidence that the board can demonstrate it understands risk and reward in relation to its appetite to undertake different activities - Evidence of an effective approach to monitoring performance against targets. - Board assurance on the adequacy of internal controls. - Evidence that the board consistently receives good quality information. |
We may draw upon a range of sources of intelligence, for example regulatory data, referrals to us (including from tenants), notifications to us and information from other bodies such as the Housing Ombudsman Service and the Building Safety Regulator.
When inspecting local authority landlords, we may request some contextual information. While we do not assess local authority landlords against the Governance and Financial Viability Standard or the Value for Money Standard, we recognise that we need to understand the context in which local authority landlords are delivering the outcomes of the consumer standards. This means that we may request information about:
- the operational management structure of the local authority and where responsibility for housing management sits within it
- the local authority’s wider governance structure
- its strategy or long-term plan for its housing stock
For all landlords, our programmed inspections involve observing meetings and on-site interviews. Accordingly, at an early stage of the process, we ask the landlord to share with us their schedule of meetings, including any tenant engagement activities, so that we can start planning these elements of the programmed inspection. Where we are attending meetings, the landlord must share the papers with us in advance.
Document review
We write to landlords and make it clear that we are starting an inspection. In most cases we give notice in advance and share the proposed dates for the start and completion of the inspection. For programmed inspections we usually give the landlord six weeks’ notice. We also share a scope with the landlord in advance which gives further indication of the inspection starting.
Each inspection is normally led by a senior member of our staff (‘the inspector’), supported by colleagues with a range of skills from across the regulator. We can appoint a person external to the organisation to carry out the inspection, although for the purposes of this section we assume it is a member of the regulator’s staff. As such, throughout this section where we refer to ‘we’, we mean the inspector. The size of the team and the particular skills required reflect what we consider to be appropriate for the specific inspection. Each inspection considers a landlord’s position at a given time and so we expect landlords to supply us with information within specified timescales. We produce and share with the landlord a scoping framework that sets out:
- the areas we will be focusing on under the different components of the inspection
- the kind of documents that are likely to provide relevant evidence.
The documents required vary depending on the scope of each inspection. In particular, we look for documentary evidence that boards, councillors and senior officers are receiving the information they need to carry out their role in ensuring that the organisation is delivering the outcomes of the standards. We also seek evidence that tenants and their representative bodies have sufficient information and opportunities to be able to scrutinise and influence their landlords.
We generally set a date by which the landlord should submit the documents we request. Landlords normally have two weeks to submit documents following the initial request. Before landlords send us documents, we discuss with them what they are intending to submit, especially if they plan to supply significantly more documents than we requested. The document request that comes with the scope is an initial request and, as the inspection progresses, we ask for further documents, if required.
Once we have received the documents, we review them to assess how far they provide us with assurance that the outcomes of our standards are being delivered. The document review is a core part of the inspection process and helps us to focus our on-site work. We may also make use of other evidence, for example regulatory returns, including the new suite of TSMs.
On-site work
In addition to the document review and desktop research, all programmed inspections involve in-person or virtual on-site work. This includes meetings with the executive leadership team, and the councillors or board members. Ahead of these meetings, we share agendas to be clear about the main areas that we want to focus on so that the landlord can prepare. The purpose of these meetings is to add to our evidence base and to explore in further detail the key points that we have identified in our document review. Depending on the subject matter, the landlord may involve staff beyond the executive team. Where a local authority has an Arm’s Length Management Organisation (ALMO), we may meet with ALMO board members and senior staff, as well as senior officers and councillors of the local authority.
We also normally observe one or more meetings. In the case of private registered providers, this is likely to include a board meeting. For local authority landlords, recognising the diversity of different governance arrangements, we decide what is likely to be the most appropriate meeting(s) to observe on a case-by-case basis.
A key part of our work is understanding how the landlord uses tenant insight and scrutiny to deliver improved outcomes. We generally supplement the documentary evidence by
- observing the forums at the landlord which enable tenant-led influence and scrutiny.
- seeking direct tenant insight through meetings with tenants engaged in those forums
We have a range of options for assessing service outcomes for tenants. Where appropriate, these include meetings, interviews, focus groups with tenants, and estate tours. We use these options flexibly, depending on the issues at the landlord and the type of insight we are trying to gather.
Concluding our findings
When we have completed the evidence gathering stage of an inspection, we begin work on concluding our findings. In doing this we look at and triangulate the different sources of evidence to determine the level of assurance they give us. It is likely at this stage in the process that we will have some follow up questions, and if so, we will raise them with the landlord to help make sure we have an accurate understanding of the current position. This normally takes the form of an ‘assurance gaps’ meeting where we explain the areas where we are seeking further evidence and give the landlord an opportunity to provide additional documents or clarification.
Where we identify issues of potential regulatory concern through inspections, or other routes, we consider how material these are to the landlord delivering the outcomes of the standards. Find out more about how we assess regulatory issues, including examples of the factors we may use to help us.
We then consider our provisional findings through our corporate quality control and quality assurance procedures. These processes support us in making sure that
- our work has been carried out in line with our requirements
- the approach to inspections is consistent where appropriate, while providing flexibility to suit the individual circumstances
- our judgements are appropriate and are evidence-based.
Following completion of these internal processes, we tell the landlord the outcome of the inspection. We then issue a new regulatory judgement which includes a summary of our inspection findings. As well as publishing a judgement at the conclusion of the inspection, we also arrange a meeting with the landlord to discuss our findings and ask the landlord for verbal feedback on their experience of the inspection.