RSH Narrative Regulatory judgement
- Supplier: My Area Housing Options
- Regulatory code: 4779
- Publication date: 17 December 2020
- Governance grade: G3
- Viability grade: V3
- Purpose for publication: First evaluation
- Regulatory route: Reactive Engagement
This regulatory judgement is the primary revealed evaluation of My Area Housing Options’ governance and monetary viability.
The regulator has concluded that it lacks assurance and proof that My Area Housing Options (My Area) is compliant with the governance and viability parts of the Governance and Monetary Viability Customary. There are points of significant regulatory concern and, in settlement with us, the supplier is working to enhance the place.
My Area has skilled fast development in recent times. The mannequin operated by My Area implies that, while it has landlord duty for its tenants, it enters into short-term and long-term leasing preparations with a lot of third events for properties.
Following engagement undertaken with My Area and subsequent investigations the regulator has discovered:
- important weaknesses in My Area’s enterprise planning framework;
- insufficient threat administration processes and inside controls; and
- that the board has did not handle its affairs with an applicable diploma of talent, diligence, effectiveness, prudence and foresight.
The regulator has inadequate assurance that My Area’s governance, threat administration and inside management frameworks are efficient or that enterprise planning is powerful. The board has did not exhibit it understands and is managing the dangers it faces or has applicable mitigation methods in place to make sure the long-term viability of the organisation and defend social housing belongings.
My Area has been unable to offer the regulator with a marketing strategy that’s based mostly on applicable and affordable assumptions. It has no data on its long-term inventory funding necessities and under-pinning data on voids and revenue assortment is proscribed. We lack proof that My Area undertakes sufficient stress testing in opposition to a variety of situations, with applicable mitigation methods in place, to make sure its long-term viability.
To ship its medium to long-term viability, My Area assumes its materials revenue supply (hire) being ‘excepted’ from the necessities of the Lease Customary by assembly the specialised supporting housing standards. We lack assurance on how the board has glad itself that its rents are assembly the Lease Customary. The regulator has due to this fact concluded that My Area is unable to exhibit that it meets the viability ingredient of the Governance and Monetary Viability Customary.
We lack assurance that My Area’s threat administration course of is sufficient. It has an under-developed understanding of its enterprise dangers and the way these affect on its marketing strategy and long-term monetary viability. It has a lot of long-term leases with no break clauses and with mounted annual hire will increase which can expose it to modifications within the exterior working surroundings, notably by way of future potential Housing Profit modifications or demand points.
A scarcity of efficient board oversight in these areas is a elementary failure of governance and operational management. The regulator has due to this fact concluded that My Area is unable to exhibit that it meets the governance ingredient of the Governance and Monetary Viability Customary.
In response to the regulator’s engagement, with the assist of its advisors, My Area has developed a monetary and governance enchancment motion plan. The board has offered assurance that it has ample liquidity to satisfy its short-term obligations because it considers its future strategic path.
The board has dedicated to work with the regulator to handle the problems outlined on this regulatory judgement. The regulator is actively working with My Area and can carefully monitor the supply of the advance plan, adjusting its technique accordingly whereas retaining the usage of its intervention powers below assessment.
Different suppliers included within the judgement
Concerning the supplier
My Area is a not-for-profit registered supplier. It’s a personal restricted firm by assure. Additionally it is a registered charity.
In its 2020 Statistical Information Return (SDR) My Area reported that it has 1,274 supported housing models.
My Area is the one registered entity.
There aren’t any unregistered entities.
Geographic Unfold and Scale
My Area operates in 63 native authority areas. Most of its inventory is within the north west and north east of England.
Staffing and Turnover
In its annual accounts for the 12 months ended 31 October 2018, My Area reported that it employed 105 full time equal members of workers and had an annual turnover of £11.7m.
My Area doesn’t develop new housing. Its development technique is to amass properties to hire below short-term leases and long-term leases.
About our judgements
Key to Grades
- G1 (Compliant): The supplier meets our governance necessities
- G2 (Compliant): The supplier meets our governance necessities however wants to enhance some elements of its governance preparations to assist continued compliance
- G3 (Non-compliant): The supplier doesn’t meet our governance necessities. There are points of significant regulatory concern and in settlement with us the supplier is working to enhance its place.
- G4 (Non-compliant): The supplier doesn’t meet our governance necessities. There are points of significant regulatory concern and the supplier is topic to regulatory intervention or enforcement motion.
- V1 (Compliant): The supplier meets our viability necessities and has the monetary capability to cope with a variety of opposed situations.
- V2 (Compliant): The supplier meets our viability necessities. It has the monetary capability to cope with an affordable vary of opposed situations however must handle materials dangers to make sure continued compliance.
- V3 (Non-compliant): The supplier doesn’t meet our viability necessities. There are points of significant regulatory concern and, in settlement with us, the supplier is working to enhance its place.
- V4 (Non-compliant): The supplier doesn’t meet our viability necessities. There are points of significant regulatory concern and the supplier is topic to regulatory intervention or enforcement motion.
Definitions of Regulatory Processes
In Depth Evaluation (IDA): An IDA is a bespoke evaluation of a supplier’s viability and governance, together with its method to worth for cash. It entails on-site work and considers intimately a supplier’s capability to satisfy its monetary obligations and the effectiveness of its governance constructions and processes.
Stability Checks: Primarily based totally on data provided by means of regulatory returns, a Stability Test is an annual assessment of a supplier’s monetary place and its newest marketing strategy. The assessment is targeted on figuring out if there’s proof to point a supplier’s present judgements advantage reconsideration.
Reactive Engagement: Reactive engagement is unplanned work which is triggered by new data or a growing state of affairs which can have implications for a supplier’s present regulatory judgement.
Stability Checks and Reactive Engagement: In some instances, we’ll publish narrative regulatory judgements which mix proof gained from each Stability Checks and Reactive Engagement.
For additional particulars about these processes, please see ‘Regulating the Requirements’.