Scottish Housing Regulator updates regulation plans for three RSLs
The reports outline the level of engagement the Regulator will have with Abbeyfield Scotland, Argyll Community Housing Association (ACHA) and Thistle Housing Association during the financial year 2017/18.
For Abbeyfield Scotland, the Regulator said a Medium level of engagement is required as the RSL completes the revision of its business model, implements the governance changes necessary to support this and completes its planned disposal programme.
The regulation plan states: “During 2016/17, we reviewed Abbeyfield Scotland’s financial returns, management accounts and its business plan to seek assurance about its financial health and its future strategy and direction.
“Abbeyfield Scotland had also previously reviewed its asset management strategy and decided to close and dispose of a number of its houses. It now has two empty houses and one tenanted property remaining to be sold. We will continue to monitor the progress of these disposals and engage with Abbeyfield Scotland about the disposal of the tenanted property to ensure the interests of the tenants are protected.
“In February 2017, we met with Abbeyfield Scotland’s executive team as well as the chair and vice chair to further discuss its future strategy. Abbeyfield Scotland had revised its business model to create a new subsidiary to undertake the provision of private rented properties and outreach services in Aberdeen and Aberdeenshire.
“Since then, Abbeyfield Scotland has established its new subsidiary, Crandeen, and has purchased five properties, intended for private rent, in Aberdeen that have been leased to Crandeen.
“We have engaged with Abbeyfield Scotland to seek assurance about the governance arrangements in place for the new Group structure. We have also sought assurance that the Group structure arrangements comply with our Regulatory Standards of Governance and Financial Management, provide appropriate support to the Group and do not have a detrimental impact on the financial viability of Abbeyfield Scotland.
“We will continue to engage with Abbeyfield Scotland to obtain additional assurance on the Group structure arrangements as Crandeen begins to implement and develop its operations. Abbeyfield Scotland will develop an action plan which sets out how it intends to meet the Regulatory Standards and will include proposals for Board recruitment and its intragroup policies and practices.”
ACHA is one of a small number of RSLs to be labelled as “systemically important” to the Regulator due to the combination of its size, turnover, level of debt and geographic importance.
The Regulator has therefore set a Medium level of engagement with ACHA to gain further assurance around its investment and subsidiary activities.
Its regulation plan states: “During 2016/17 we reviewed ACHA’s Corporate Strategic Plan and Business Plan including its 30-year projections and asset management strategy. We engaged with the executive team and the Chair to discuss the risks and challenges within the plans to gain on-going assurance about ACHA’s financial position. We received assurance about its approach to asset management and will liaise further about its investment and stock rationalisation proposals. We also engaged with ACHA on work it was doing to consider rent affordability. We will engage further about the phased implementation of the rent restructuring exercise.
“ACHA carried out an independent governance review in 2015. This review identified a number of weaknesses in ACHA’s governance and it took forward a range of improvements to address these. ACHA has now provided us with assurance that this work is complete and that it has addressed the governance weaknesses previously identified.
“We also engaged with ACHA about its subsidiary AHFA and reviewed management accounts and projections to gain assurance about its financial position. AHFA reviewed its contracts during 2016/17 and completed a limited restructure following the appointment of a new managing director.
“ACHA is the only registered social landlord which manages designated sites for Gypsy Travellers. It has plans in place to ensure its sites meet the minimum standards set by Scottish Government in advance of the June 2018 deadline. It has also consulted on proposals to close one of its sites which has been vacant for almost three years and will be reaching a decision shortly. ACHA has an on-going development programme of new housing for social rent and will continue to receive significant public subsidy to help achieve this.”
A Medium level of engagement is also required at Thistle Housing Association to gain assurance about its compliance with Regulatory Standards of Governance and Financial Management and the completion of its on-going investment works, the Regulator said.
The regulation plan for the RSL states: “Thistle owns 250 of the 610 homes in mixed tenure blocks that need significant investment to bring them up to the Scottish Housing Quality Standard (SHQS). Thistle planned to bring these properties up to the SHQS by November 2016 but work has been delayed and significant difficulties encountered with the project. We will continue to engage with Thistle to gain assurance about its completion of the investment works.
“We have been engaging with Thistle to get additional assurance about its governance following its handling of some notifiable events. Thistle has been engaging openly and constructively with us and plans to carry out an independent governance review to assess its compliance with our Regulatory Standards of Governance and Financial Management.”