Risks facing social housing sector on the rise, warns regulator

October 23, 2019

Strategic and operational risks facing the social housing sector are on the rise, the Regulator of Social Housing’s Sector risk profile 2019 has suggested.

The seventh edition of the annual publication said that the most significant risks that boards of registered providers must manage and mitigate included:

health and safety compliance – “all providers have an obligation to act to ensure the homes they provide are safe for tenants and they must also fulfil their legal duty of care to their staff”
stock condition and asset management – “investment should be based on a good, evidenced understanding of the overall condition of stock underpinned by up-to-date data”
market sales exposure – “the implications of the market cycle and a slowdown in some geographical areas on providers’ cash flow and development plans should be considered”
reputational risk – “business decisions, performance and probity across all areas of operation and board and executive members’ conduct should have regard to the expectations of all stakeholders”
rents – “strategies and business plans need to cope with changes in housing policy and related areas including welfare reform”.

Fiona MacGregor, Chief Executive of the Regulator of Social Housing, said: “Alongside some weakness in demand in the housing market and the need to respond to evolving building safety requirements, this year’s Sector risk profile highlights the importance of adequately investing in existing stock, as well as ensuring necessary scrutiny of the build quality of new stock.

“This includes satisfying statutory health and safety requirements and effectively managing all outsourcing arrangements, and demands high-quality data on the condition of properties. Failure in these areas not only puts tenants’ health and lives at risk but also has major reputational risks to both the provider and the sector as a whole.”

She added: “The Sector risk profile outlines key risks for boards to consider when stress testing their organisations. It also emphasises the importance of robust, data-based stress testing to underpin effective risk and mitigation strategies.”