Social landlord to take legal action over "unfair" assessment by regulator

A provider of homes for vulnerable adults is to seek judicial review later this month of an assessment issued by the Regulator of Social Housing (RSH) after the watchdog said its governance and financial viability were both inadequate.

Inclusion Housing said the RSH’s assessment published last February was flawed, unfair and irrational.

The landlord does not develop new housing but acquires leases to rent homes to vulnerable adults. It said the RSH’s judgment amounted to an attack on this model of provision.

The RSH said Inclusion, which owns or manages some 1,800 homes and has a £21.6m annual turnover, “provided insufficient assurance that its current risk management and mitigating actions are commensurate with its risk profile.

“We lack assurance that steps within its control should risks crystallise would ensure its on-going financial viability and that social housing and tenants homes are protected over economic and policy cycles.”

It said Inclusion’s scenario planning was that if the risks emerged it would seek a period of renegotiation with its private sector landlords to enable it to continue to operate.

“This approach demonstrates that Inclusion is reliant on the goodwill of third parties to agree to renegotiation and amendments to agreements,” the RSH said.

“If this strategy was unsuccessful Inclusion indicates that, as mitigation, it may explore insolvency procedures. This could result in the potential loss of the homes from the regulated sector, with inadequate consideration of the re-housing needs of the vulnerable client group housed.”

The RSH also voiced concerns that Inclusion had been unable to demonstrate that the risks to its financial viability could be effectively managed or mitigated over the life of its contracts.

Inclusion said in a statement: “Our comprehensive claim, supported by substantive evidence, is that the judgement is legally flawed, unfair, irrational, inconsistent and in breach of the regulator's duties.” 

It said that 2018-19 had seen its our best ever financial year in relation to overall surplus, cash reserves and strengthening balance sheet.

“Inclusion has demonstrated a strong track record in how to operate the lease model successfully, viably and responsibly, and continues to function as a high performing and robust business,” it said.

Mark Smulian