Coronavirus impact – an update from the Regulator of Social Housing

The coronavirus crisis has seen many housing associations apply effective risk management and stress testing to their work, but there will be more challenges ahead. Will Perry of the Regulator of Social Housing provides an update on regulation and outlines plans for ensuring effective governance as we start the process of recovery.

Most housing providers have delivered essential emergency and safety services to their residents throughout the coronavirus crisis, as the regulator’s (Coronavirus Operational Response Survey (CORS) reports show.

The value of effective risk management, including stress testing and contingency planning has been amply demonstrated – including planning for other contingencies (such as Brexit) which had led to the sector holding a large amount of cash. This gave us considerable reassurance for the short period in March when the debt capital markets temporarily closed.

Since then, we have seen another side of the housing sector’s nature as a low-risk, socially responsible investment destination. Recent keenly priced and oversubscribed bond issues will be a positive in the June Quarterly Survey. 

However, as we began to see in the March survey, there will also be pressures – stalled development, reduced market sales, increasing costs and arrears, and delayed major repairs programmes.  The full operational and financial impact of the last few months will not be clear for some time, and recovery will bring its own risks.

Our nature as a regulator is risk- and assurance-based. Our Chief Executive Fiona MacGregor’s speech at Digital Housing Week highlighted that these recovery risks will be the focus of our work in the coming months.

We have been discussing with our board how we can maintain sufficient assurance about the position of individual providers and the sector as a whole, while recognising that we will need to adapt our approach to reflect a quickly changing situation. 

Part of this will come from continuing with the CORS and the Quarterly Survey, but we will also need to adapt our In-Depth Assessments (IDA) and stability checks to ensure we have enough assurance and understanding in the right areas.

Over the summer we will be undertaking a refocused IDA with a small group of willing providers.  While this will enable us to hone online delivery, we will be focusing on how providers are managing the risks and making the decisions associated with the recovery phase. 

How are boards and executives assured that they can make sufficient, timely investment in their stock, catch up on statutory checks and repairs to keep their residents safe and get development moving? Is contingency planning and stress testing timely, and focused on the relevant risks?

We recognise that business planning in an uncertain climate is challenging and that plans will need to change more frequently. However, it is essential that we understand how both individual housing providers and the sector as a whole intend to manage recovery, and so we will undertake a stability check round this year, based on financial forecast returns submitted by the end of September/October. As with IDAs, we will adapt this to reflect the key risks and shorter planning horizons of the recovery phase, while ensuring that we can refresh published grades.

There isn’t a recipe or blueprint for the next few months and years. Recovery will present new risks and opportunities, and our goal as the sector’s regulator is that these are effectively governed and managed.