The regulation of registered Social Landlords Act
The Regulation of Registered Social Landlords (Wales) Act (the Act), introducing reforms to the regulation of the Welsh social housing sector, became law in Wales on 13 June 2018. The main provisions of the Act came into force on 15 August 2018.
The Act will restore Registered Social Landlords' (RSLs) classification as private sector non-financial corporations by the Office of National Statistics (ONS) for the purpose of national accounts. The decision by the ONS to reclassify Welsh RSLs as public sector organisations in 2016 added an estimated £2.3bn of debt to the national books of Wales and as such there was pressure to return them to the private sector as soon as possible. The Act will achieve this by amending or removing Welsh Government's (WG) regulatory control of Welsh RSLs and Local Authority influence over mainly, but not exclusively, Welsh Large Scale Voluntary Transfer RSLs at board and shareholder level.
Under the Act Welsh RSLs will no longer require the consent of WG before disposing of property or making constitutional and structural changes, including merging by amalgamation or transfer of engagements. Instead, there will be an "after the event" notifications regime, which will be similar to the English model. In addition, the Act reduces the proportion of places on a board that a Local Authority can fill to a cap of 24% and removed Local Authority voting rights at general meetings and any rights of veto over constitutional changes. Similarly the powers of WG to appoint managers, or to remove or appoint officers to housing associations in the event of mismanagement have also been tightened.
Welsh RSLs operate within a constantly evolving financial and regulatory environment. In particular, there is a greater emphasis on delivering value for money. This can be challenging where they experience inefficiencies caused by overly complex corporate structures and governance arrangements, many of which may be in place for historic reasons and no longer relevant. De-regulation will give boards more flexibility to implement plans to restructure their businesses and streamline their corporate structures and governance arrangements. Although de-regulation does not mean that RSLs will be unregulated or subject to any less oversight by WG, which introduced a more robust regulatory framework in 2017, the introduction of the Act is a welcome move for the Welsh social housing sector.