What local housing authorities need to know about the new approach to proactive regulation by the RSH
Since June 2022 the Social Housing (Regulation) Bill has been making its way through the parliamentary process, introduced into the House of Lords in June and received its third reading at the end of October. It is now being considered by the Commons before receiving Royal Assent.
The Bill, trailed in the Social Housing White Paper in 2020, has two very notable focus areas. These are: fundamental reform to the remit and powers of the Regulator for Social Housing (RSH) – from reactive to proactive regulation; and a focus on Health and Safety matters including tenant empowerment.
Health and safety regulation for social housing is broadly contained within the ‘consumer standards’, these apply to local authority registered providers (LARPs) in the same manner as Housing Associations – there won't be any special treatment.
The argument for reform in these focus areas was well made at the time. RSH's Consumer Regulation Review 2021-22 outlined examples of interventions on consumer regulation. It showed a marked increase in the number of regulatory referrals (up 10% - to 653- year on year) as well as the proportion of referrals being escalated to the Consumer Regulation Panel (increased from 40% to 46% year on year).
Of the eight findings of breach to the consumer standard, five were local authorities. Interestingly all five were as a result of self-referrals to the regulator, which shows, at least in those authorities, an appreciation of responsibility for compliance as well as a culture of openness. On the flip side, this also could be interpreted by some to mean local authorities are performing less well than Housing Associations, accounting for a disproportionate number of regulatory breaches. Since the end of the Consumer Regulation Review's period, LARP regulatory notices have continued to be published and consumer compliance issues are likely further to come under the spotlight following the RSH's new proactive approach to regulation. The RSH has encouraged LARPs to prepare for the shift to a more muscular regulatory approach.
Social housing health and safety is in the spotlight. The Regulator's new powers will be a key reform that ministers will surely hold up to show they are seeking to address the sector-wide issues. The recent issues in Rochdale and the way the Government directly intervened brings this into sharp focus.
Currently the RSH will only investigate a potential breach if there is a referral regarding non-compliance, either a self-referral or from an interested party, such as a tenant, charity or local politician. Furthermore, the RSH will only investigate if the failure is to the serious detriment of tenants or potential tenants. The ‘serious detriment’ hurdle is to be removed by the Bill, which lowers the bar for RSH's investigations. The Bill proposes that the RSH obtain more wide-reaching powers to seek assurance from LARPs on standards compliance. The new approach to proactive regulation will require upfront information from landlords which the Regulator will likely assess against the new tenant satisfaction reports to corroborate the landlord's evidence. Furthermore, in a show of even more muscularity, more recent amendments from the House of Lords have included a duty on the Regulator to implement a plan for regular and one-off inspections of RPs.
Housing Associations have a head start on local authorities in more proactive regulatory style, as LARPs have not been subject to In Depth Assessments (IDAs) as well as being organisations which are – as their name suggests - more concentrated and specialised on delivery of social housing. However, irrespective of the model used to inform the Regulator, establishing compliance with any new regulatory aspects will, put most obviously, simply require the LARP to be certain that it is complying with the current standards. That might sound trite but how does the LARP satisfy itself that it is complying with the standards? For Housing Associations there is typically a Board of Directors with strategic oversight. For LARPs the governance model will differ between local authorities. Those with committee systems might consider going back to the future and establishing a Housing Committee. What regular reassurance of regulatory standard compliance will those local authorities operating with a Cabinet system want to see? What enhanced and formal role, if any, will residents play in the assurance system? Good governance, as always, is key to getting this right.
Overwhelmingly the regulatory notices published by the RSH for local authorities have concerned the Homes Standard regarding health and safety matters relating to electrical, gas, water, asbestos and fire safety. Often this was where the local authorities had not completed the requisite inspections on a scale that amounted to a potential serious detriment to tenants.
With those breaches in mind, which are probably much more widespread than the number of regulatory notices suggest, an important aspect of the Bill that local authorities will need to address is appointing a health and safety lead. This person is responsible for monitoring the LARP's compliance with health and safety requirements relating to the health and safety of the tenants of social housing. They will need to have sufficient authority and resources to obtain information in order to assess the risks. They will need direct reporting lines to councillors. Authorities will need to build processes and systems that will help to inform that lead of the risks that are present.
Trowers & Hamlins will continue to monitor the progress on the Bill and especially as there is further consultation from the RSH on new regulatory standards and a new mechanism to regulate them. We expect further information from the RSH this year on a direction of travel. There is no reason for LARPs to wait for any of that to start taking steps to establish compliance systems and processes. It is also a good opportunity to consider your current governance model to see whether it could be further enhanced to respond to the new, more muscular, approach of the Regulator.