The Social Housing Regulation Act and the changing landscape of consumer regulation
The past few years have seen some of the most significant events in social housing, with the Grenfell fire tragedy in 2017 bringing conversations around the adequacy of social housing and especially the lack of tenant involvement and empowerment to the fore.
Government published the Social Housing Green Paper: A New Deal for Social Housing in 2018 and subsequently the Social Housing White Paper/Tenants Charter in 2020 all with the aim of improving how social housing is regulated.
More recent issues such as Awaab Ishak's death and the Housing ombudsman's regular findings of severe maladministration have kept this conversation at the fore.
The tone of comments, particularly from Michael Gove as the Secretary of State for Levelling Up, Housing and Communities, is very much now that those living in social housing deserve better and that the sector and public will not tolerate RPs who are failing to meet the expected standards. This is particularly the case with RPs being seen as having achieved the best deal possible from the rent cap (i.e. the highest of the options available at 7%).
All of this sets the context for The Social Housing (Regulation) Act 2023 (Act) which, at the time of this article, is due to receive Royal Assent imminently.
The Act is intended to be the catalyst for a new proactive approach to regulating social housing, ensuring standards are met and taking action against failing landlords. The Act itself describes its purpose as being to "reform the regulatory regime to drive significant change in landlord behaviour".
Simply, this is the most important piece of legislation for RPs for many years. Those responsible for managing and operating RPs must be aware of its significance and understand not just what the detail requires, but also the way this fundamentally alters the landscape for social housing, the expectations on social landlords and the rights of tenants going forward.
The Act has three core objectives which are:
- to facilitate a new, proactive consumer regulation regime;
- to refine the existing economic regulatory regime; and
- to strengthen the Regulator of Social Housing's (Regulator) powers to enforce the consumer and economic regimes.
Reform the consumer regulatory regime
The Act will facilitate a new proactive consumer regulatory regime. To achieve this, the Regulator’s statutory objectives will now include safety and transparency and it will have new powers to support this.
- We will see the introduction of a new Advisory Panel to the Regulator which is specifically required to include tenants of social housing.
- Significantly, the 'serious detriment' test will be removed paving the way for action to be taken by the Regulator in a greater number of cases of breaches of the consumer standards.
- Of course, alongside this we have already seen the introduction of the tenant satisfaction measures on 1 April which RPs are now required to report on. It is anticipated that the first year of data will be published in Autumn 2024.
- We are also going to see a shakeup of the consumer standards themselves with several new consumer standards being introduced.
- This will include a new standard regarding the competence and conduct of individuals involved in relation to "professionalism", requiring senior housing managers and senior housing executives to obtain qualifications in housing management. We also expect a new standard regarding information and transparency, setting expectations on RPs to make information available to tenants and the Regulator.
We expect to see new draft standards out for consultation in the summer of 2023.
Refine the economic regulatory regime
Whilst the emphasis is on improving consumer regulation, it is clear that this is not to be at the detriment of the economic standards. The Act also seeks to maintain and refine the Regulator’s current economic regulatory role. Ensuring that providers are well governed and financially viable remains a core priority for the Regulator.
Strengthen the Regulator’s enforcement powers
The Act will strengthen the Regulator by giving it new enforcement powers, seeking to ensure it can effectively intervene when required. This is particularly the case in relation to the consumer standards in order to underpin the importance of these and bring them to the same level as the economic standards.
New powers include an ability for the Regulator to arrange surveys of the condition of properties more quickly, and a new power to require an RP to prepare and implement a performance improvement plan. This is intended to move the Regulator away from reliance on voluntary undertakings by RPs and towards more proactive regulation.
Other powers include a power for the Regulator to authorise persons to enter an RP's premises to undertake emergency remedial action to remedy failures by an RP and the ability to issue financial penalties on RPs of an unlimited amount (having previously been limited to £5,000).
There is much more detail in the Act we cannot cover here that RPs need to be aware of. Please refer to our Essential Guide to the Act and further information regarding the revised consumer standards which will be published this summer.