In March of this year, the government undertook a review of the Homes and Communities Agency (“the HCA”). Following this review, the government has recommended that the social housing regulation function of the HCA should be taken on by a separate regulatory body.
The government commenced a review into the HCA to examine the continuing need for an executive non-departmental public body of this nature, and to look at whether the corporate governance and management arrangements currently in place within the HCA are robust and transparent. This followed concerns around potential conflicts of interest between the investment function and the regulatory function of the HCA.
At present, the HCA investment arm makes and manages recoverable investment and guarantee programmes that facilitate social housing delivery, whereas the HCA regulatory function regulates registered social housing providers within a statutory framework.
The government published its findings in November. The review found that at present, governance arrangements and an operational “ethical wall” have ensured that information is not inappropriately exchanged between the HCA regulatory function and the HCA investment function, which in some cases deals with registered providers as a creditor. However, some responses to the review found concerns around the potential conflict of interest, and suggested that a downturn in the housing market could provide additional complexity.
The review proposed that there will be a close working relationship between the HCA, which will continue the investment function, and the proposed new regulatory body. The government has stated that this would be an administrative change only, and that the new regulator’s powers and operations would not be different from the HCA’s current powers and operations. However, the Housing and Planning Act 2016 will soon introduce some changes to the role of the new regulator. This Act generally deregulates certain aspects of the housing association sector, and introduces changes around the requirement for consent of the HCA to property disposals and mergers, and extends voluntary right to buy to housing associations. Guidance on the new Act is expected in Spring 2017.
We will provide a further update on the new regulator when this proposal has been finalised by the government, as well as providing an update on the Housing and Planning Act 2016 when the relevant guidance is published.
Posted on 22/12/2016 in Legal UpdatesBack to Knowledge