Part 83 amendment and handling SPO breaches
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Back in 2009 when the then Regulatory Framework was being prepared there was a real expectation around tenant involvement and services. The publication of the Framework in 2010 signaled the advent of tenant scrutiny and more widely a regulatory basis to tenant involvement and tenant services. It also included health and safety – a strong “golden thread” from the National Conversation with thousands of tenant views.
The Localism Act 2011 cleaved economic (governance, finance, rent and VFM standards) from consumer regulation (including involvement, Decent Homes, ASB, repairs and maintenance). The regulator would proactively regulate the economic standards and landlords, with their tenants, would ensure compliance with the consumer standards. To support this there were three safeguards. Firstly faced with service failure tenants could complain through landlord’s complaints processes. Secondly tenants could hold their landlords to account through scrutiny. Finally the regulator could intervene if there was “serious detriment”.
Since the Regulator started issuing governance downgrades I have produced an annual summary entitled Learning from Regulatory Downgrades . These have included the issues which have resulted in landlords receiving governance downgrades and what lessons other landlords could gain from them. These have included downgrades driven by consumer regulatory failures.
The Grenfell disaster was a salutary reminder of the need to uphold tenant safety. Both the Sector Risk Profile and Regulating the Standards emphasised that this was a core issue for landlords, and, where not upheld, was an example of serious detriment. Likewise the 2017 Consumer Regulation Review highlighted the importance of having proper systems in place to identify and manage all Health and Safety requirements across the board.
Both Regulating the Standards and the Consumer Regulation Review set out the process for considering serious detriment. The regulator can only intervene when the serious detriment requirement has been met. Where it has been met than the Regulator will publish a Regulatory Notice. Given that this may expose governance weaknesses the Regulator will also consider whether there should be a governance downgrade. However this is taken on its own merits – there is no direct link, and there is one example of where a Housing Association has not been downgraded having received a Regulatory Notice for gas safety. In addition Councils and Housing Associations under 1,000 properties do not receive a Governance judgment and cannot be downgraded.
One of the consumer regulation downgrades featured a serious breach of repairs services with a substantial number of complaints raised. This exposed weaknesses in the relationship of the Independent Housing Ombudsman, which receives individual complaints from tenants, and the Regulator. This has resulted in a Memorandum of Understanding between the two, allowing the Ombudsman to raise issues that it believes may show systemic failure by a landlord.
The below table captures, for the first time, all Regulatory Notices issued by the Regulator on the consumer standards. To date there have been 24 Regulatory Notices issued. Of these 15 relate solely to Gas Safety (and another jointly), 3 to Fire Safety, 2 to Repairs and one each for tenant safety, Decent Homes and Tenancy Rights.
Nearly all Regulatory Notices resulted in a downgrade where relevant – only one (anonymous) case from 2012/23 and another in 2016/17 avoided downgrades despite having been issued with Regulatory Notices, both on gas safety.
For some landlords it has been simply about resolving the issues, regaining G1 and moving on. In other cases the Regulatory Notice and associated downgrade has been part of a much wider picture involving other issues of concern and in four cases ceasing to be a separate entity.
|Year||Issue||Downgrade||Other issues||Current grade|
|2012/13||Gas Safety||No||N/A||Not known|
|2013/14||Gas Safety||G3||Non reporting leading to G3||G1|
|2013/14||Gas Safety||G3||Chief Exec payment||No longer a separate entity|
|2014/15||Gas Safety||G2||Other reasons for G2 rating||G2|
|2014/15||Repairs||G3||Rose to G2 then fell to G3||G2 for merged entity|
|2014/15||Tenant Safety||N/A||Local Authority||N/A|
|2015/16||Gas Safety||N/A||Local Authority|
|2015/16||Gas Safety||G2||Other issues involved in G2||G2|
|2016/17||Gas Safety||G3||Other issues involved in G3||G3 (being merged)|
|2016/17||Gas Safety||G3||Other issues involved in G3||G3|
|2016/17||Gas Safety||G1||No downgrade||G1|
|2016/17||Repairs||G3*||N/A||G2 for merged entity|
|2016/17||Fire Safety||G3||Other issues led to G3, fire safety issues arose from remedial action||G3|
|2016/17||Decent Homes||N/A||Also gas safety, only Regulatory Notice issued, under 1,000 properties|
|2017/18||Gas Safety||N/A||Under 1,000 properties|
|2017/18||Tenancy rights||G2||Relating to temporary accommodation||G2|
The Regulator has made it clear that Health and Safety is a core issue for landlords – Board Members and Councillors alike are responsible for ensuring the law is complied with and tenants kept safe. Arguably tenant health and safety is no longer a ‘reactive’ consumer standard but effectively an integral part of governance and covered by economic regulation. Either way Board Members and Councillors need to ensure that there are comprehensive and effective systems in place to identify and manage all Health and Safety requirements. This includes accessing professional advice if needed.
For gas safety this includes making sure annual checks and servicing are done on time and that policies and systems are in place and working.
For fire safety this includes dealing with outstanding actions from Fire Risk Assessments, ensuring that there are robust internal controls and that there enough investment in asset management to avoid non-compliance. Health and Safety also includes other issues including ensuring safe premises and robust approaches for electrical, asbestos and legionnaires.
Successive downgrades to G3 on repairs showed that serious detriment could go beyond health and safety. In this case, complicated by a tardy initial response, and overly glowing reports of improvement, there were issues with both specific failures around emergency and urgent repairs and poor service overall.
In addition, although not used as a breach in the Regulatory Notice, there was criticism of complaint handling by the Regulator and this also showed the scope for this being a potential ground for serious detriment in the future.
This referred to a case where a landlord had leased properties but failed to ensure that these were kept to a decent standard.
This referred to a case where there had been a failure to evict in line with the law and a breach of the Tenancy Standard.
As part of the deregulatory measures introduced in response to the reclassification of Housing Associations by the ONS the regulator no longer needs to give consent to mergers or other significant changes to management arrangements. However it has introduced new requirements on landlords to consult, set out the advantages and disadvantages of the change, and demonstrate to tenants how landlords have taken into account tenant views in reaching a decision. The currency of this change means that landlords would be well advised to respond and demonstrate compliance, particularly given the large amount of time and money involved in mergers.
Although the division of economic and consumer regulation governs the reactive approach of the regulation the principles of co-regulation make clear that landlords should comply with all regulatory standards. This is part of the Governance and Viability standard which sets out that landlords should comply with all regulatory requirements. This is reinforced, somewhat obliquely, in the Governance and Viability Code of Practice .
As part of the Government wider response to the Grenfell Tower it has announced a Green Paper into Social Housing, preceded by a number of meetings with tenants by the Minister of State for Housing and Planning Alok Sharma. Those meeting are still taking place but have emphasised the importance of fire safety, tenant rights, tenant voice and complaints. Whilst the Regulator has avoided any immediate changes until the various inquiries have taken place (and currently there is no evidence to suggest that housing regulation was at fault) it is likely that changes may be made on tenant voice, including on health and safety, and more widely.
Phil Morgan is the former Executive Director of Tenant Services at the Regulator. He co-wrote the 2010 Regulatory Framework and put in place Memorandum of Understandings with the then Housing Ombudsman and Local Government Ombudsmen. www.philmorgan.co.uk
If you would like to discuss any of these issues further, or need support or advice on anything relating to governance and regulatory compliance, then please get in touch with our Head of Governance and Regulatory, Jo Savage. Click here for Jo's contact details.
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