Tower Hamlets Community Housing has been downgraded to G3/V3 status by the Regulator of Social Housing after breaching economic standards, according to a regulatory judgement published on 23 March 2023. The regulator’s investigation found weaknesses in the governance and financial position of the housing provider, with the board failing to manage risks appropriately or show that it has mitigations in place to ensure the provider’s long-term viability. The regulator also found that Tower Hamlets Community Housing relied on poor-quality data when forecasting investment spend for its existing homes.
The downgrade means that Tower Hamlets Community Housing is non-compliant with the Governance and Financial Viability Standard. Registered providers of social housing with more than 1,000 units are awarded both governance (G) and financial viability (V) grades for their compliance with the standard. Grades of G1 and G2 indicate compliance with the governance element of the standard, while grades of G3 and G4 indicate non-compliance. Similarly, V1 and V2 grades indicate compliance with the financial element, and V3 and V4 grades indicate non-compliance.
The regulatory judgement comes after Tower Hamlets Community Housing was placed on the gradings under review list on 20 December 2022 to indicate that the regulator was investigating the provider’s compliance with the Governance and Financial Viability Standard. The housing provider’s previous grades were G1/V2.
Harold Brown, Senior Assistant Director for Investigations and Enforcement, commented on the investigation’s findings, stating that significant issues were found in the way Tower Hamlets Community Housing is run, including a failure to manage financial risks and reliance on poor-quality data, leaving it with financial weaknesses. Brown added that the housing provider needs to tackle these issues promptly and return to compliance with the regulator’s standards.
In response to the regulatory judgement, Tower Hamlets Community Housing has put a plan in place to improve its governance and address its long-term viability, in agreement with the regulator. The Regulator of Social Housing promotes a viable, efficient, and well-governed social housing sector able to deliver and maintain homes of appropriate quality that meet a range of needs. It undertakes robust economic regulation focusing on governance, financial viability, and value for money that maintains lender confidence and protects the taxpayer. It also sets consumer standards and may take action if these standards are breached and there is a significant risk of serious detriment to tenants or potential tenants.