In a regulatory notice the Regulator of Social Housing (RSH) has concluded that a housing association has breached the economic standards in relation to both governance and financial viability. As a result, it has been downgraded to non-compliant G3 / V3 grades.

Following an investigation, the regulator found weaknesses in South Yorkshire Housing Association’s (SYHA) internal controls framework and concluded that its board has not been managing the organisation with an appropriate level of skill, diligence, prudence or foresight.

Weaknesses in its financial governance has led to SYHA miscalculating its covenant compliance over a number of years. This has resulted in actual and forecast covenant breaches with one of its funders.

In the judgement, RSH say that SYHA’s business plan demonstrates limited financial capacity in the short to medium term, and does not currently have adequate mitigation strategies in place to deal with plausible financial stresses.

In agreement with the regulator, SYHA is working to strengthen its financial capacity and improve its governance arrangements.

Harold Brown, senior assistant director for investigations and enforcement at RSH, said: “Our investigation found serious issues of concern with SYHA’s financial processes and controls, resulting in breaches to its loan covenants. SYHA needs to address these issues promptly to ensure its long-term viability and covenant compliance, and we will continue to monitor the provider closely as it carries out this work.”

In a statement, Larry Gold, CEO for SYHA said: “In April 2023, South Yorkshire Housing Association self-reported what we believed to be a breach of the Governance and Financial Viability Standard to the Regulator of Social Housing. Following the regulatory review, SYHA has been re-graded as V3 G3. While we are of course disappointed to not be meeting the regulatory standards at the highest level, we have worked closely with the regulator during the review process and we understand the rationale for the regrade.

“Extensive plans are already well underway to improve our position on governance and viability. These will continue to be our number one priority. Our commitment to working with the regulator to strengthen the organisation’s financial and governance capacity and capability, and to make the changes required to ensure our long-term viability, is recognised in the Regulatory Judgement.

“Since joining SYHA as CEO earlier this year, I have been impressed by the dedication of our workforce and commitment to customers. It is important to stress that the judgement is no reflection on the quality of homes and services provided to those we serve. Furthermore, we will be working hard to ensure there is no adverse impact on our customers and partners while we make the necessary changes to strengthen our organisation.”