The Regulator of Social Housing has set out its view of the key risks and challenges currently facing social housing in its latest Sector risk profile.

Among the suggestions is the need for “robust data on stock quality” ahead of the changes to the Decent Homes Standard and the decarbonisation agenda. The Regulator says this is also to “ensure the continued provision of good quality homes”.

There was also a big push on the need to consider rents, with the inflation figures for September 2021 likely to reach 4% due to increasing energy prices and arrears likely to rise with the cutting of universal credit and the end of furlough.

On this, the Regulator says: “Boards will need to fully understand their cost base and capital requirements, ensuring that a range of inflation assumptions, including differential assumptions, are factored into their stress testing.

“The potential for high CPI inflation in the 12 months to September 2021 may represent a significant increase in providers’ maximum permitted rent inflation for 2022/23, and Boards will need to consider a wide range of factors in reaching decisions on rent increases charged to tenants.”

The RSH adds that “charging the correct rents to tenants is a fundamental aspect of being a social housing provider” and that rent compliance will still be a large part of the Regulator’s focus.

In a heads up to boards, the document says: “Boards should ensure that they have adequate assurance on the quality of their organisation’s internal controls on rents to ensure compliance with all regulatory requirements. Similarly, Boards should ensure that rigorous systems are in place to set and manage service charges and that they adhere to all legal requirements in this regard.”

Other key risks identified by the Regulator include:

• Tenant and building safety is a key, developing responsibility. Boards will need to understand how legal requirements are changing and have assurance about health and safety so that tenants are safe in their homes.
• Demands for transparency with tenants is increasing following the Social Housing White Paper, and Boards should take action now to ensure they provide good services and to strengthen their engagement with tenants.
• The current macroeconomic climate is uncertain and Boards will need to manage their access to labour, skills, and materials – particularly as these affect services to tenants and new development.
• Increased reliance on debt means Boards need to be able to effectively monitor interest cover and gearing, manage downside risk and evaluate the financial products they choose.
• Forecasts for development have returned to pre-pandemic levels and Boards will need to manage the significant risks associated with the development and, where applicable, sale of new housing.

Fiona MacGregor, Chief Executive of RSH said: “Boards and Councillors are the custodians of people’s homes and as society and the economy emerge from the pandemic the social housing sector faces continuing challenge and public scrutiny.

“Providers need to closely monitor the risks they face, including those we have identified in our Sector Risk Profile, and take strategic action to manage them so that they can provide safe and good quality homes and services now and in the future.”

Against the backdrop of pandemic recovery, these are the risks which the RSH considers Boards of registered providers need to manage in meeting the regulator’s standards.

Some areas of risk are also relevant to Councillors governing local authority providers.

The publication sets out a range of competing pressures that providers’ Boards face: all providers will need to be clear about how they make the necessary strategic decisions and trade-offs to achieve their purpose and explain these clearly to stakeholders.