In a regulatory judgement, the Regulator of Social Housing concluded that a London-based housing association has breached the economic standards and, as a result, has been downgraded to V3 / G3 status.

Following an investigation, the regulator found weaknesses in Tower Hamlets Community Housing’s (THCH) governance and financial position. Its board failed to show that it is managing these risks appropriately, or that it has mitigations in place to ensure the provider’s long-term viability.

The regulator states that THCH’s financial weakness means that it is unable to meet the costs of its day-to-day operating activities and repair liabilities. In addition, it has relied on poor-quality data when forecasting investment spend for its existing homes.

In agreement with the regulator, Tower Hamlets Community Housing has put a plan in place to improve its governance and address its long-term viability.

Harold Brown, Senior Assistant Director for Investigations and Enforcement, said: “Our investigation found significant issues 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. It needs to tackle these issues promptly and return to compliance with our standards.”

In a statement, Mark Thrasher, chair of the board for THCH, said:

“We’ve welcomed the opportunity to engage with the Regulator in a transparent way. Our Board recognises that historic strategic financial decisions have not been robust enough.

“Significant building safety investment, inflation, a rent cap, the cost-of-living crisis, and a shortage of affordable homes is having a considerable impact on the long-term survival of housing providers our size. While a downgrade is disappointing, against this backdrop, it was anticipated and accurately reflects our challenges. We haven’t been naïve to this and have been open about actively seeking opportunities to ensure a sustainable future.

“We take the Regulator’s judgement seriously and are committed to addressing its concerns to improve our resilience. It’s positive that the Regulator is confident we have the capacity, capability, and resources to do just that. We remain focused on providing good, safe homes and services to our residents in Tower Hamlets.”