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The housing association sector and the Housing Corporation, the sector’s regulator, are facing new and more complex financial risks, according to the National Audit Office. The Housing Corporation has started to reform the way in which it regulates associations, known as Registered Social Landlords (RSLs), but there is scope to improve regulation further.

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According to a report today to Parliament by NAO head Sir John Bourn, the Corporation and the sector have a good record in avoiding RSL financial failure. No RSL has become bankrupt and no tenants have lost their homes in the last 10 years. However, the sector is under increasing financial pressure, and is expanding as more properties are transferred from local authority ownership to RSLs under the government’s Large Scale Voluntary Transfer (LSVT) programme. Associations are also reorganising and diversifying into other activities.

In response to these changes, the Corporation is adopting a new approach to regulation – one which is less prescriptive and more targeted on areas of greatest risk.

However, Sir John Bourn points out that the Housing Corporation should take further steps to focus regulatory attention on the key risks in the sector.


  • The Corporation should pay close attention to how well RSLs assess their risks, to ensure that they focus on the key risks and have appropriate strategies for managing them.
  • The Corporation is introducing a new less prescriptive regulatory code. The Corporation will need to ensure that the high standards of performance, probity and accountability expected of the sector are not diluted under the new regulatory regime.
  • The Corporation should revise the financial ratios that it uses to identify RSLs most at risk, and devise new ones for assessing the financial performance of RSLs created under the LSVT programme.

Sir John also found that the Corporation needs to improve its use of information as part of its regulatory activities. Although it has a range of sources of information about RSLs’ risks, it should turn this into a comprehensive picture of financial risk in the sector, to help focus its regulatory efforts and provide an overview on the financial health of the sector. It also needs to gather additional information to help it assess risks in individual RSLs and ensure that RSLs provide timely information about their finances.

The Corporation has re-organised and secured additional staff resources. However, it will continue to need to ensure that it has sufficient staff, with the right skills and experience to regulate the increasing financial complexity of the sector.

Sir John also found that the Corporation should take firmer action on the results of its work. The Corporation should bring to RSLs’ attention underlying financial problems that it has identified, so that RSLs may take action to prevent chronic problems becoming more serious. Some cases of serious concern run on for a long time. The Corporation’s feedback to RSLs on the results of its regulatory reviews needs to be improved. It should also seek regular feedback from the sector on its performance as a regulator.

"The Corporation has a good record in preventing serious financial failure in the sector, but risk in the sector is changing. Although the Corporation is reforming its approach, we recommend further steps to protect the interests of taxpayers and tenants."

Housing associations registered with the Housing Corporation own or manage some 1.45 million homes, a third of the social housing stock in England, housing some 3.2 million people. Over £24 billion of public money has been invested in the sector and a further £1 billion a year is planned over the coming years. These associations, known as Registered Social Landlords (RSLs), provide housing at affordable rents for the homeless and people on low income or with special needs. RSLs are responsible for managing the variety of risks that they face, while the Corporation is responsible for regulating how well they do this. The Corporation has the complex task of seeking to ensure that tenants’ homes and taxpayers’ investments are protected, while also avoiding restriction on RSLs’ scope to engage in well-managed risk taking.

Sir John Bourn


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