Why we are engaging with Hillcrest Homes (Scotland) Ltd (Hillcrest)
We are engaging with Hillcrest abouts its financial management, tenant and resident safety, development plans and because it is a systemically important landlord.
We refer to a small number of RSLs as systemically important because of their stock size, turnover or level of debt or because of their significance within their area of operation. We need to maintain a comprehensive understanding of how their business models operate, and how they manage the risks they face and the impact these may have. So we seek some additional assurance each year through our engagement plans. Given Hillcrest’s size, turnover and level of debt we consider it to be systemically important.
Hillcrest is one of the largest developers of new affordable housing in Scotland. It has plans to grow through a considerable programme of new homes for social and mid-market rent and will receive significant public subsidy to help achieve this.
Hillcrest has told us it needs to obtain new private finance during 2026/27 to support its development plans. We will engage with Hillcrest to get assurance about how it is managing the risks to the organisation including its levels of debt and on-going development plans.
Hillcrest has undertaken a number of different surveys in recent years at one of its buildings to confirm what, if any, remedial works are required to meet tenant and resident safety requirements for high-rise buildings. These surveys were subsequently superseded by the requirement to undertake a Single Building Assessment (SBA).
In July 2025 Hillcrest carried out an SBA which identified a number of recommendations for remediation work to the building. Hillcrest has put in place an action plan to address these. Hillcrest has also implemented interim measures to mitigate the risks to tenants whilst it progresses the required remedial works.
Hillcrest is engaging openly and constructively with us.
What Hillcrest must do
Hillcrest must:
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send us copies of its Board and audit committee minutes as they become available;
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send us by 30 April 2026:
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its approved business plan and updated risk register;
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30 year financial projections comprising a statement of comprehensive income, a statement of financial position and a statement of cash flows complete with assumptions and explanatory narrative;
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a comparison of projected financial loan covenants against current covenant requirements;
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financial sensitivity analysis which considers the key risks, the mitigation strategies for these risks and a comparison of the resultant covenant calculations with the actual covenant requirements;
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report to the Board in respect of the approved 30 year projections, sensitivity analysis and covenant compliance; and
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evidence of how it demonstrates affordability for its tenants.
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send us an update on its development programme by 31 October 2026. This will include its latest report to the governing body/appropriate committee about development and details of the scale and tenure mix, timescales for delivery and any material delays or changes to the programme;
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tell us if there are any material adverse changes to its development plans which might affect its financial position or reputation, in line with our notifiable events guidance; and
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send us quarterly updates on progress with its plan to address its tenant and resident safety issues.
What we will do
We will:
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review the minutes of the Board and audit committee meetings and liaise as necessary;
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observe Hillcrest’s Board;
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review the business plan, financial and supporting information;
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meet with Hillcrest’s senior staff and Chair to discuss its business plan, the financial and supporting information and any risks to the organisation;
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review the development update and engage as necessary;
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review progress with the plans to address the tenant and resident safety issues and engage as necessary; and
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update our published engagement plan in the light of any material change to our planned engagement with Hillcrest.
Regulatory Returns
Hillcrest must provide us with the following annual regulatory returns and alerts us to notifiable events as appropriate:
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Annual Assurance Statement;
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audited financial statements and external auditor’s management letter;
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loan portfolio return;
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five year financial projections; and
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Annual Return on the Charter.
It should also notify us of any material changes to its Annual Assurance Statement, and any tenant and resident safety matter which has been reported to or is being investigated by the Health and Safety Executive or reports from regulatory or statutory authorities or insurance providers, relating to safety concerns.