Why we are engaging with Reidvale Housing Association Ltd (Reidvale)
We are engaging with Reidvale about its governance and financial management.
In April 2022 Reidvale, having carried out a strategic options appraisal, decided that seeking a partnership with another RSL was the best option to ensure it meets the Regulatory Standards of Governance and Financial Management (Regulatory Standards), and protect the interests of tenants and other service users.
We originally engaged with Reidvale in March 2019 as our annual risk assessment had identified that a majority of board members had been in place for more than nine years. We were also aware that Reidvale had not assessed its compliance with Regulatory Standards.
Following our engagement, Reidvale commissioned an independent review of its compliance with Regulatory Standards. This review, completed in September 2019, found that there were a number of areas where Reidvale was non-compliant with Regulatory Standards. The areas of non-compliance included demonstrating strategic control, the development and monitoring of its Business Plan, risk management, the lack of appropriate processes to assess the skills and experience needed on the management committee, the appraisal processes for staff and committee members and succession planning.
Reidvale developed a Governance Improvement Plan. It co-opted three individuals on to its management committee to support it to take forward the necessary improvements. It also appointed an interim senior officer following the retirement of the previous post holder.
Reidvale commissioned a further review of its compliance with regulatory requirements in November 2020. The review identified some progress in relation to delivering improvements but found continued serious weaknesses in compliance with regulatory requirements. The review specifically raised matters relating to Reidvale’s Business Plan and rent affordability.
During the strategic options appraisal process it became apparent that Reidvale’s expenditure in some areas such as staff salaries was high in comparison to similar registered social landlords (RSLs). Reidvale commissioned an organisational review to consider this further. It highlighted serious weaknesses in Reidvale’s organisational structure and raised further additional concerns regarding Reidvale’s compliance with Regulatory Standards.
Reidvale also carried out a stock condition survey in order to understand its future maintenance requirements and incorporate that information into its strategic and financial planning. The stock condition survey report was produced in January 2022. Reidvale is currently putting in place a one-year investment programme. One of its main priorities is to address failing stonework in its pre-1919 properties and it is carrying out a pilot to establish the extent of the work required and the likely costs.
Reidvale is engaging openly and constructively with us as it takes forward action to address its weaknesses, including progressing its transfer proposals. We will continue to engage with it to seek assurance that it will address the areas of non-compliance with Regulatory Standards.
The Housing (Scotland) Act (2010) requires us to monitor and assess the financial well-being, governance and performance of each RSL.
Our current assessment is that Reidvale is working towards compliance with the Regulatory Standards of Governance and Financial Management. We set out below the information that Reidvale must provide in order to assure us that it can achieve compliance.
What Reidvale must do
- keep us informed about progress with its proposal to seek a partnership with another RSL and its proposals to consult tenants;
- provide us with regular updates on its progress in implementing its Governance Improvement Plan to address the serious weaknesses in its governance and financial management;
- provide us with regular updates on the steps it is taking to address matters arising from its organisational review; and
- provide us with regular updates on its progress in implementing its one-year investment plan including work to address the failing stonework in its pre 1919 properties.
What we will do
- engage with Reidvale about its plans to seek a partnership with another RSL to seek assurance tenants’ interests are protected;
- review and monitor the implementation of Reidvale’s Governance Improvement Plan;
- meet with Reidvale’s senior officer on a monthly basis to discuss progress;
- engage with Reidvale regarding the outcome of the organisational review;
- engage with Reidvale about its progress in implementing its one-year investment plan and addressing failing stonework in its pre 1919 properties;
- review our engagement with Reidvale on an ongoing basis; and
- update our published engagement plan in light of any material change to our planned engagement with Reidvale.
Reidvale must provide us with the following annual regulatory returns and alert us to notifiable events as appropriate:
- Annual Assurance Statement;
- audited financial statements and external auditor’s management letter;
- loan portfolio return;
- five-year financial projections; and
- 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.