Why we are engaging with Trust Housing Association Ltd (Trust)
We are engaging with Trust about its financial management.
Trust has told us that it has both Heat with Rent charges and Communal Energy charges. Initially, increases in the price of energy were not passed on to tenants and Trust were required to subsidise the costs. Action has been taken to close this gap following a consultation on increasing the charges. However, given the uncertainty around energy costs, we require assurance on the long-term impact of these charges.
What Trust must do
Trust must send us by 30 April 2023:
- its approved business plan and updated risk register;
- 30 year financial projections consisting of statement of comprehensive income, statement of financial position and statement of cash flows complete with assumptions and explanatory narrative;
- a comparison of projected financial loan covenants against current covenant requirements;
- 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;
- the report to the Board in respect of the approved 30 year projections, sensitivity analysis and covenant compliance; and
- evidence of how it demonstrates affordability for its tenants.
What we will do
- review the business plan and financial projections;
- provide feedback on the business plan and financial projections; and
- update our published engagement plan in the light of any material change to our planned engagement with Trust.
Trust 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.