About our annual risk assessment
Each year, we carry out a risk assessment to enable us to plan our engagement with social landlords. This year’s risk assessment took place in the context of the COVID-19 global pandemic which has brought unprecedented challenges for landlords, tenants, service users and people who are threatened with, or experiencing homelessness.
Over the past year, landlords have worked quickly to adapt to the new challenges brought by the pandemic. They were amongst the first on to the frontline in local communities, supporting their tenants and residents through those challenges. This support has included responses that are well beyond core landlord activities, but have been essential to the wellbeing of individuals, households and communities. Landlords have put in place new services or expanded existing services to respond to the impact of the pandemic on their communities, including tackling loneliness and digital exclusion and to ensure people have access to basic supplies.
At the same time, landlords have had to manage the effects of the pandemic on their businesses: rising arrears, significant backlogs in responsive and planned maintenance, empty homes, and in a range of other services. And, of course, we have seen a significant rise in the number of people in temporary accommodation over the period of the pandemic.
We made temporary adjustments to our regulatory approach in response to the pandemic. On 18 March 2020 we moved our regulatory approach to monitoring the impact of the pandemic on landlords. We asked landlords (including local authorities providing homelessness services only) to notify us of any changes to service levels (including closure of offices or facilities to the public), significant service disruption or financial impact as a consequence of COVID-19. To help the Scottish Government and the Social Housing Resilience Group understand the scale and nature of disruption and to plan a co-ordinated response, we asked landlords to provide us with a monthly information return to get a clear picture of the impact of COVID -19. We publish the data we receive and we have used this information to identify emerging issues and serious risks to tenants, people who are threatened with, or experiencing, homelessness and other service users.
In November 2020, we published the risks we would focus on in our risk assessment of social landlords. This confirmed that we would concentrate on the impact of the pandemic on social landlords’ performance while maintaining a focus on: homelessness, affordability of rents, tenant and resident safety for all landlords and financial health and good governance for RSLs (or how well they are run). To reflect the impact of the pandemic on landlords we considered a smaller number of indicators than we have done in previous service quality risk assessments.
The pandemic, and the public health response, has impacted on social landlords’ ability to deliver a full range of services for tenants and service users. We asked landlords to highlight in their 2020 Annual Assurance Statement (AAS) any non-compliance with regulatory requirements that was directly due to the impact of the pandemic and to distinguish this from non-compliance that is for other reasons.
We have used this information, along with a range of other information and intelligence, to understand and to acknowledge where a landlord has been unable to fully comply with regulatory requirements, in whole or in part, as a consequence of the pandemic. We have taken account of this in our assessment of each landlord’s performance and risk to judge our level of engagement with each landlord.
Where we are assured that tenant and resident safety is not compromised, we will not engage with a landlord where it does not fully comply with regulatory requirements and where:
- the non-compliance is exclusively or largely a consequence of the pandemic; and
- the landlord has effective plans to return to full compliance.
We will engage with a small number of landlords to get the necessary assurance about the effectiveness of their plans to respond to areas of non-compliance .
We publish information on our engagement with each social landlord in our engagement plans, and for the first time we have published a Regulatory Status for all RSLs. The Regulatory Status shows whether an RSL complies with the Regulatory Standards of Governance and Financial Management (the Regulatory Standards) and regulatory requirements, is working towards compliance or where we are taking statutory action. We also highlight where a Regulatory Status is under review.
- 140 RSLs are compliant with Regulatory Standards and regulatory requirements (with two under review);
- seven RSLs do not meet the Regulatory Standards and regulatory requirements and are working towards compliance; and
- two RSLs do not meet Regulatory Standards and regulatory requirements and we are using statutory powers to address the non-compliance.
We have not determined a regulatory status for five RSLs who have transferred engagements to another RSL during the year: Barony Housing Association, Bellsmyre Housing Association, Hunters Hall Housing Co-operative, Kendoon Housing Association and Osprey Housing Moray.
The engagement plan for each landlord is available on our Landlord Directory. You can find out more about our risk assessment process, how we regulate and regulatory status’ in our Regulatory Framework.
Our engagement with RSLs
How we decide on our engagement
We use a range of information to form a view on each RSL’s compliance with regulatory requirements and the Regulatory Standards.
This includes the annual returns that RSLs are required to submit to us:
- the Annual Assurance Statement (AAS)
- the Annual Report on Charter (ARC)
- the Audited Financial Statements (AFS)
- financial forecasts
- loan portfolio details.
We also consider additional information and intelligence, for example, from notifiable events, whistleblowing, significant performance failures and information from current engagements.
This year as a result of the COVID-19 pandemic, we have also had regular updates from landlords on the impact of the pandemic on their organisation and its ability to deliver services to tenants and other service users. To assist the work of the Social Housing Resilience Group we have also received monthly returns from all landlords on key information such as arrears and lets to people who are homeless.
Where we judge that we need further information and assurance from an RSL, we will engage with it and publish details of this in the RSL’s engagement plan.
The main reasons for our engagement with RSLs
We’re engaging with
- 29 RSLs on governance;
- 25 RSLs on finance;
- 14 RSLs on planned organisational changes; and
- two RSLs on tenant and resident safety.
On some occasions we are engaging with an RSL for more than one reason.
Where we are engaging with an RSL about finance and will consider its business plan, we will also discuss with the RSL how it has satisfied itself that its rents are affordable for its tenants.
Systemically important RSLs
Some RSLs are of a size, have a level of turnover and debt, or a geographical location that means it could be more difficult for us to fulfil our statutory objective of protecting tenants and others if they were to experience financial difficulty. We consider these landlords systemically important and we are engaging with 21 RSLs on that basis in 2021/22. See which landlords are systemically important.
RSLs where we are using our statutory powers to intervene
To safeguard and promote the interests of tenants and service users, we are currently using our statutory powers to intervene in two landlords, Fairfield Housing Association and Thistle Housing Association. We plan to conclude our intervention at Thistle when it is de-registered at the end of April 2021.
Our engagement with local authorities
How we decide on our engagement
For local authorities, we monitor, assess, report and intervene (as appropriate) on the performance of housing activities. For 26 of the 32 local authorities we assess both their landlord and homelessness services. We assess the homelessness service only for the six councils who have transferred their homes to RSLs.
We use a range of information from local authorities to do this including the AAS, the ARC and other intelligence we have from our engagement with local authorities and through the shared risk assessment process. All our local authority scrutiny work is directed through the Shared Risk Assessment (SRA) with all the main scrutiny bodies for local government. We share information through a Local Area Network (LAN) – made up of officers from each of the scrutiny bodies – for each council. Each LAN then agrees the key scrutiny risks within individual councils and may produce a plan of scrutiny for each council, called a Local Scrutiny Plan (LSP).
We also use the Scottish Government’s official statistics on homelessness.
Prior to COVID-19 local authorities were implementing their Rapid Rehousing Transition Plans to help them meet their legal duties towards people who are threatened with, or experiencing, homelessness. The pandemic impacted on landlords’ ability to let homes resulting in a significant increase in the number of households in temporary accommodation, pressure on the pool of temporary accommodation required, and demand for settled accommodation.
So this year we have focussed our assessment on the provision of access to suitable temporary accommodation, and how local authorities are working with RSLs to provide lets to households who are homeless to reduce the numbers in temporary accommodation.
This year we have reviewed the information on homelessness in local authorities’ COVID-19 monthly returns. During 2021/22 we will discuss with all local authorities what the impact of the pandemic has been on outcomes for people who are threatened with, or are experiencing, homelessness in its area, how it is working with its RSL partners to provide accommodation, and then review our engagement with each local authority. We will consider the Scottish Government’s recently published official statistics as part of this work.
The main reasons for our engagement with local authorities
We’re engaging with:
- 32 local authorities on homelessness;
- five on service quality with a particular focus on gas safety and emergency repairs; and
- seven on progress with ensuring that Gypsy/Travellers sites meet the Scottish Government Minimum Site Standards and requirements in relation to fire safety.
How we review our engagement
We will review the engagement we will have with all social landlords in our next annual risk assessment. We may review our engagement with a landlord during the year if circumstances change or new information becomes available. If we do, we may publish an updated engagement plan for that landlord.