The risks we will focus on

Each year, we assess risk in social landlords to determine what assurance we need from them and what they may need to improve. We focus on the risks to tenants, people who are homeless, Gypsy/Travellers and factored owners. Here we describe the risks we will focus on.

The main risks we will focus on

Our annual risk assessment is how we assess risk in all social landlords. It is the main way we carry out our statutory function to monitor, assess, report and intervene (as appropriate) in relation to each social landlord’s performance of housing activities as well as financial well-being and standards of governance for each Registered Social Landlord (RSL).

The main risks we will focus on this year are:

  • Service quality - The quality of services social landlords provide for tenants and service users
  • Rent affordability - How landlords deliver rent affordability and value for money for tenants and service users
  • Homelessness - How local authorities deliver services for people who are homeless or threatened with homelessness, and how local authorities and RSLs provide settled accommodation and support people to sustain their tenancies
  • Quality and maintenance of homes – How social landlords meet their duties to deliver good quality, well-maintained homes
  • Tenant and resident safety – How landlords ensure that they are meeting their duties to keep tenants and residents safe
  • Gypsy/Travellers - How landlords that provide Gypsy/Travellers sites ensure minimum site standards to meet the needs of residents
  • Financial health of RSLs – How financially healthy RSLs are and how well they manage their money
  • Good governance of RSLs – How well run RSLs are.

Why we focus on these risk areas

Service quality

The Scottish Social Housing Charter sets the standards and outcomes that all social landlords should aim to achieve when performing their housing activities and their duties to help people who are homeless, duties around the safety of tenants’ homes and promoting equalities and human rights.

We base our risk assessment of service quality on social landlords’ Annual Returns on the Charter (ARC). We will again focus on the areas that tenants tell us matter most to them and where there is a legislative duty on landlords:

  • Tenant satisfaction
  • Complaint handling
  • Repairs
  • Gas safety
  • Anti-social behaviour
  • Tenancy sustainment
  • Rent collection
  • Re-lets and managing empty homes
  • Lets to people who are homeless.

You can see detailed information on the Charter indicators and information we use to assess risk in our technical appendix.

We also use:

  • Supplementary information provided in the ARC
  • Our previous engagement with a landlord
  • Other information we gather as part of our regulatory work.

We use year on year Charter data to look for trends and identify consistent poorer or deteriorating performance.

We will normally engage with a landlord about service quality where we have concerns about five or more indicators. We may also engage on the basis of fewer indicators if we need to in order to protect tenants and service users for example around gas safety.

Rent affordability and value for money

Social landlords need to be able to keep rents affordable for their tenants and service users and be able to demonstrate how they provide value for money for the rents they charge.

Planned rent increases could cause future affordability issues for tenants in receipt of housing benefit as well as tenants in work whose pay may not keep up with the pace of inflation.

All social landlords are required to be transparent about costs, to engage with their tenants about what is affordable for them, and to do all they can to be efficient and drive costs from their business before passing these on to tenants.

Homelessness services

It is vital that people who are homeless, or threatened with homelessness, can quickly and easily access the services they need, including temporary accommodation if necessary.

Local authorities have specific statutory duties to people who are homeless, or threatened with homelessness. RSLs also play a key role in preventing homelessness through managing arrears, providing temporary and settled accommodation and supporting people who were homeless to sustain their tenancies.

We will continue to have a strong focus on how local authorities deliver homelessness services and how local authorities and RSLs work together to deliver homes for people who need them.

We will consider the following areas in our risk assessment:

  • Access – whether local authorities are complying with their statutory duties to make inquiries into a person’s homelessness
  • Assessment – how long it takes to complete homelessness assessments and the decisions made
  • Temporary accommodation – whether local authorities are complying with their statutory duties to offer temporary or emergency accommodation to people when they need it, the quality of the temporary accommodation, and how long people spend there waiting for a home
  • Outcomes – how quickly people get settled accommodation after a local authority has assessed that it has a duty to provide this, the number of lets landlords provide to people who are homeless and the sustainment of those lets.

The indicators we will use to assess homelessness are available at the technical appendix.

Quality and maintenance of homes

Since 31 March 2015 social landlords have been required to ensure their houses meet the Scottish Housing Quality Standard (SHQS). Landlords are also required to ensure their houses meet the Energy Efficiency Standard (EESSH) for Social Housing by 31 December 2020.

Social landlords should have robust asset management strategies and plans. This means having good quality information about their homes in place to inform planned investment costs, liabilities and projected spend. Therefore when we assess risk to the quality of tenants’ homes and decide the level of assurance we need we consider:

  • how landlords are addressing houses which fail SHQS and EESSH
  • whether landlords have good quality, up-to-date information about the quality of their existing homes and future survey plans.

We will also look at a landlord’s ability to meet its maintenance obligations in general. Where a landlord is not meeting the requirements of SHQS or EESSH or there are other potential issues highlighted from the stock quality risk assessment, we may seek additional assurance from the landlord.

The Scottish House Condition Survey 2017 recognised that a significant number of pre-1919 tenements are in critical disrepair. We will monitor the impact this may have on local authorities and RSLs who own pre-1919 stock. Our focus will be on seeking assurance that those landlords are making adequate provision in their business plans for the necessary maintenance and investment plans.

The indicators we will use to assess stock quality are available at the technical appendix.

Tenant and resident safety

All social landlords are required to meet their legal duties around tenant and resident safety. This includes areas such as the management of asbestos, as well as gas and electrical safety and fire regulations. Social landlord must be able to get the assurance they need that they meet these duties and act quickly to address any non-compliance.

Gypsy/Traveller site standards

Social landlords that provide Gypsy/Travellers sites must make sure those sites are well maintained and managed, and meet the minimum site standards set in Scottish Government guidance.

Good financial health

RSLs must comply with our Regulatory Standards of Governance & Financial Management. Regulatory Standard 3 is the principal standard governing financial management and requires an RSL “to manage its resources to ensure its financial well-being and economic effectiveness”. When we consider financial health we look at the risk or probability that an RSL will not comply with this standard. This year we will consider the following themes:

  • General financial well-being: we use a range of ratios and trend information to measure an RSL’s financial performance. We also consider each RSL’s ability to provide accurate forecasts of its financial performance
  • Rent levels and the impact of welfare reform: we measure the impact and potential impact of changes in the welfare system by considering the trends in voids, bad debts, arrears and rent increases
  • Pensions: we consider each RSL’s pension position and the impact and potential impact upon the RSL’s financial well-being
  • Other activities and group structures: we consider the risk that diversification into non-social housing activities (for example factoring or care and support activities) may present to each RSL. And where the RSL has a parent, we will also consider its performance
  • Development: we consider the impact of any programme to build new houses
    Treasury: we consider the degree of complexity of each RSL’s funding strategy and debt repayment profiles
  • Other regulatory information: we consider other relevant information including auditor reports under S72 of the Housing (Scotland) Act, notifiable events, whistleblowing and auditors’ management letters.

The new Regulatory Standards contain an explicit requirement for RSLs to maintain rents at a level that tenants can afford to pay. We will monitor and assess the compliance of each RSL with this requirement.

The main financial information we use is the information we collect annually from RSLs which is available on our website here and on our social landlord directory .

Good governance  

Good governance underpins the delivery of financial health and good services to tenants. We assess RSLs’ governance against our Regulatory Standards of Governance and Financial Management. All RSLs are required to comply with these standards.

We consider a range of factors or circumstances that indicate risk. We look at a combination of the statistical data we gather from landlords as well as other evidence and intelligence from our engagement with landlords. We consider whether this information could indicate a risk to the governing body:

  • delivering good tenant outcomes
  • demonstrating strong and effective leadership
  • managing and mitigating risk sensibly
  • being open and accountable
  • meeting its legal obligations in relation to equalities
  • maintaining ethical standards.

The new annual assurance statements are an important part of the evidence we use to assess risk. We will use these for this first time in our risk assessment this year.

We will also consider the information we gather from the ARC and Financial Returns including:

  • governing body membership
  • the length of tenure of governing body members
  • the length of tenure of the Chair
  • the number of members on the governing body
  • staff turnover and the use of external and internal audit, including the frequency with which the external auditor is rotated.

We will also consider:

  • information and intelligence from our previous engagements with the RSL
  • any concerns raised directly with us by tenants and other service users, including Significant Performance Failures
  • any whistleblowing or allegations about improper conduct reported to us
  • information gathered during our inquiry work (including thematic inquiries)
  • any complaints about the RSL to the Scottish Public Services Ombudsman
  • information from statutory auditors
  • broader performance or financial issues that raise concern about its governance.

You can find out more about how we asses risk and our regulatory priorities in our publications on:

 

Technical appendix: the Charter indicators and information we use to assess risk

Service Quality Indicators – All landlords

Charter indicator  Annual Return on the Charter Reference number 
Percentage of tenants satisfied with their landlords service  I1 
Percentage of tenants who feel their landlord is good at keeping them informed about services and outcomes  I3
Percentage of tenants satisfied with the opportunities to participate in landlords decision making process  I6
Percentage of tenants satisfied with the quality of their home  I10
Percentage of tenants who feel their rent represents good value for money  I29
Percentage of tenancy offers refused during the year  I18
Percentage of all complaints responded to in full  14&5
Percentage of al complaints responded to within SPSO timescales  14&5
The percentage of lets to homeless people  C18
Average length of time taken to complete emergency repairs  I11
Average length of time take to complete non-emergency repairs  I12
Percentage of re-active repairs completed right first time  I13
Percentage of tenants who have had repairs and maintenance carried out in the last 12 months satisfied with the service  I16
Percentage of properties that require a gas safety record which had a gas safety check and record completed by the anniversary date  I15
Percentage of anti-social behaviour cases reported last year which where resolved within locally agreed targets  I19
Percentage of rent lost due to properties being empty during the last year  I34
Average length of time taken to re-let properties in the last year  I35
Rent collected as a percentage of the total rent due in the reporting year I30
Gross rent arrears as at 31 March as a percentage of rent due for the reporting year  I31
The percentage of new tenancies sustained for homeless people  I20
The percentage of new tenancies sustained for others I20

Homelessness indicators - local authorities only 

Access  Source 
Number of homelessness applications  SG
Applications for homelessness where applicant slept rough at least once during the last 3 months. SG 

Housing options approaches for homelessness reasons where the local authority did not confirm a homelessness application had been made.

SG 
Assessment  
Percentage of assessments completed within 28 days SG 
Percentage assessed as unintentionally homeless, or threatened with homelessness SG 
Percentage assessed as intentionally homeless SG 
Percentage assessed as neither homeless or threatened with homelessness SG 
Percentage withdrawn prior to assessment decision SG 
Percentage resolved prior to assessment decision SG 
Percentage lost contact prior to completion of homelessness assessment, or for whom the local authority does not know the outcome SG 

Percentage of homeless, or threatened with homelessness, assessments with at least one support need identified.

SG
Temporary accommodation  
Number of applications that have not been offered temporary accommodation SG 
Percentage of temporary accommodation refused, by type ARC
Number of placements that breached the Unsuitable Accommodation Order SG 
Percentage change in households entering temporary accommodation  
Average length of time (days) households spend in temporary accommodation type SG 
Outcomes  
All Outcomes - post assessment* SG
Percentage not known / lost contact post assessment outcome for  households assessed as homeless or threatened with homelessness (including intentionally homeless) SG 
Percentage of Scottish Secure Tenancies provided by a local authority to people who are unintentionally  homeless ARC 
Case duration (from homelessness application to outcome) SG 
Number of people waiting for more than 12 months for an outcome SG 
Percentage of tenancies sustained by people who are homeless for more than 12 months ARC
Repeat homelessness: households reassessed as homeless within the same year* SG 

Stock quality indicators - all landlords

Charter indicator    Annual return on the charter reference number 
Stock condition survey information C24
Stock failing SHQS C26
Percentage of stock compliant with EESSH  

Gypsy/Travellers - landlords who provide sites

Charter indicator Source
Minimum site standards for Gypsy/Travellers SG guidance
Additional fire safety requirements Fire (Sco) Act 2005