The risks we will focus on- November 2020

Each year, we assess risk in social landlords to determine what assurance we need from them and what they may need to improve. The COVID-19 pandemic and the measures introduced to limit the spread of the virus have had a significant impact on social landlords’ delivery of services to tenants, people who are threatened with, or experiencing, homelessness and others who use their services. Earlier this year, we made temporary adjustments to our regulatory framework which will enable us to fulfil our statutory objective whilst supporting landlords to manage the impact of COVID 19. Here we describe which risks we will focus on.


30 November 2020


This year’s annual risk assessment takes place within the unprecedented context of a global pandemic.  Social landlords moved at pace to adapt to the new and challenging environment in which they found themselves operating.  And did so in a way that provided a good level of protection for their tenants and service users.  In the immediate future landlords and their tenants and service users are facing a number of additional risks as a result of the pandemic. 

On 18 March we moved our regulatory approach to monitoring the impact of COVID‑19 upon 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. We also asked landlords to provide us with a monthly information return to get a clear picture of the impact of COVID -19 and we provide regular reports to the Scottish Government and the Social Housing Resilience Group to help them understand the scale and nature of disruption and to plan co-ordinated responses. We also publish the data we receive.

We have used this information to identify emerging issues and serious risks to tenants, people who are homeless and other service users.  We will consider that information when we carry out the forthcoming risk assessment. 

In accordance with current guidelines, all of our staff are now working from home, and we have had to adjust how we regulate.  For the time being, we will carry out only regulatory engagement that is critical to the performance of our regulatory functions.   And we will prioritise near term risks over long term risks.  We will continue to respond to new risks and issues as they arise.

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 social landlords’ performance of housing activities as well as financial well-being and standards of governance for Registered Social Landlords (RSLs). 

 The main risks we will focus this year are:   

  • Homelessness - How local authorities deliver services for people who are threatened with, or experiencing, homelessness. This includes providing people who need it with suitable temporary accommodation (particularly during the pandemic) and how they are working with their RSL partners to provide settled homes, limiting the time people spend in temporary accommodation.   
  • Tenant and resident safety – How landlords ensure that they are meeting their duties to keep tenants and residents safe and continue to do so during the COVID-19 pandemic. This will also include how landlords that provide Gypsy/Travellers sites ensure minimum site standards and fire safety requirements to meet the needs of residents. 
  • Financial health of RSLs – How financially healthy RSLs are and how well they manage their money with a focus on resilience and financial planning against the challenges of the COVID-19 pandemic.
  • Governance of RSLs – How well run RSLs are.

Why we focus on these risk areas

Homelessness services    

Local authorities have legal duties towards people who are threatened with, or experiencing, homelessness.  This includes offering suitable temporary accommodation and providing settled accommodation.  Prior to the pandemic local authorities were working to deliver their Rapid Rehousing Transition Plans (RRTPs) which helped to ensure they were complying with these duties. 

The pandemic has impacted on landlords’ ability to let homes resulting in a significant increase in the numbers of households currently in temporary accommodation and consequent pressure on the pool of temporary accommodation which is available if needed.    

So we will focus our assessment on the provision of access to suitable temporary accommodation and how local authorities and RSLs are working together to provide lets to homeless households and reduce the number of people in temporary accommodation. 

Tenant and resident safety  

We expect all social landlords 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.  COVID-19 has had an impact on landlords’ ability to progress planned maintenance and safety checks.  Social landlords must be able to get the assurance they need that they meet these duties and act quickly to address any non-compliance. 

Social landlords that provide Gypsy/Travellers sites must make sure those sites meet the minimum site standards set in Scottish Government guidance as well as meeting the legal requirements relating to fire safety.

The areas we will focus on are set out in Section 5.  

Financial health  

Financially well-run RSLs deliver better outcomes for their tenants.  RSL sector finances remain strong but landlords and their tenants are facing challenges and uncertainties.  The response to and financial impact of the COVID-19 pandemic  means, for many RSLs, there will be less financial capacity not only to deal with adverse events but also for planned maintenance and development. 

Social landlords also 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, particularly as the longer term economic impact of the COVID-19 pandemic works through.

Regulatory Standard 3 (RS3) is the principal standard governing Financial Management for RSLs.  RS3 requires an RSL to ‘manage its resources to ensure its financial well-being, while maintaining rents at a level that tenants can afford to pay’.  RSLs need to comply with this standard at all times.  In the financial risk assessment, we consider the risk or probability that an RSL will not comply with RS3 especially around financial well-being.  We also consider whether RSLs have demonstrated effective financial management, planning and control.

As part of the financial risk assessment 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: we consider the impact and potential impact of rent increases on tenants' ability to afford them, 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 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 homes
  • 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

For the assessment of financial health we use the information we collect annually from RSLs which is available on our website here and on our social landlord directory. 


We assess RSLs’ governance against our Regulatory Standards of Governance and Financial Management which all RSLs are required to comply with. We consider a combination of the statistical data we collect on governance alongside other evidence and intelligence from our engagement with landlords.

We consider whether this information could indicate a risk to the governing body:

  • delivering good outcomes for tenants
  • 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 annual assurance statements (AAS) from landlords are also an important part of the evidence we use to assess risk.  In August, we set out further guidance to landlords completing their AAS in recognition of the severe difficulties that landlords were facing as a result of COVID -19 and the continuing uncertainty about how, and how quickly, things might change

It is essential landlords understand the extent to which their ability to deliver services and to comply with regulatory requirements has been affected by COVID-19.  In particular, landlords will wish to understand the full range of new risks and issues for tenants and other services users.  We will consider the extent to which any material non-compliance is directly due to COVID -19 as opposed to any other non-compliance with regulatory requirements.  We appreciate that the pandemic is likely to have affected each landlord’s ability to comply fully with all regulatory requirements and we will take account of this when we assess risk and judge our level of engagement with each landlord.

Provided we are assured that tenant and resident safety is not compromised, generally 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
  • the landlord has effective plans to return to full compliance

We will also consider the information relating to governance which 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
  • 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
  • any complaints about the RSL to the Scottish Public Services Ombudsman
  • information from statutory auditors
  • broader performance or financial issues that raise concern about an RSLs' governance

Find out more about how we assess risk

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

Technical appendix for landlords: tenant safety and homelessness indicators we will use to assess risk

Homelessness indicators  
Local Authorities only Source

Number of households that have not been offered temporary accommodation

SG official statistics and SHR monthly returns

Number of placements that breached the Unsuitable Accommodation Order

SG official statistics

Number of households in temporary accommodation

SG official statistics on homelessness and SHR monthly returns

Local Authorities and RSLs  

Number of lets made to households that are homeless

ARC C2, SG official statistics and SHR monthly returns

Tenant safety indicators  

Percentage properties with gas safety record renewed by anniversary date


Average hours to complete emergency repairs


Notifiable events relating to tenant and resident safety


Minimum site standards for Gypsy/Travellers (for landlords with Gypsy/Traveller sites)

SG guidance

Additional Fire safety requirements (for landlords with Gypsy/Traveller sites)

Fire (Sco) Act 2005