Why we are engaging with Blochairn Housing Association Ltd (Blochairn)
We are engaging with Blochairn about its governance, financial management, planned organisational changes and tenant and resident safety.
In October 2022, following an independent governance review, Blochairn identified a number of areas of non-compliance with regulatory requirements including the Standards of Governance and Financial Management (the Standards). The areas of non-compliance included business planning, risk management, the governing body’s understanding of its role and its effective control of decision making within the organisation, the quality of the information provided to the governing body, tenant and resident safety, internal audit and internal processes and policies.
In February 2023 we changed Blochairn’s regulatory status to ‘non-compliant – working towards compliance’. We assessed that Blochairn did not comply with Standards one, two, three, four, five and six. Blochairn developed an improvement plan to address the serious weaknesses in its governance.
Blochairn’s senior officer left the organisation in October 2022, and it appointed an interim senior officer in November 2022. Blochairn completed a strategic options appraisal (SOA) which identified that Blochairn was not financially viable in the medium term. In March 2023 Blochairn decided that in order to address its failures, it was in the best interests of its tenants and other service users to transfer to another Registered Social Landlord (RSL).
Blochairn identified a potential transfer partner and started to develop transfer proposals. Blochairn commissioned a stock condition survey (SCS) in 2023/24 to inform the transfer process. The SCS identified the need for increased investment in Blochairn’s homes.
In December 2023 Blochairn submitted a notifiable event about a potentially serious tenant and resident safety issue. An independent investigation (December 2019) had identified potentially serious fire safety risks affecting a 2011 development of four blocks of properties, which comprised around a third of Blochairn’s homes. The investigation had been carried out on three of the four blocks.
Blochairn commissioned a review of the 2019 investigation which completed in January 2024 and recommended that a Fire Risk Assessment of External Walls (FRAEW) should be carried out to establish the risk presented in each of the three blocks. In January 2024 Blochairn decided to proceed with a FRAEW on only one of the blocks.
As a result of the potential fire safety risks, Blochairn was unable to progress its transfer plans until it concluded the FRAEW. It needed to first establish the fire safety risks, any interim and permanent remediations required and the impact of this on its business and financial plans. Blochairn initially advised that the FRAEW on the one block would complete in March 2024.
The FRAEW was not completed by April 2024. We raised concerns with Blochairn about the potentially serious and urgent risks to tenant and resident safety and we sought assurance about Blochairn’s capacity to deal with its increasingly complex range of issues at the required pace. Blochairn confirmed in April 2024 that it assessed it had sufficient capacity. We continued to engage with Blochairn about completion of the FRAEW.
In September 2024 Blochairn told us that it had completed its governance improvement plan.
The FRAEW was completed in September 2024 and updated in October 2024. It concluded that the overall risk presented in the one block was a ‘high medium/significant risk’. It recommended that the Fire Risk Assessment (FRA) for the block should be updated to take account of the FRAEW findings.
In October 2024 the updated FRA gave the block a ‘substantial’ risk rating and set out 19 recommended actions. It rated 15 of the actions as ‘high priority’ and the remainder ‘medium priority’. Blochairn told us that the remedial actions required to resolve the fire safety risks would have a material impact on its financial position.
In November 2024 Blochairn engaged with the Scottish Government about the fire safety risks and the impact on its financial position. The Scottish Government asked Blochairn to commission Single Building Assessments (SBA) to establish the risk presented in all four blocks.
We asked Blochairn to provide us with assurance that it had plans to address the immediate financial risks. In response, Blochairn submitted cashflow projections that outlined the estimated costs for the remedial work, showing that it would be unable to cover the projected expenses needed to resolve the issues.
Blochairn was unable to provide us with sufficient assurance about its capacity to address its financial position including the anticipated liquidity challenges, managing its obligations to lenders, including ensuring covenant compliance, and engaging with other stakeholders, such as Scottish Government, regarding potential funding for cladding remediation.
Blochairn has been slow to identify financial risks and has made errors in its financial assumptions and is currently reviewing its medium/long term financial models. This has increased the financial risks for Blochairn. Despite repeated requests from October 2024, Blochairn only recently, in March 2025, submitted a 12 month (rolling) cashflow.
In December 2024 Blochairn asked SHR to direct a transfer of its assets under section 67 of the Housing (Scotland) Act 2010 (the Act) to another RSL on the grounds that Blochairn’s viability was in jeopardy for financial reasons and to protect the interests of tenants and service users. Blochairn told us that it was unable to invest in its properties and that continuing with all necessary remediation works to address tenant and resident safety issues would put it in financial jeopardy.
We considered Blochairn’s request. We assessed that Blochairn was unable to deliver its voluntary transfer strategy because it had not yet established the fire safety risks and resulting liabilities for any RSL transfer partner. We also assessed that whilst Blochairn had taken some steps to address the serious and urgent risks to tenant and resident safety and its financial viability, it had not dealt with this in a sufficiently comprehensive way and with the required pace, to minimise the risk to the safety of its tenants and residents. Blochairn was also unable to provide sufficient clarity around its financial position.
In January 2025 we set out our serious concerns to Blochairn. We noted that we were considering using our statutory powers of intervention to provide Blochairn with additional capacity to address its serious and urgent tenant and resident safety and financial viability issues at the required pace.
In response to our serious concerns, Blochairn has taken steps to provide us with assurance that it is putting in place arrangements to demonstrate it has the capacity to address its serious failures at pace.
In February 2025 Blochairn appointed a transfer lead officer. Blochairn’s interim senior officer left the organisation in February 2025 and the transfer lead officer’s remit was extended to include the role of interim senior officer. Two governing body members also resigned in February 2025, and Blochairn appointed two individuals with appropriate skills and experience to the governing body in March 2025. Blochairn currently has nine governing body members, an interim senior officer, five temporary members of staff and no permanent members of staff.
In March 2025 Blochairn provided us with a transfer and fire safety action plan. This included an update on progress with the FRA recommendations for the one block; eight are complete, 11 are in progress, 10 of which are high risk. Blochairn also commissioned SBAs for all affected blocks on 12 March 2025 and has started to develop a communications plan covering key stakeholders including tenants and residents.
As a matter of urgency, Blochairn now requires to:
- establish the fire safety risks presented in all four blocks by ensuring completion of the SBAs by 31 May 2025;
- complete the remaining FRA recommendations for the one block commenced and complete any FRA recommendations for the other three blocks following receipt of the SBAs;
- incorporate the outcome of all of the SBAs, including any recommended interim and permanent remedial works, into its plans;
- engage effectively with its tenants, residents and other key stakeholders as it addresses the fire safety risks in affected properties and develops its plans, including its transfer plans; and
- engage effectively with its funders as it addresses the fire safety risks in affected properties and develops its plans, and establish any available financial support for the delivery of its plans.
We assess that Blochairn does not comply with Standards one, two, three, four and six, and Scottish Social Housing Charter outcomes two (communication) and four (quality of housing).
Blochairn is working constructively and openly with us to address its non-compliance.
The Housing (Scotland) Act (2010) requires us to monitor and assess the financial well-being, governance and performance of each Registered Social Landlord (RSL).
Our current assessment is that Blochairn is non-compliant and is working towards compliance with the Standards of Governance and Financial Management. We set out below the information that Blochairn must provide in order to assure us that it can achieve compliance.
What Blochairn must do
Blochairn must:
- provide us with weekly updates on progress with its fire safety action plan. This must include an update on progress with completing the FRA recommendations for one block and an update on progress with delivering the SBAs on all four blocks;
- provide us with weekly updates on progress with delivery of its transfer action plan;
- provide us with weekly updates on progress with its communications plan, including details of engagement with affected tenants and residents about fire safety issues and with all tenants about the development of its transfer plans;
- send us its governing body papers when they are issued to the governing body;
- send us management accounts quarterly;
- send us monthly updates of cashflow projections for a rolling 12 month period;
- send us any additional financial information as required;
- send us the following financial information by 30 June 2025:
- 30 year financial projections consisting of statement of comprehensive income, statement of financial position and statement of cash flow 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 resulting covenant calculations with the actual current covenant requirements;
- the report to the Board in respect of the approved 30 year projections, sensitivity analysis and covenant compliance;
- meet with us weekly to discuss progress with the fire safety and transfer action plan, the communications plan, the financial information, any other risks to the organisation and its capacity to deliver its plans and manage its risks; and
- notify us of any issues which have or may have a material adverse impact on the delivery of its plans.
What we will do
We will:
- review the fire safety, transfer and communication plan updates and the financial information Blochairn provides and engage as necessary;
- review the governing body papers and engage as necessary;
- meet with Blochairn weekly to discuss progress with its plans, its financial information, the risks facing the organisation and its capacity to deliver its plans and manage its risks;
- meet with Blochairn’s governing body to discuss progress by 30 April 2025;
- review our engagement with Blochairn on an ongoing basis and formally review our engagement no later than 30 June 2025; and
- update our published engagement plan in the light of any material change to our planned engagement with Blochairn.
Regulatory returns
Blochairn 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.