Why we are engaging with Caledonia Housing Association Ltd (Caledonia)
We are engaging with Caledonia about its financial management, development plans and because it is a systemically important landlord.
Caledonia has one registered subsidiary, Cordale Housing Association Ltd.
We refer to a small number of RSLs as systemically important because of their stock size, turnover or level of debt or because of their significance within their area of operation. We need to maintain a comprehensive understanding of how their business models operate, and how they manage the risks they face and the impact these may have. So we seek some additional assurance each year through our engagement plans. Given a combination of Caledonia's size, turnover and level of debt we consider it to be systemically important.
Caledonia is one of the largest developers of new affordable housing in Scotland and has plans to grow through a considerable programme of new homes for social rent and low cost home ownership. Caledonia will receive significant public subsidy to do this. It has recently arranged new private finance to support its development programme. We will engage with Caledonia to get assurance about how it is managing the risks to the organisation including its level of debt and on-going development plans.
What Caledonia must do
Caledonia must:
- send us copies of its Board and audit committee minutes as they become available;
- send us by 30 April 2025:
- 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;
- 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.
- send us an update on its development programme by 31 October 2025. This will include its latest report to the governing body/appropriate committee about development and details of the scale and tenure mix, timescales for delivery and any material delays or changes to the programme; and
- tell us if there are any material adverse changes to its development plans which might affect its financial position or reputation, in line with our notifiable events guidance.
What we will do
We will:
- review the minutes of the Board and audit committee meetings and liaise as necessary;
- observe Caledonia’s Board;
- review the business plan and financial information;
- meet with Caledonia’s senior staff to discuss its business plan, the financial information and any risks to the organisation;
- review the development update and engage as necessary; and
- update our published engagement plan in the light of any material change to our planned engagement with Caledonia.
Regulatory Returns
Caledonia 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.