Why we are engaging with Key Housing Association Ltd (Key)
We are engaging with Key about its financial management and because it is a systemically important landlord.
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 Key’s turnover we consider it to be systemically important.
Key will be required to absorb significant additional costs as a result of changes to employers’ national insurance contributions.
What Key must do
Key must:
-
send us copies of its Board and audit committee minutes as they become available;
-
send us by 30 June 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 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; and
-
-
-
evidence of how it demonstrates affordability for its tenants.
-
What we will do
We will:
-
review the minutes of the Board and audit committee meetings and liaise as necessary;
-
observe Key’s Board;
-
review the business plan and financial information;
-
meet with Key’s senior staff to discuss its business plan, the financial information and any risks to the organisation;
-
seek assurance on the impact of the changes to employers’ national insurance contributions and engage as necessary; and
-
update our published engagement plan in the light of any material change to our planned engagement with Key.
Regulatory Returns
Key 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.