Why we are engaging with River Clyde Homes
We are engaging with River Clyde Homes about its financial management, service quality, stock quality 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 a combination of River Clyde Homes’ size, turnover and debt we consider it to be systemically important.
River Clyde Homes has a substantial programme of investment in its existing homes which reduces its capacity to absorb additional financial pressures. It is also continuing to review value for money in its subsidiary, Home Fix Scotland. We will engage with River Clyde Homes to get assurance about how it is managing the risks to the organisation arising from these issues.
River Clyde Homes has identified reinforced autoclaved aerated concrete (RAAC) in some of its homes, and River Clyde Homes told us it has a plan in place to manage any associated risks. We are seeking assurance that River Clyde Homes is progressing with this plan and that it has a plan to complete any remedial work that is required.
To assess the risk to social landlords we have reviewed and compared the 2023/24 service quality performance of all social landlords to identify the weakest performing landlords. We will therefore engage with River Clyde Homes about repairs and void management.
What River Clyde Homes must do
River Clyde Homes must:
- send us copies of its Board and Audit & Risk Committee minutes as they become available;
- send us by 30 April 2025:
- its 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 by 30 April 2025 for Home Fix Scotland:
- financial projections consisting of statement of comprehensive income, statement of financial position and statement of cash flow complete with assumptions and explanatory narrative;
- financial sensitivity analysis which considers the key risks and the mitigation strategies for these risks; and
- reports to the Boards of Home Fix Scotland and River Clyde Homes in respect of the approved financial projections and sensitivity analysis.
- keep us updated on how it is managing the risks associated with RAAC and its plans to complete any remedial work required; and
- send us the information we require about the actions it is taking to improve its performance on repairs and void management.
What we will do
We will:
- review the minutes of the Board and Audit & Risk Committee meetings and liaise as necessary;
- observe River Clyde Homes’ Board;
- review the financial information;
- meet with River Clyde Homes’ senior staff to discuss its business plan, the financial information and any risks to the organisation;
- review the updates River Clyde Homes provides about RAAC in its homes and engage as necessary;
- review the information that River Clyde Homes provides about its work to improve its service quality performance and engage as necessary; and
- update our published engagement plan in the light of any material change to our planned engagement with River Clyde Homes.
Regulatory Returns
River Clyde Homes must provide us with the following annual regulatory returns and alerts 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.