SHR Board Meeting Minutes - 4 October 2022

Present

Welcome, Apologies and Declarations

GW welcomed all present and LP who joined by audio.   It also noted apologies from SHR Board member Ewan Fraser (EF) and noted that he had submitted comments in advance to GW.      

LP declared a conflict of interest with the registration application for Link Housing Association and the Board noted she would not participate in that part of the meeting.  It noted to allow for potential appeal panel arrangements CS and MD would also leave and not participate for that item.   HTT reported that she was previously an employee of Link Living and retained a personal friendship with a service manager.   The Board noted her declaration and that this was some time ago. It agreed that HTT should remain in the meeting and participate in the decision-making.  It note that despite the absences, there would still be enough members present to allow for a decision.

There were no further declarations of interest.  

The Board noted that due to meeting room constraints that there were no staff observers, but welcomed that colleagues KM and JJ would attend to present specific papers.  

Consent Agenda

The Board noted and approved the consent agenda items including:

• minutes from 23 August 2022, subject to a minor correction;
• matters arising;
• ARAC update; and
• the Chair and member activity report.

Chief Executive Report

MC presented on issues and developments that impact regulated bodies, the wider housing environment and SHR.  

MC updated the Board on the emergency housing legislation including the Scottish Government’s rent freeze proposals.  He and HS reported on the Task & Finish Group meetings that they had attended along with a range of sector stakeholders.  The Board considered the update and discussed:

• the timescale for transition through parliament, review periods and when the legislation may no longer be applicable and fall;
• the likely mechanisms, noting the limitations of safeguards for landlords and that there is currently no detail on how caps will be set and enforced;
• SHR’s role, noting ongoing engagement with Scottish Government officials and that there is no reference to SHR on the face of the legislation;
• the differences between the Scottish proposals and English arrangements;
• stakeholder feedback, noting potential unintended consequences such as how the sector is viewed by stakeholders and its future capacity to contribute to new build and net zero targets;
• feedback from landlords on concerns around already increased costs driven by rising interest and inflation rates;
• potential impact on the financial health and viability of landlords and how in turn this may impact on their spend choices, compliance with statutory duties, Charter performance, ability to deliver transfer commitments and act as rescue partners if required;
• local authorities, noting early indications around rent increases for 2023/24. It also noted that under current legislation, there is no role for local authorities as rescue partners;
• potential impact on homelessness if private landlords withdraw; and how market exit could already be compounded by increasing interest rates;
• sector-led proposals for 2023/24 being developed for consideration by Scottish Government; and
• current landlord rent consultation plans, noting SHR is preparing a letter for all landlords on this as well as the importance of stress-testing business plans and Annual Assurance Statement preparation. It also noted the importance of landlords engaging with lenders at this time.

MC also updated the Board on the Scottish Government’s pay offer, explaining work to factor this into SHR’s projections alongside the change in employer National insurance contributions.  MC confirmed that more detail would be provided in November at the mid-year budget review.  MC explained some uncertainties around the Scottish Government overall budget position and the impact this may have in the short to medium term.  The Board noted the need for agility around SHR’s work programme.   The Board also discussed:

• intelligence around the private rented sector; and
• potential to outsource any aspects of SHR’s work, noting limitations and Management Team capacity.

The Board noted the Chief Executive’s report.

Registration Application - Link Housing Association

HS and KM presented an application from Link Housing Association (Link HA) to become a registered social landlord.  They highlighted that SHR does not receive many registration applications and the last one approved was over ten years ago and was the registration of Wheatley Housing Group but pre-dates all the current SHR Board members. 

KM outlined the assessment carried out, explaining that Link HA met each registration criterion.  She set out, that based on the assessment, SHR’s Management Team recommends the Board approve the registration of Link HA.

The Board considered the application and discussed:

• accounts, noting SHR already had access to these for Link HA as a non-registered subsidiary and the group’s business plans and financial projections;
• non-asset owning parents as registered social landlords, noting the tests around ultimate control and SHR’s ability to regulate and exercise powers. The Board noted that Link HA is currently a non-registered subsidiary of Link Group which itself is an RSL and registration of Link HA will allow Link Group to consider its future Group structure arrangements.
• use of the term ‘housing association’, noting as a subsidiary Link HA has been in use for some time and that there is no statutory prohibition on non-RSLs using the term. KM confirmed non-charitable and commercial activity that Link HA carried out has now been moved into a new subsidiary; and
• SHQS performance, noting a dip in relation to electrical safety performance like many other RSLs, but that plans are in place to deliver the necessary improvements.

The Board thanked KM and HS for the detailed paper setting out the assessment.  It agreed that it was satisfied that it met with all the criteria and agreed to register Link HA with effect from 4 October 2022. 

Action: KM/HS to register Link HA with effect from 4 October 2022. 

Regulatory Risk Assessment Methodology

HS and JJ presented the annual risk assessment methodology, highlighting that this is one of the key ways that SHR carries out its statutory duties, explaining that the outcome determines the level of regulatory engagement with each landlord.  They set out the context for this risk assessment, including SHR’s resource capacity in future years, the cost of living crisis, rising interest and inflation rates and evolving Scottish Government housing policy including rent caps.  They reported that as the operating environment for landlords is volatile and continuing to move at pace, there may be a need to revisit the focus of the methodology especially around financial aspects of the risk assessment. 

JJ explained the focus of the proposed methodology, highlighting the importance of tenant and resident safety, affordability, statutory homelessness obligations, stock quality and the financial health of RSLs as well as good governance.   He explained how SHR comes to a risk-based assessment.  The Board considered the methodology proposals and discussed:

• approach to surveying landlords about tenant and resident safety, noting in response to feedback from landlords this will take place earlier and that the scope of the survey will again be discussed with their representative bodies in advance;
• outcomes for all people experiencing homelessness and the variation on the services that they may encounter, noting that human rights and equalities is embedded throughout the methodology. It also welcomed that SHR is planning a meeting with advice agencies and that it has recently updated advice on Annual Assurance Statements including around equalities;
• costing net zero, noting while all costs expected to be incurred should feature in landlord business plans, many are still to work through net zero costs and there are particular issues for older stock. It also noted the impact of the ESSH2 review and rent freeze on how landlords are prioritising this work;
• prepayment meters, noting SHR does not collect information on the number of tenants using these; and
• approaches taken by landlords to achieving gas safety compliance, noting that SHR engages around processes and records management if there are compliance failures.

The Board also discussed the challenge for SHR as it seeks to resource the risk assessment and resulting engagement outcomes.  It noted work to consider flexibility in the risk assessment, including the approach taken with business planning for some Systemically Important RSLs. 

HS confirmed the importance of risk-based triaging focussing on key indicators, and reported on ongoing work to review 2022/23 work plans in light of the volatile operating context and SHR’s resource capacity.  The Board noted the potential for increased risk in some areas and the possible implications of this.  

The Board welcomed considerations to flex the approach to regulation and noted that it will have an opportunity to discuss this further at its workshop in November.  

The Board approved the risk assessment methodology and noted that SHR may have to adjust this to reflect the changes in the social housing operating environment that continue to develop at pace.  The Board also noted that SHR will publish details of the indicators it will consider in the risk assessment at the end of November 2022. 

Action: HS to implement the risk assessment methodology, publish the indicators being considered and update the Board on any adjustments.

Faifley Deregistration

HS presented an application for voluntary deregistration of Faifley Housing Association.  She explained the background to the transfer of engagements to Caledonia Housing Association in March 2022.  The Board considered the case and discussed:

• how Faifley’s failure to submit an Annual Assurance Statement triggered engagement with Faifley;
• plans which are being developed, if resources allow, to carry out a small number landlord visits in 2022/23 to review the process landlords followed to complete their Annual Assurance Statements, noting findings may influence other landlords as well as lead to further engagement;
• issues around poor governance at Faifley, noting how SHR has developed its approach to the governance risk assessment to include a review of a sample of minutes for all RSLs. It welcomed that SHR reflects on learning from casework and builds this into future risk assessments; and
• transfer commitments made to Faifley tenants. It noted that some landlords could face challenges as a result of the proposed rent cap and increasing costs.  It also noted that SHR monitors the delivery of these commitments through engagement plans, and would consider cases individually if a landlord did not meet its commitments, but that there is no legislative or contractual basis for the commitments. The Board agreed to consider this further at a future workshop.

The Board approved the voluntary removal of Faifley Housing Association from the Register under Section 28 of the Housing (Scotland) Act 2010 and noted that SHR will write to Faifley and Caledonia to confirm removal. 

Actions:

• HS to remove Faifley Housing Association and confirm this in writing with it and Caledonia.
• SHR Board to consider transfer commitments further at a future

Standing Orders Review

RH presented a review of SHR’s standing orders.  She explained that ARAC considered this when it met in September.   RH updated the Board on considerations and advice around voluntary deregistration where an organisation has already transferred engagements and she proposed delegation of this to the Chief Executive.  She set out plans to keep the Board sighted through the CEO’s report and quarterly performance reports.  The Board noted that these reports already set out a summary of casework leading up to any transfer of engagements.  It approved the proposal and asked RH to recirculate the Standing Orders with the appropriate amendments for any final comments. 

The Board also discussed:

• SHR’s powers to set performance improvement powers, noting this has a statutory basis, but to date SHR has not used these powers; and
• appeal arrangements and how early members should withdraw from discussions, noting discussions can take place a long time ahead of any regulatory Board decision being considered. It agreed not to make any amendments in relation to this and to revisit appeals for further discussion at a future workshop. 

The Board thanked ARAC for scrutinising the Standing Orders and contributing to the review.  It approved the proposed changes, subject to correction of a minor typo and amendments to reflect the delegation of voluntary deregistration cases under Section 28 of the Housing (Scotland) Act 2010. It requested a fresh version be circulated for final comments prior to publication.  

Actions: RH to make final corrections to the standing orders, amend to reflect delegation of voluntary deregistration under S28 of the Housing (Scotland) Act 2010 and recirculate by email to the Board for final comment and agreement prior to publication.  

AOB

Risk Management - MC confirmed that Management Team has discussed risk management recently and it continues to consider how to capture and reflect the evolving and volatile operating context.  He reported a refreshed register would be provided to the Board in December 2022. 

Landlord Forum – GW reported that he has written to all RSLs to invite them to note an interest in participating in a landlord forum with SHR.  The Board welcomed the positive response to date.  It noted that GW and AW will progress this initially with MC, with an aim of a meeting before the end of the year and will seek to involve other Board Members over time.  

Board survey – the Board noted that the annual staff survey about it has been postponed until after event in November for the Board and all staff. 

OSCR – The Board congratulated MD on her recent appointment to Chair OSCR.  It noted she will take over from GW who has acted as interim Chair at OSCR. 

SHR’s Office – IM updated the Board on work around SHR’s future office.  He explained that there is an opportunity for SHR to review the overall scale of the space it takes and that the management team will consider this in the weeks ahead. He asked if the Board wishes to be involved in any decision should the Management Team propose a reduction in space.  The Board noted it had previously approved the footprint that SHR would occupy and agreed to delegate any decision on further amendments to the Chief Executive. 

Effectiveness of meetings and papers

The Board welcomed the quality of the papers and the time for discussions, especially noting for the registration case, it was the first time this Board had been asked to consider an application.  It asked that recommendations are always set out on the front page of future papers.  

The Board agreed the venue had worked well and would be appropriate for future meetings.  It also noted ongoing planning to include slots for external speakers at future meetings. 

DONMs

The Board will hold a workshop on 22 November 2022 and meet on 6 December 2022.

MC outlined plans for the Board and staff event in November 2022.  

Private session

The Board held a private meeting with the Chief Executive.

Post meeting notes

Between 4 October 2022 to 6 December 2022, the Board was briefed or received updates on:

• Scottish Government emergency Cost of Living (Tenant Protection)(Scotland) Bill
• Meida coverage
• Correspondence with MSPs
• Rent thematic
• Annual Assurance Statements
• Landlord groups
• Report on RSL Loan Portfolio returns
• Advice to landlords on rent increases
• SHR’s office move
• SFHA survey on regulation
• Scottish Social Housing Charter review