Helen Shaw - TPAS conference - 30 June 2023
Good morning everyone and thank you for asking us along to your conference. I know you have had a packed agenda over the last couple of days and we are delighted to be here.
The title of this session is the key challenges facing social housing and there are two key things I wanted to talk to you about.
The first is a report which we have published this morning which highlights the significant and worsening financial difficulties being experienced by tenants. The report is based on feedback from our National Panel of Tenants and Service Users, which has nearly 500 members.
It is also very timely that we are here today as we have just recently published a discussion paper setting out some early proposals on possible changes to our regulatory framework.
And we are really keen to hear from tenants, landlords, investors and other stakeholders with an interest in social housing about our proposals.
So this is a great opportunity for us to hear from you today about what you think works wells with the regulatory framework and what you think we might need to consider changing.
Before I get into the detail of all of this, I thought it would be helpful if I said a few words about who we are and what we do and also then talk about what we see as the key challenges facing social housing at the moment.
So what is the Scottish Housing Regulator?
We are the independent regulator of social landlords in Scotland and we regulate:
- 160 Registered social landlords
- 32 local authorities
Our role is to monitor, assess, report and intervene (where appropriate) on social landlords’ performance and the financial well being and governance of RSLs.
We have one statutory objective – to safeguard and promote the interests of tenants (both current and future tenants) as well as people who are homeless, factored owners and Gypsy/Travellers.
And when we talk about our Regulatory Framework, this is our statement of how we perform our functions and how we regulate both RSLs and the housing and homelessness services provided by local authorities.
We actively involve tenants and other service users in our work and we recently refreshed our strategy for this.
It is really important that we understand tenant and service users views and priorities, that we involve them in our work and that we communicate with tenants and service users about our work.
We do this in a number of ways:
- National Panel of Tenants and Service Users - this was established back in 2013 and now has over 500 members and I’ll come back in a bit and say more about the report we have published this morning.
- Regional Network Liaison Group – we engage with the Liaison Group on a regular basis to discuss policy areas and our work
- Tenant Advisors – we have a pool of independent, volunteer tenant advisors who work with us to for example review information that landlords produce for their tenants or feeding back to us on our communications.
- We also currently have two members on our Board who are tenants of social landlords and help bring a tenant perspective to our work.
In March this year, we published our new plan setting out how we will include tenants and service users in our work and if you haven’t yet had the chance to look at this, I would recommend this to you to help understand a little more about how we go about our work.
If I turn now to the key challenges facing the social housing sector:
The context for social housing is very different from the world that we lived in when we introduced the current regulatory framework back in 2019.
Since then we have had a global pandemic, the UK has left the European Union, there is a war in Europe, and there has been significant political change in the UK.
More recently we have seen a cost of living crisis which has meant that tenants and social landlords continue to face enormous challenges.
Many tenants are facing genuine financial hardship. We are seeing acute issues around homelessness, and temporary accommodation in particular.
And many of these challenges are reflected in findings from the research report which we have published this morning.
This found that:
- A quarter of members that responded said they are not managing well financially, and around three quarters feel that their financial circumstances are worse now than twelve months ago.
- Panel members identified increased food and energy costs as the biggest contributors to financial difficulties, with more than 7 in 10 saying these have had a significant impact.
- More than half of respondents were having difficulty heating their home at the time of the survey in the early months of 2023, compared with just under a third at the same point in 2022.
- Nine in ten respondents cited energy costs as the main factor contributing to difficulties in heating their home. The vast majority of respondents are concerned about their future financial circumstances.
- The research also focused on rent levels and annual increases. Two in five respondents reported experiencing difficulties in affording their rent in the last year, up on the level for the previous year. Feedback linked these difficulties to heating costs, rent levels and other living costs.
- Most respondents had received information from their landlord in the last year about annual rent increases, with the majority saying their landlord provided different rent increase options, information on what options might mean for services, and asked for their views on proposed increases.
- More broadly, the report also explored Panel members’ views on their landlords’ decision making, opportunities for involvement and information to tenants. A further strand of the report was a series of in-depth discussions with people with experience of using homelessness services.
Our work with the National Panel is an important way for us to better understand the priorities, concerns and thoughts of tenants and service users of social landlords in Scotland.
This year’s report once again highlights that tenants are facing significant cost of living challenges, and that pressures on household finances have heightened. We hope the research is helpful to everyone with an interest in social housing.
Social landlords are also faced with cost inflation that is running well above the headline rate of CPI, higher interest rates, and increasing requirements on quality of homes, while responding to pressure to keep rents as low as possible.
The Scottish Government also intends to bring forward two housing bills during the remainder of this Parliamentary term.
What this means for us as a regulator is that the landlords we regulate and the tenants that landlords serve face continued uncertainty and volatility and that degree of unpredictability is pretty unprecedented.
So our message to landlords is to stress the importance of listening to their tenants and continually reviewing their business plans to ensure that they manage their business in a way which ensures their financial well being and importantly maintains rents at a level that tenants can afford.
What are our proposals for the review of the Regulatory Framework?
I mentioned earlier that on 9 June we launched a national discussion on the future of social housing regulation in Scotland.
The discussion paper which we published sets out our early thinking on our future approach, regulatory priorities and how we will work. We will use the feedback on the paper to develop detailed proposals for a new Regulatory Framework. And we will consult on the new Framework later this year.
Our starting point is that we believe the current Regulatory Framework has worked well during the last five years, and that it broadly remains relevant and appropriate. We also recognise a clear appetite from many involved in social housing for a period of stability and continuity.
So, we have aimed to maintain our current approach, but with some change to reflect the learning from the last five years and to ensure the Framework remains up to date.
The discussion paper sets out initial suggestions on what we think we might need or want to change. We are keen to hear the views of all our stakeholders on our early ideas.
The discussion paper explains how we will continue to keep a focus on safeguarding and promoting the interests of tenants, people who are homeless and others who use social landlords’ services. If you have not had a chance to look at this, I would encourage you to do so and let us know what you think.
There are some key areas that I would draw your attention to in the discussion paper:
Our regulatory priorities
We use the tools in our Regulatory Framework to focus on the greatest risks to the interests of tenants and service users. For tenants and service users of both RSLs and local authorities these include the risk of:
- living in a poor quality or unsafe home;
- being unable to afford to live in their home; and
- being homeless, or at risk of homelessness, and unable to access appropriate housing.
For RSL tenants, a further important risk is them losing their home or secure tenancy if their landlord becomes insolvent.
The best way for an RSL to protect against these risks and to protect its financial health is for the organisation to put in place and maintain the building blocks of good governance. This means that it will have the capacity and quality of information to make sound decisions about its services for tenants and others, investment in its homes, future business plans, financial arrangements, and policies. Our experience is that governance failures are often at the root of serious problems.
We also recognise the wider harm if lenders, investors and funders to RSLs do not see them as a good place to invest, resulting in less, or more expensive, investment in new and existing homes. By regulating effectively we help to maintain lenders’, investors’ and funders’ confidence.
Following the lessons from the Grenfell Tower Disaster, and more recently the coroners’ report in to the death of Awaab Ishak, we believe it is important that we have a strong focus on landlords listening to tenants and on the quality of homes and tenant and resident safety. We will aim to regulate to support social landlords to meet their obligations and duties for tenants and those who use their housing services. Translating this into regulatory priorities, we believe that a significant focus of our work from April 2024 onwards should be on landlords:
- listening and responding effectively to tenants and service users
- providing good quality and safe homes
- keeping homes as affordable as possible
- doing all they can to reduce the number of people who are experiencing homelessness
Annual assurance statements
We believe that landlords assuring themselves, tenants and us should remain at the heart of our regulatory approach. We are keen to build on the successful adoption by landlords of the Annual Assurance Statement (AAS).
We recognise that at any given time there may be specific issues on which governing bodies and committees require explicit or additional assurance; a recent example of this is assurance on their landlord’s systems to identify and deal with any reported cases of mould and damp.
We believe there is value in enhancing the AAS process by ensuring that we can identify specific areas or issues on which assurance should be explicitly set out in a landlord’s AAS. To that end, we propose to add a provision to allow us to require landlords to include explicit assurance in the AAS on a specific issue or issues; we would communicate any specific assurance requirements to landlords in advance of their submission of the AAS.
Annual return on the Charter
We believe that the indicators we collect through the Annual Return on the Charter (ARC) broadly remain relevant and appropriate. However, we want to test with stakeholders whether they continue to view the indicators as useful and of value, if there are any that we should stop collecting, and whether there are other areas of information we should be collecting.
We are keen to strengthen further our approach to monitoring tenant and resident safety. Therefore, we propose to introduce to the ARC indicators that focus on tenant and resident safety, in addition to those that are already there on gas safety and emergency repairs. These additional indicators would focus on electrical, water, fire, asbestos and lift safety.
Following the coroners’ report last year in to the death of Awaab Ishak due to prolonged exposure to mould in his home environment, we believe it is important that we have appropriate monitoring of the effectiveness of landlords’ approach to managing reports and instances of mould and dampness.
So we are asking stakeholders to suggest what they believe would be the most effective and appropriate way to do this, including indicators for possible inclusion in the ARC.
Regulatory requirements
As we flag above, we will aim to strengthen further our emphasis in the Framework on landlords listening to tenants and service users, building on the existing requirements to do this.
To that end, we propose to amend the requirements currently under the heading of Tenant and Service User Redress to include a requirement that landlords provide tenants, residents and service users with easy and safe ways to provide feedback and raise concerns, and ensure that they consider such information and provide quick and effective responses.
We also propose to amend the title of this part of the Framework to Listening and Responding to Tenants and Service Users.
Regulatory status
We believe that the regulatory status for RSLs has been an effective addition to the regulatory framework which delivers greater transparency around our regulatory view of RSLs. Some stakeholders have suggested that there may be value in using more direct language around non-compliance, particularly in the working towards compliance status, or in having an additional regulatory status for RSLs, between compliant status and working towards compliance status, along the lines of compliant with improvements needed. Those stakeholders feel that this would increase transparency around the current performance of individual landlords while reducing the potential for a sudden movement from a compliant status to non-compliant.
Significant performance failures
We currently provide tenants with a way to give us information on a significant performance failure by their social landlord and we set out how we define a significant performance failure in our factsheet. We do not receive large numbers of reports of significant performance failures, and of those we do receive fewer are assessed as significant performance failures. We are interested in views on whether there are any changes we should make to how we define significant performance failures.
I haven’t covered absolutely everything in the discussion paper but hopefully this gives you a good sense of our thinking on this. And of course we would be keen to hear if there is anything else that you think we should consider.
Before I finish, I wanted to cover what the next steps will be.
We have asked for responses to the discussion paper by 11 August.
We are carrying our a range of engagements with various stakeholders to discuss our ideas over the summer and we will consider the responses to these discussions alongside the written responses we receive.
If you wish to respond, you can complete the form we have published alongside the discussion paper or simply email or post your feedback to us.
We will consider all of the responses we receive and to help makes this a transparent process we are publishing the responses we receive as we get them (unless someone specifically asks us not to).
We will then formally consult on a revised framework later in the year with a view to implementing the new framework on 1 April 2024.
I’ll pause there and hand over to Kirsty.
Once Kirsty has finished, we will then have the opportunity to take questions. As I say, we are really keen to hear your views on anything that I have covered today or indeed any other issues.
Thank you.