2023 was a busy year for the statute-makers in England. The Social Housing (Regulation) Act 2023 heralded the biggest change to social housing regulation since 2008, and there was a storm of building safety legislation. So what's in store for 2024? Here we round up some changes we might see in the English social housing finance market. This Part 1 looks at social housing regulation and building safety.
English social housing finance: what's in store for 2024? Part 1
Social housing regulation
The Social Housing (Regulation) Act 2023 was big news last year but much of it is yet to come in to force. In 2024 we can look forward to:
- the much-publicised new consumer standards being assessed from April and associated "C" gradings being added to "G" (governance) and "V" (viability). The Department for Levelling Up, Housing and Communities is currently consulting on proposed timescales for repairs in the social rented sector under Awaab's Law
- increased regulatory and enforcement powers for the Regulator and changes to the moratorium regime. We expect these to come in to force in April, and we responded to the Regulator's recent consultation on guidance on how it intends to use its regulatory and enforcement powers
- a consultation on the long-awaited new Decent Homes Standard, which DLUHC says will come out "over the autumn / winter period"
- the new rent settlement. DLUHC has confirmed that maximum rent increases from April are back to CPI + 1% (so 7.7%, slightly higher than last year's 7% cap). For shared ownership, they revert to RPI +0.5% (save for new shared ownership leases granted from 12 October 2023 which will be at CPI + 1%). We will look at shared ownership in Part 2 of this series
These changes will:
- impact on how registered providers of social housing provide and fund services to their tenants, with a strong focus on tenant safety; and
- increase regulatory oversight and extend existing Regulator powers, e.g. by:
a) applying to for profit RPs as well as not-for-profits;
b) putting the Regulator's ability to use its powers on breach of the consumer standards on the same (stronger) footing as for breach of the economic standards; and
c) making fines for non-compliance unlimited.
Most legislation is now in place and the construction and property industries are turning their minds to how it can be implemented in practice. Regulations are still adding meat to the bones, for example last week's regulations specifying the information that the Principal Accountable Person and Accountable Persons must keep and share as the "golden thread", and clarifying responsibilities where there are multiple APs for the same higher-risk building. All higher-risk buildings should have been registered with the Building Safety Regulator (BSR) – it has been unlawful to allow such buildings to be occupied without registration since 1 October 2023.
Regulations are still adding meat to the bones, for example this month has seen regulations:
- specifying the information that the Principal Accountable Person (PAP) and Accountable Persons (APs) must keep and share as the "golden thread information", and clarifying responsibilities where there are multiple APs for the same higher-risk building
- bringing into force new obligations, including to:
- prepare a Safety Case Report (which summarises the safety case for a higher-risk building)
- implement Mandatory Occurrence Reporting (where the PAP must report certain issues relating to the structural integrity or fire safety of a higher-risk building to the BSR)
- produce a residents engagement strategy and put in place complaints procedures
The BSR can also now request that building assessment certificates be prepared. A PAP must apply for a building assessment certificate within 28 days of being requested to do so by the BSR. The BSR will issue the certificate if it is satisfied that the PAP and any other APs are complying with all relevant duties.
But the industry is still wrestling with how other statutory obligations will be fulfilled, and it is clear there is a shortage of professionals who have the necessary skills (and/or PI cover) to monitor and report on compliance. This has made it difficult for funders to assess what property charging due diligence or documentary protections they might want to address potential risks, and for industry bodies such as the LMA to make recommendations.
This year, we expect the conversation will gather pace and protections will start to be seen in finance documents as the industry gets to grips with the new requirements and borrowers want to charge higher-risk buildings as security.
Please get in touch with one of our key contacts below or your usual AG Social, Sustainable and Green Finance team contact if you would like to discuss.
To the Point
Subscribe for legal insights, industry updates, events and webinars to your inboxSign up now
Get up to date with our latest news on LinkedInFollow now