06 October, 2020
The Regulator of Social Housing (RSH) has published details of a Regulatory Notice (a Notice) issued to Wandle Housing Association Limited (WHA), a registered provider (RP) operating predominately in South London. Regulatory notices are issued in response to an event of regulatory importance that, in accordance with its obligation to be transparent, the RSH wishes to make public.
The Notice was issued to WHA following analysis by the RSH of its 2018/19 Statistical Data Return. This analysis identified an increase in the average rent at a time when providers were required to reduce rents. A failure to reduce rents at this time indicated a failure to comply with the requirements of the Welfare Reform and Work Act 2016.
In response to the RHS's enquires, WHA has undertaken a series of investigations to assess the scale and nature of the errors. These have found that between 2016 and 2020, approximately £320k was overcharged as a result of incorrect rent-setting. Is suggested that the majority of incorrect rents were the result of either misclassification of properties as falling outside of the categories affected by the rent cuts or the failure to implement a 1% reduction in the first 12 months on some new tenancies.
In response, WHA has considered its approach to rent setting and annual rent changes and has developed an action plan. The plan includes reimbursing tenants who have been overcharged, the correction of data errors stemming from tenancy classifications impacting on annual rent setting and the implementation of a policy and procedure review to clarify lines of accountability, strengthen knowledge and skills and improve assurance on rent setting.
The issuing of a regulatory notice to WHA clearly indicates that the RSH is actively examining rent setting across the sector following the Sector Risk Profile Addendum highlighting this problem and is prepared to issue sanctions. Moreover, it shows how serious the RSH is with its aim to improve the quality and accuracy of data provided by RPs.
What is evident is how incremental errors in the calculation of rent can, for all but the smallest of RPs, add up to a considerable sum if not caught and corrected quickly. The subsequent requirement to reimburse affected tenants will not only impact on an RP's finances but also potentially jeopardise its governance and viability grades.
RPs should also be aware that rent setting records are likely to contain 'personal data' for the purposes of data protection law. Any errors in such records will breach obligations to ensure personal data is accurate and kept up to date as set out in data protection law. Therefore, inaccurate rent setting not only poses the risk of regulatory action from the RSH but also the data protection regulator, the Information Commissioner's Office.
Forbes Solicitors have recently been working with several RPs to provide advice on the accurate completion of SDR returns, and assistance developing policies, and procedures to ensure that rent setting is compliant with the Rent Standard 2020 and considering what to do if it might not have been.
For more information regarding this or any other aspect of housing sector compliance please contact your usual advisor at Forbes or Daniel Milnes in our Governance, Procurement & Information department or phone on 0333 027 4234. Alternatively send any question through to Forbes Solicitors via our online Contact Form.