Watchdog overseeing housing associations has been criticised

  • The social homes watchdog who oversees housing associations in England has come under criticism from MPs for financial ratings.

    Clive Betts, the select committee chairman, has said that the Homes Communities Agency's reluctance to downgrade associations' financial viability meant "nobody would have a clue" if they were in trouble reports the BBC.

    Only one of England's housing associations were not downgraded by the ratings agency Moody's in May. Moody's claim that the move was prompted by a "reassessment of the likelihood" of a financial bail-out from the government.

    Despite the mass downgrade, the industry regulator the HCA only gave one housing association (the Cosmopolitan Housing Group) the lowest V4 financial viability rating.

    Mr Betts says that this "amounted to a futile exercise in locking the stable door long after the horse had bolted".

    Housing associations are responsible for the management of 2.6 million homes in England and the not-for-profit bodies have replaced local authorities as the main providers of social housing since the 1980s. However, reduced funding from central government meant that they need to incur debt to a greater extent than previously" in order to pay for new homes, the committee's report stated.

    Julian Ashby, chairman of the HCA's regulation committee, told MPs he was reluctant to downgrade housing associations' financial viability ratings in case it triggered an increase in the cost of their debt, meaning they will face further difficulties.

    Instead, he said he would mark down their governance rating to signal concern, a tactic described by MPs as "misleading" and lacking "openness".

    "The committee was surprised to find that what purported to be an assessment of the financial viability of housing associations was no such thing," Mr Betts said.

    The report called on the HCA to change its practice, adding: "We recommend that the regulator publish accurate financial viability ratings."

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