Response to viability regrade

The Regulator of Social Housing has today issued a series of regulatory judgements, one of which sees settle’s financial viability rating changed from V1 to V2.

Through the published judgement, the Regulator has confirmed they have assurance that settle “complies with the viability elements of the Governance and Financial Viability Standard. Its financial plans are consistent with, and support, its financial strategy.” The judgements notes that settle “has effective treasury management arrangements and has ensured access to adequate levels of liquidity. It also forecasts ongoing compliance with financial covenants.”

The judgement that has been published provides background for the change in viability rating on the basis that settle is “planning to increase investment in its existing homes, including works to improve energy efficiency. It is also forecasting increasing development costs. In combination with the current economic uncertainty in relation to inflation and interest rates, these factors place pressure on financial performance and reduce its capacity to deal with downside risk.”

In a move previously trailed by the regulator, similar judgements were also issued today for several other housing associations. In an update published along with the judgements today, the Regulator notes expectations to publish a number of regraded judgements for providers over the next few months, reflecting the challenging conditions across the economy.

Letchworth-based settle owns and manages over 10,000 homes across Hertfordshire, Bedfordshire, Buckinghamshire and South Cambridgeshire.  The organisation reported £70.8million group turnover at the end of the 2021/22 financial year. Earlier this year, settle retained the highest V1G1 rating following an in-depth assessment by the Regulator.

On behalf of settle, Sally Veitch, chair of the settle board said,

“Following a recent review by the Regulator of Social Housing, settle’s grading for financial viability has changed from V1 to V2. We retain our regulatory grading of G1 for governance. We respect the judgement passed by the Regulator. This change reflects the reality of the external environment and increased pressures faced by settle and so many others. We are pleased to retain our G1 rating for governance, reflecting the good risk management we have in place. As part of our ongoing business planning processes, the settle Board and Executive team had already identified and responded to many of the external challenges we have been facing, to ensure the business remains financially resilient, and that as we move forwards we can continue to do the best for our customers, including delivering on our commitments to invest in the quality of their homes and neighbourhoods.”

Gavin Cansfield, settle chief executive said,

“The decision confirmed by the Regulator of Social Housing reflects the increasing economic pressures we are all dealing with. We know we have a vital role to play at settle, providing quality homes our customers can live in comfortably and increasing the supply of affordable new homes. We remain a financially strong organisation. We will continue to closely monitor and adapt to the external environment. Working with our Board we have already revised downwards the pace and scale of our development plans, identified efficiency savings and have been stress testing our business plan. I am confident that we are well placed to continue appropriate investment in new homes and existing properties as we move forwards. I know that colleagues across settle will continue working closely with our partners to deliver good services to our customers and a positive impact across the neighbourhoods in which we work.”

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