Blog: Thursday 2nd April - Capsticks: Lessons from regulatory inspections against local authorities

Darren Hooker, Partner, Capsticks

Two years in, what have we learned from regulatory inspections of local authorities?

We are now two years into the regime introduced by the Social Housing (Regulation) Act 2023. Since then, the Regulator of Social Housing has carried out inspections of local authorities for compliance with the consumer standards – a new initiative that has now become familiar. The two-year milestone provides the perfect opportunity to reflect on this system and set out the key learning points for practitioners from these inspections.

Grading

The Regulator has now inspected 80 local authorities and given them a C grading for their compliance with the consumer standards.

Of those 80 local authorities:

• 8 have received a C1 grade, meaning the Regulator has judged that the local authority is delivering the outcomes required in the consumer standards;
• 28 have received a C2 grade, indicating that there are ‘some weaknesses’ in delivering the outcomes required in the consumer standards and ‘some improvement’is needed;
• 37 have received a C3 grade, meaning there are ‘serious failings’ in delivering the outcomes required in the consumer standards and ‘significant improvement’ is needed; and
• 7 have received a C4 grade, meaning there are ‘very serious failings’ in delivering the outcomes required in the consumer standards and ‘fundamental changes’ must be made.

What do these results show?

Generally, local authorities are performing worse than housing association registered providers under the new regime. At the time of writing, no housing association has been awarded a C4 grade, and they are generally more concentrated around the C1 and C2 levels. But, as the above shows, there are 7 C4 gradings among local authorities and most are graded C2 or C3.

It is worth noting that the Regulator’s position is that, in time, all registered providers of social housing (RPs) should be achieving a C1 grade, as this is the only grade that means landlords are delivering the outcomes required in the consumer standards.

Initially, we may have been anticipating that few RPs would actually achieve a C1 grade and the Regulator was willing to accept that they were on a journey to improvement. However, two years into the new regime, it is clear that the Regulator now expects more. It is no longer enough for the RP to have a route to improvement – that journey must be leading somewhere. In simple terms, a C1 grade is now harder to achieve than it was two years ago because the Regulator and the public are demanding results and not just a plan.

Local authority RPs therefore have some work to do to collectively get themselves up to a C1 level.

Where the issues lie

The themes in the C3 and C4 judgments remain familiar and include:

• a lack of evidence about the condition of properties;
• gaps in relation to health and safety compliance, with numbers of outstanding gas or fire safety checks and lack of smoke or carbon monoxide alarms being particularly common;
• significant backlogs of repairs (including urgent repairs), with both high numbers of outstanding repairs and long delays in having those repairs carried out;
• numbers of homes not meeting the Decent Homes Standard;
• lack of proper processes in place to assess and mitigate the risk to tenants of living in homes where issues are outstanding;
• failures to establish proper tenant engagement structures, where tenants have meaningful opportunities to scrutinise and influence decisions; and
• issues with the collection of tenant satisfaction measures survey data.

The main reason for the above are issues with governance and, in particular, data. An RP cannot consider complying with the consumer standards unless it has the foundation of accurate, complete and up-to-date data about the condition of its stock and the needs of its residents. Many of the issues we see in relation to consumer standard compliance can be directly traced back to ineffective data systems. Arguably, updating data systems is a significant undertaking, but it is potentially an investment which can have the single greatest effect on ensuring compliance going forward.

On the horizon

Local authorities need to be aware that there will be two new consumer standards coming into force in 2026. First, a competency and conduct standard, which will require housing managers to obtain specific qualifications. Secondly, a social tenants’ access to information requirement standard, where landlords will need to publish certain information and provide residents with an ability to request certain information from their landlords. The Regulator will be looking for compliance with these standards – and, of course, compliance with Awaab’s Law – in future inspections.

Conclusion

Both local authorities and the housing sector generally have some work to do to ensure full compliance with the consumer standards. Two years into the new regime, expectations are increasing and we need to be able to start identifying improvements in service delivery and the quality and safety of housing for residents.

How Capsticks can help

We work with our local authority clients both ahead of and in the wake of Regulator inspections to ensure compliance with the standards, helping them to tackle the issues that can lead to low gradings. If this topic is something that interests you, please contact Darren Hooker at darren.hooker@capsticks.com for more information.