Government consults on separating social housing functions from HCA

The social housing regulation work of the Homes and Communities Agency (HCA) will be established as a separate function, the DCLG has announced.

The recommendation, made in a Tailored Review of the HCA that was published yesterday, is intended to allow a stronger focus on the HCA’s primary objectives of housing delivery, regeneration, growth and devolution.

Since 2014, HCA has expanded into investments, which the review found creates a potential for conflicts of interest because in some cases the HCA acts as both a secured creditor and regulator of registered providers.

The agency currently has an ‘ethical wall’ to prevent commercially sensitive information being exchanged between its regulator and investment functions, but the report warned that this may not be sustainable as the financial landscape of the social housing market changes.

Gavin Barwell, the housing and planning minister, said: “We are determined to create a housing market that works for everyone and the HCA and regulator will play an important role in delivering the homes this country needs.”

The review argued that while there was a “clear and continuing need” for the work of the HCA, its role should be clarified by a new statement of purpose, a more unified and integrated executive leadership and a stronger strategic function. It also suggested a change of name to reflect the fact that the HCA is focused on housing.

Social housing regulation will be carried out by a new non-departmental public body, which will retain working relationships and shared corporate services with the HCA and the DCLG. The change is constitutional and will not affect the regulator’s powers.

Until the separation is achieved, the report urged the HCA and the DCLG to “actively explore” options for increasing the independence of the HCA regulatory function, and to ensure that the ‘ethical wall’ remains strong.

Julian Ashby, chair of the HCA Regulation Committee, said: “The decision to separate the regulator from the HCA will strengthen our ability to promote a viable, efficient and well-governed social housing sector able to deliver homes that meet a range of needs.”

Sir Edward Lister, the chair of the HCA, added that the organisation has a strong track record of delivering the government’s housing targets but “we know we need to do even more in future to ensure more people have the opportunity to own their own home”.

The DCLG has opened a consultation on the proposals, which will run until 27 January.

Last week, the HCA also introduced a consultation on introducing fees for its social housing regulation work. The consultation, which runs until 9 January, argues that to ensure the regulator “has sufficient resources to be effective”, providers will have to pay a fee to augment the central government funding.

Under the proposals, all providers would have to pay a one-off fee of £2,500 after they register and then an annual fee of £300 if they own fewer than 1,000 units.

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