Local authority consumer regulation briefing

This Campbell Tickell briefing is aimed at senior officers and elected members of local authorities that own social housing stock, whether managed in house, or by an ALMO or TMO. It summarises the key features of the Regulator of Social Housing’s new regulatory regime, focusing on the issues that local authorities most need to be aware of, and to address.

What is consumer regulation and how does it work?

New regulation came into force for stock-owning local authorities from April 2024; which is based on provisions in the Social Housing Regulation Act. The aim is to drive long term improvements in the social housing sector, and depends on landlords’ abilities to demonstrate compliance with four ‘consumer’ standards namely:

Neighbourhood & Community

Safety & Quality

Tenancy

Transparency, Influence & Accountability (including ‘Tenant Satisfaction Measures’)

The standards apply to all social landlords registered with the Regulator for Social Housing (RSH). Local authorities are responsible for all homes under their ownership, including for Arms-Length Management Organisations (ALMOs) or Tenant Management Organisations (TMOs).

Under the new regulatory regime, a landlord’s compliance is assessed by the RSH. For landlords with more than 1,000 homes, this will be via a programmed inspection at least once every four years. In other cases, a reactive inspection may be triggered by events. In all cases1, there will be a rating issued, from C1 to C4, defined as follows:

C1 = delivering the outcomes of the standards

C2 = some weaknesses and improvement is needed

C3 = serious failings and significant improvement is needed

C4 = very serious failings and fundamental changes are needed

The consequences of such judgements may entail unlimited fines (as yet untested), regulatory intervention in operational matters concerning safety for example, as well as wider reputational damage. Ultimate accountability for compliance rests with the elected members of the council as a whole, rather than solely with the housing service, ALMO, or with responsible Cabinet or Committee members. This means that Councils need to be able to demonstrate the evidence of compliance that is in place. This point is central to the concept of co-regulation which is at the heart of how the RSH regulates.

What are the key lessons to be learned from the first wave of regulatory judgements?

Since April 2024, 52 grades have been issued to landlords based on the new consumer standards, with local authorities accounting for all but three of eighteen C3 gradings issued and the only C4 grade so far. These local authorities range considerably in size from 38,500 to 1,500 homes, covering a mix of political leadership and geographical locations. Only one local authority at the time of writing had received a C1 grade (Barnsley Metropolitan Borough Council), with another nine receiving a C2 grade.

There is a range of possible reasons which could explain this disparity. Many have suggested that local authorities, unlike housing associations, are dealing with the regulator in a more substantial way than previously, so they may be less well prepared.

Local authorities in receipt of a C3 grade have largely been through reactive engagement once problems have been identified and self-referred to the regulator. A common reason for such self-referral has been a lack of data to show compliance on safety and quality measures (or a lack of confidence in such data), as well as deficiencies in tenant engagement and not adapting the delivery of services according to tenants’ needs.

Those which have received a C2 grade so far have been able to demonstrate an understanding of the gaps or shortfalls which exist in compliance and have clear action plans in place to address this. The one local authority to have received a C1 was able to demonstrate performance monitoring by cabinet and involved tenants.

What do local authorities need to do?

To help prepare for inspection, we would encourage landlords to conduct a self-assessment (or gap analysis) against the standards. This involves rigorously detailing their evidence of compliance with the required outcomes of each of the standards. This involves rigorously detailing their evidence of compliance with the required outcomes of each of the standards. This should look at what assurance exists, including what additional or external checks are in place to provide assurance on, say, the accuracy of data or implementation of key policies.

Since April 2024, landlords have been required to submit Tenant Satisfaction Measures (TSMs) to the regulator, which have been published in full. These consist of a mixture of management information (e.g. % of homes that have had all the necessary fire risk assessments) and tenant perception (e.g. % of tenants satisfied with the overall repairs service). TSM results should not be viewed in isolation but can provide the basis for identifying gaps in compliance and/or underperformance which should help to inform service improvement plans.

Where there are material gaps in compliance, landlords must self-refer to the regulator, identifying the potential breach and outlining what action is being undertaken to resolve this. The failure to do so is likely to result in a less favourable judgement, as well as potentially exposing tenants and employees to harm.

Key questions about consumer regulation to address

As senior officers and elected members consider their approach to the new regulatory regime, some key high-level questions will be useful to understand:

Data – what data is available to demonstrate compliance with the standards? Is it accessible and accurate? What assurance is there on data integrity? How does data inform service planning?

Governance – what structures are place to ensure effective oversight, challenge and support for the staff leadership and team? How performance is performance measured and assessed, and how effective are the mechanisms for doing so?

Engagement – what range of methods are currently in place to allow for tenant engagement? How representative are those involved of the wider tenant population. What meaningful changes or impacts has tenant engagement led to?

Culture – do employees at all levels understand the importance of regulation? How are they engaged in shaping and delivering improvement plans? Is the safety of tenants and staff an over-riding priority?

Learning – does the housing service learn from tenant complaints, other mistakes or oversights and any Ombudsman cases, and make the necessary changes to its procedures and processes?

Contract management – are the contractors, advisor and agents working on behalf of the council working on appropriate terms (including third party management of homes and buildings)? Have their skills, experience, track record and/or qualifications been properly assessed?

Equality and diversity: Can the housing service demonstrate compliance with the Public Sector Equality Duty as applying to all councils? (NB, not within the Consumer Standards as such, but clearly of key importance nonetheless).

Assurance – what external validation is in place to assess the performance of the housing service, and the integrity of the data that underlies it? Are elected members receiving solid assurance, or are they rather relying on reassurance?

Contact us

If you would like to have a conversation about how Campbell Tickell can assist your organisation, please feel free to email one of our senior team leads:

Catherine Little: catherine.little@campbelltickell.com,
Ceri Victory-Rowe: ceri.victory-rowe@campbelltickell.com.

Call our office: +44(0)20 8830 6777

Find out more about our consumer regulation consultancy support.

Local authority consumer regulation briefing