Summary

All 26,000 Nottingham council homes will be under Inspection to Meet New Standards Set by Regulator of Social Housing (RSH), which all landlords must now follow.

The Social Housing (Regulation) Act 2023, implemented in response to the 2017 Grenfell Tower fire, introduced the new regulatory framework. A recent report from Nottingham City Council highlights significant efforts required to bring its housing stock into compliance with these updated standards.

The council now directly manages social housing after winding up its arms-length management organisation, Nottingham City Homes (NCH). Moving NCH in-house came after it emerged millions of pounds in rent payers’ money, from the Housing Revenue Account (HRA), was unlawfully diverted to the general fund for other services.

During a Housing and City Development Scrutiny Committee meeting on Monday, April 15, councillors were told a full condition check had not been done by NCH for at least eight years.The HRA issue was uncovered in 2021 by then-corporate director of finance Clive Heaphy, who said the cost to put the problem right was in the region of £51m.

A report by Richard Penn, a local government expert, concluded it occurred due to poor governance practice, principally at Nottingham City Council but also at Nottingham City Homes. It added there had been a serious failure of governance at NCH, where the chief executive and others had sufficient knowledge of the Housing Revenue Account ring-fence to know that returning surpluses to the council to help with general fund budget pressures “could not be justified but they went along with it.”

The report, alongside another investigation by the Chartered Institute of Public Finance and Accountancy, concluded existing arrangements between NCH and the council did not allow for the money to be “adequately protected” and changes needed to be made. They both recommended NCH be brought in-house.

During the meeting, Sajeeda Rose, Corporate Director for Growth and City Development, said councils typically conduct due-diligence tests before deciding to bring similar organizations in-house.A lot of authorities do 20 per cent samples, 10 per cent samples, the fact we have made a commitment that actually we will do our whole stock will give us a very detailed and evidenced understanding of our stock.

That will clearly throw up challenges in terms of how we respond to that. The Regulator of Social Housing (RSH) now has a full year of inspections planned.

Documents highlight that it expects “only a few” housing services to achieve the highest rating. If a service gets the lowest two ratings, the RSH will work with the provider to make sure critical changes are made.