Gateway's Response to Regulatory Downgrade
15 November 2022
The Regulator of Social Housing (RSH) has today confirmed Gateway Housing Association a G1 governance grade following the annual stability check, but downgraded Gateway’s viability rating from V1 to V2. Gateway continues to be fully compliant with the regulations.
The Regulatory Judgement confirmed that Gateway Housing Association continues to meet the requirements on governance set out in the Governance and Financial Viability Standard. The Regulator has confirmed that Gateway’s existing G1 grade for Governance has been retained.
A rating of G1 is the highest grading of the four possible achievable for both governance and financial viability. The rating confirms Gateway has effective governance in place. A V2 viability rating means that Gateway meets the RSH’s viability requirements and has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risk to ensure continued compliance.
Gateway’s V1 downgrade comes at a time that the sector is seeing a wave of downgrades in response to the current economic challenges and subsequent volatility in the financial markets. The current economic environment has placed additional pressure to the cost base of the housing sector due to inflation and the scarcity of material. All providers, including Gateway, are undertaking surveys, and making provision for significant investment to existing housing to deal with the requirements of building safety, de-carbonisation, and long-term maintenance. The cost of capital for new debt is also having an impact at a time decisions are still to be made on future rent policy. The sector is also awaiting the outcome of a government consultation on a tightening of the rent cap, which could lead to a significant loss of revenue.
Gateway’s CEO, Kate Franklin commented, “Whilst it is disappointing to be downgraded, we recognise that alongside the external challenge we have a degree of uncertainty in our financial planning owing to an as-yet incomplete picture on the scale of future investment in the sustainability of our homes. We are working hard to address this in the coming weeks as we finalise our long-term asset strategy and building safety plans.”
Gateway is a well-established community-based housing association with 3,000 properties primarily in the London Borough of Tower Hamlets. We are uniquely the largest provider of sheltered housing in Tower Hamlets and were the first registered provider of older persons shared ownership in the borough. We are particularly proud of our new build properties for leasehold, shared ownership and direct sale which is low density and high quality.