Decision

Previous regulatory judgement: Newlon Housing Trust (29 June 2022)

Updated 13 December 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Newlon Housing Trust

• Regulatory code: L0006

• Publication date: 29 June 2022

• Governance grade: G1

• Viability grade: V2

• Reason for publication: Changed basis for viability grade

• Regulatory route: In Depth Assessment

This regulatory judgement confirms our previous published assessment of Newlon Housing Trust’s (Newlon) financial viability and governance grades following completion of an In Depth Assessment (IDA).

Based on evidence gained from the IDA, the regulator has assurance that Newlon Housing Trust complies with the viability elements of the Governance and Financial Viability Standard. Its financial plans are consistent with, and support, its financial strategy. It has effective treasury management arrangements and has ensured access to adequate levels of liquidity. It also forecasts ongoing compliance with financial covenants.

Newlon continues to have material risks which it needs to manage to maintain compliance. Forecast earnings from its core social housing lettings business are not sufficient on their own to cover interest payments, with a reliance on sales and other income to meet its obligations. Newlon’s significant levels of development activity, alongside increased investment in existing stock including building safety expenditure, reduces its capacity to deal with adverse events.

The regulator’s assessment of Newlon’s compliance with the governance elements of the Governance and Financial Viability Standard remains unchanged. Based on the evidence gained from the IDA, the regulator has assurance that Newlon’s governance arrangements enable it to adequately control the organisation and to continue meeting its objectives.

Other providers included in the judgement

Access Homes Housing Association Limited

About the provider

Origins

Newlon is a community benefit society with charitable rules, a registered provider and the parent of the group. Its core business is the provision of housing services, support, care and community related activities. Newlon is committed to developing new affordable housing in London.

Registered Entities

Newlon has one registered subsidiary, Access Homes Housing Association Limited, which is a non-charitable registered provider.

Unregistered Entities

There are four wholly owned unregistered entities within the group:

• Outward Housing (trading as Outward) is a registered charity limited by guarantee and is the support and care provider in the group.

• Newlon Fusion, a registered charity and company limited by guarantee responsible for carrying out some community benefit activities.

• NewlonBuild is a non-charitable company limited by shares that provides design and build services. NewlonBuild holds 50% equity stakes in two joint ventures with Vistry Partnerships Limited.

• NewlonInvest, a non-charitable company limited by shares, used for making commercial investments in housing development.

Geographic Spread and Scale

Newlon owns and manages around 8,000 properties in North and East London.

Staffing and Turnover

At 31 March 2022, the group employed 700 full-time equivalent staff and turnover for the year was £92m.^{[footnote 1]}

Development

Newlon is an investment partner with the Greater London Authority and is on target to develop 2,000 homes across a range of tenures over 10 years to 2023. Following this, a 10-year programme including 200 affordable homes per year is planned.

About our judgements

Key to Grades

Governance:

	Compliant
G1	The provider meets our governance requirements.
G2	The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.

	Non-compliant
G3	The provider does not meet our governance requirements. There are issues of serious regulatory concern and in agreement with us the provider is working to improve its position.
G4	The provider does not meet our governance requirements. There are issues of serious regulatory concern, and the provider is subject to regulatory intervention or enforcement action.

Viability:

	Compliant
V1	The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.
V2	The provider meets our viability requirements. It has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure continued compliance.

	Non-compliant
V3	The provider does not meet our viability requirements. There are issues of serious regulatory concern and, in agreement with us, the provider is working to improve its position.
V4	The provider does not meet our viability requirements. There are issues of serious regulatory concern, and the provider is subject to regulatory intervention or enforcement action.

Definitions of Regulatory Routes

In Depth Assessment (IDA): An IDA is a bespoke assessment of a provider’s viability and governance, including its approach to value for money. It involves on-site work and considers in detail a provider’s ability to meet its financial obligations and the effectiveness of its governance structures and processes.

Stability Checks: Based primarily on information supplied through regulatory returns, a Stability Check is an annual review of a provider’s financial position and its latest business plan. The review is focused on determining if there is evidence to indicate a provider’s current judgements merit reconsideration.

Reactive Engagement: Reactive engagement is unplanned work which is triggered by new information or a developing situation which may have implications for a provider’s current regulatory judgement.

Stability Checks and Reactive Engagement: In some cases, we will publish narrative regulatory judgements which combine evidence gained from both Stability Checks and Reactive Engagement.

For further details about these processes, please see Regulating the Standards.

1. Based on unaudited accounts for year ended 31 March 2022. ↩