The increasing complexity of the operating environment for housing associations has resulted in innovative new ways of working, with group structures evolving, and more joint ventures being undertaken.
Group structures are occurring more with the introduction of ‘for-profit’ registered providers and the potential for ‘for-profit’ organisations being the parent in a group structure.
The development of a variety of joint venture (JV) mechanisms continues to grow, with a variety of different forms of JV structures available.
Housing association group structures come in all shapes and sizes. Some are relatively simple, some complex. With the changes happening in the housing sector it is becoming apparent that group structures are also evolving, particularly with the introduction of ‘for-profit’ registered providers and the potential ‘for-profit’ organisations being the parent in a group structure.
Through the regulatory framework the Regulator of Social Housing (RSH) remains very clear that social housing assets should not be put at undue risk. For-profit registered providers are being asked to effectively ring-fence their social housing businesses from other activities.
In circumstances where a registered provider is the parent organisation which includes other registered providers it is the RSH’s expectation that the parent organisation assists and supports their subsidiaries to comply with the regulatory requirements.
Likewise, if a parent organisation is not a registered provider but has registered provider subsidiaries it is expected that the parent organisation should support and assist the subsidiaries meet the regulatory framework and standards. As a registered provider the subsidiary should not be prejudiced by the activities or undue influence of the parent or another part of the group.
All in all there is growing complexity in the governance of group structures which needs to be fully understood and effectively directed by the board of the parent and subsidiary bodies. Board members may face difficult and conflicting challenges as they exercise their individual responsibilities to act independently in the best interests of the specific organisation that appoints them. Where individuals hold board roles on more than one organisation within a group there should be formally documented procedures for dealing with any conflict or potential conflict of interest.