Tenant Services Authority letter to Housing Associations assesses current threats and advises on responses.

Wednesday 10 December 2008  Ref: TSA 08/08

The Tenant Services Authority (TSA) is actively engaging with housing associations and has today written a letter to all associations owning more than 1,000 homes (Wednesday 10 December 2008).

The TSA will proactively assess risk across the sector and act proportionately in its dealings with landlords to ensure risks are effectively assessed and action is taken to maintain the confidence of lenders and tenants in today’s exceptionally challenging financial climate.  The fundamentals of investment in affordable housing remain very attractive and we are committed to maintaining that position.

With falling land prices, very low long term interest rates, rising demand for affordable homes to rent and a new tailored offer from the Homes and Communities Agency (HCA) the TSA believes many associations are well placed to play a significant role in helping to build the new homes England needs.

In recent weeks the fall in long term interest rates has resulted in a number of associations with free standing interest rate swaps receiving cash or security calls under the terms of those agreements. 

The TSA advices associations to ensure that they are:

• regularly marking to market their exposures, in order to ensure that they can meet their obligations under the terms of all their finance agreements on a timely basis.



• monitoring compliance with their loan agreements including responsibility for notification, supply of information and financial covenants.

Any association that anticipates having any difficulty in meeting the terms of their loan or derivative agreements should ensure that they inform their lenders and the TSA as soon as possible.

TSA’s revised assessment process:

TSA Regulatory Judgements (RJs) have been introduced as a new product to replace Housing Corporation Assessments.

TSA RJs provide continuity supporting the Regulatory Code, which remains the basis of TSA’s regulation in the interim as the new Standards framework is developed during 2009. 

RJs will:

• comment on RSLs' performance on Viability, Governance and Management of Service Delivery;
• offer judgements under a series of headings – which will initially remain the same as under the previous regime, but without the accompanying traffic lights; and
• no longer comment on delivery of the National Affordable Housing Programme, as this judgement is now clearly within the remit of the Homes and Communities Agency (HCA).

TSA will continue to receive information from the HCA regarding partnership status and allocations, and RJs will routinely take these into account where appropriate through the assessment of Viability.  Any serious failings will impact on our assessment of Governance and/or Management.

Clare Miller, TSA Executive Director of Governance and Viability, said,   “In today’s challenging market, the TSA is actively engaging with associations to identify and help to manage their risk.  At the same time the TSA continues to expect associations to be pro-active in identifying their own risk exposures and taking corrective action where required.  Our new Regulatory Judgements will be the means by which we inform associations, their lenders, tenants and stakeholders of our current regulatory position.”

For further information, contact:  Katy Nicholson, TSA press office, Tel: 0207 393 2115

Notes to editors:

1) The TSA maintains that it is the responsibility of associations to monitor their own risk exposures, and to take corrective action where required.  The TSA expects associations to be pro-active in doing that including regularly updating and reviewing their financial forecasts; assessing their exposure to the housing and finance markets including the consideration of alternative uses/disposal of assets; arranging new private finance facilities on a timely basis and monitoring compliance with financial covenants.

2) The Tenant Services Authority (TSA) is the new Independent regulator for affordable housing, set to raise the standard of services through a well-governed sector that puts tenants first.   It launched on 1 December 2008.

3) Initially the Tenant Services Authority (the TSA) will operate under the legal powers of the Housing Corporation whilst it consults on the powers set out in the 2008 Housing and Regeneration Act.  

4) The TSA will be consulting with tenants across 5 million households and their landlords - including Local Authorities, ALMOs and housing associations - to develop the new standards framework and implement the new powers granted in the Homes and Regeneration Act. The TSA intends to ‘switch on’ its new powers for Housing Associations in December 2009 and across the Local Authority sector in April 2010.