Heylo given lowest possible governance and viability gradings

For-profit Heylo Housing has been handed the lowest possible governance and viability gradings due to issues of serious regulatory concern.

According to the Regulator of Social Housing (RSH), which downgraded the provider to non-compliant G4* and V4* ratings, said Heylo had failed to protect the homes of its shared owners.

Heylo does not own any of these homes, which are instead controlled by unregistered ‘investment pods’. The regulator said this had left the RP dependent on its wider group to manage financial problems impacting its homes.

The RSH added that Heylo had “failed to put things right despite its previous commitment” to do so. 

Two of Heylo’s “pods” have gone into financial administration, putting decisions over 3,500 of the RPs social homes in the hands of administrators.

According to the RSH, Heylo has not proved it can continue to operate in the short term and has also failed to demonstrate it can manage and mitigate critical risks that could be caused by wider group members.

“Heylo RP’s current business model means it can’t protect its homes and tenants. We have worked intensively with Heylo RP to get it to sort out its governance arrangements, so it can safeguard the shared ownership homes from decisions taken elsewhere in the group. Its failure to make these changes is unacceptable,” said chief executive Jonathan Walters. 

“Being a registered provider is a serious undertaking that brings significant but essential obligations. Heylo RP chose not to go through our registration process and we subsequently found serious issues. Its failure to act has placed public funds, investor funds and the reputation of the sector at risk.

“We will continue to engage intensively with Heylo RP and expect swift action to address our concerns, meet the standards and protect tenants’ homes.”

The regulator said the level of concern associated with Heylo’s new gradings would “ordinarily result in the immediate use of regulatory and/or enforcement powers”, but that the position with regard to Heylo was “materially more complex due to group arrangements, the structure through which the social housing homes are held and Heylo RP’s limited ability to exercise control over the events that have led to the identified risks”.

As such, the RSH does not intend to immediately exercise further powers but said it would take action if required.

Heylo previously had non-compliant gradings of G3* and V3* after breaching the governance and viability standards in December 2022.