​Riverside upgraded and Muir Group downgraded in latest regulatory judgements

Riverside has had its governance rating upgraded after improving its management of risk following its merger with One Housing Group.

The Regulator of Social Housing (RSH) today moved the 77,000-home association’s governance rating from ‘G2’ to the top ‘G1’ grade.

RSH had previously given Riverside the lower ‘G2’ rating – which means it is compliant but needs to improve -due to concern over risks from its merger with One Housing Group in 2021. One, which reported a £25.5m pre-tax deficit for 2020/2021, joined Riverside as a subsidiary in December 2021 before fully amalgamating last year.

Following the 2021 merger, RSH said One “held significant risks from longstanding, legacy business activities and decision making had not been consistently supported by accurate data”

However in today’s judgement, RSH said it now has assurance that Riverside’s governance arrangements “enable it to adequately control the merged organisation”.

It said: “Riverside has strengthened its governance and compliance frameworks to support the enlarged group and agreed a strategy to simplify the organisation’s activities and structure.

“It has improved the management of risks across the group, including those relating to financial and treasury information and has actioned pre-merger due diligence findings. The board has also implemented a series of changes to improve the quality of its data and has strengthened its reporting and oversight of strategic risks.”

Riverside, which is aiming to build 4,000 homes by 2026, retains its ‘V2’ grade for financial viability, which means it complies but needs to manage material risks. RSH said Riverside’s additional investment in existing homes to complete fire safety works and improve energy efficiency, combined with a higher reliance on sales “reduces Riverside’s capacity to respond to adverse events.”

Elsewhere, Chester-based Muir Group, which owns and manages 5,800 homes, had its viability rating downgraded from ‘V1’ to ‘V2’. RSH said Muir Group needs to manage its exposures to increased build costs related to repairs and maintenance.

RSH said: “It is also investing in improving the quality and energy efficiency of existing homes and servicing increased debt associated with its development programme. These factors, set in the context of economic pressures, weaken Muir’s financial performance, and reduce its capacity to manage adverse events.” RSH said however that Muir Group has an “adequately funded business plan, sufficient security in place and is forecast to continue to meet its financial covenants under a reasonable range of scenarios.”

>>See also: Housing associations’ cash levels fall to lowest in a decade as development forecasts reduce

>>See also: ‘The figures on starts are terrifying’. What’s really happening to the Affordable Homes Programme

Beyond Housing today had its governance rating upgraded from ‘G2’ to ‘G1’. The 15,000-home north-east landlord had previously been told by the RSH to make improvements to manage risks around rents.

Today, RSH said: “The regulator has assurance that Beyond has strengthened its risk and internal control framework, including rent setting to ensure effective management of the process

In 11 other judgements today, providers grades did not change (see table below)