The National Housing Federation (NHF) has published for consultation a new draft version of its sector-specific Code of Governance with the aim of adopting a new, final version in November 2020. This is particularly important for housing associations who have adopted the NHF Code because of the need to comply or explain where they do not meet the requirements of any new Code.

The draft Code is a complete re-write and re-organisation of the NHF Code (last updated in 2015) and represents a strategic shift in what the sector considers to be good governance. Indeed, it is clear from the draft Code that the NHF has taken up the mantel and pressed ahead with a major emphasis towards the safety of residents following the Grenfell Tower disaster and tenants being involved in setting strategy as indicated in the Government’s Social Housing Green Paper.

From compliance to delivery of your mission

The most obvious change is the move away from concentrating on ensuring compliance and probity towards the need for housing associations to positively articulate their mission and values and then deliver on them. This major change of emphasis is reflected by setting aside the “Nolan” Standards in Public Life in the current Code and proposing four new overarching principles: mission and values, strategy and delivery, board effectiveness and control & assurance. Underneath each of the four principles is a set of positive requirements for each housing association adopting the draft Code to measure themselves against. As with the current Code, there is still the option for housing associations to explain why they do not or cannot meet any part of the draft Code.

The future role of residents?

As widely expected in a future Housing White Paper, there is a strengthened emphasis on tenant empowerment with housing associations required to place the views, needs, safety and aspirations of their residents and other customers at the heart of the board’s decision-making. Housing associations would need to actively “encourage and support residents and other customers to engage with, influence and contribute to strategic decision-making, and in particular to decisions that affect their interests”.  This will require feedback and reporting dialogue with residents, whilst ensuring the safety of residents would be an “overriding priority”.

The proposed requirement for housing associations to be accountable to residents is woven into the fabric of the draft Code through these new duties and simply through the number of times residents are referred to – over 20 times compared with only four in the current Code. The change in terminology from tenants to residents is also interesting and perhaps seeks to focus housing associations’ attention on the human relationships with the people who live in their homes rather than on the legal landlord and tenant relationship.

What other changes have been made?

Other changes in the draft Code place greater emphasis on the need for equality, diversity and inclusion in governance. In particular, the membership of board and committees must now comprise people with diverse backgrounds and attributes and include people with direct lived experience of the communities served by housing associations.

Perhaps reflecting wider concerns over the reputation and trust in the sector, there is a proposed requirement the board “takes into account in its actions and decisions the importance of maintaining trust in the organisation and promoting its reputation and that of housing associations more generally with all external stakeholders and the wider communities it serves.”

The mission and values statements in Principle 1 of the draft Code are codified in the provisions relating to board function. Instead of just setting and ensuring compliance with the values, vision, mission and strategic objectives of the organisation, boards will also be responsible for ensuring compliance with the Code’s specific values of mission, resident focus, equality diversity and inclusion, culture, integrity, conflict of interest, accountability, and reputation and trust.

The recommended tenure for non-executives and other independent committee members has been reduced from a maximum tenure of nine years to a default position of six consecutive years across all of the organisation’s boards and committees with the option to extend for a further three.

Interestingly, the draft Code indicates that the NHF will publish good practice guidance on the application of the Code for different types and sizes of housing association.  This is in a similar vein to other sector codes like the Charity Governance Code which has different versions for larger or smaller charities.  As some of the largest housing associations become even bigger, this approach will hopefully ensure that the draft Code can be proportionately and appropriately applied with the resource levels available to housing associations at both ends of the spectrum.

Finally, there is a new emphasis on financial, environmental and social sustainability and organisation culture as well as more detailed provisions in some areas including group structures, joint ventures and partnerships, board appraisal review and learning, audit and risk.

We hope these new provisions will be the catalyst for further positive change in social housing governance and will encourage housing associations to take action to improve the quality of their governance, particularly in the areas of tenant engagement, risk and safety management and equality, diversity and inclusion.

Have your say

This consultation is now the last of a three-stage review process. The NHF is seeking final comments from members and stakeholders to ensure that the proposed new code is clear, easy to understand, and would not cause any adverse or unintended consequences that would prevent its adoption.  You can have your say here until midnight on 6th September and the NHF aims to publish the final version of the new Code in November.

For more information

Anthony Collins Solicitors will shortly be releasing a recorded webinar featuring an interview with Paul Bayly of the NHF who has been leading on this project. This will assist you in responding to the consultation and understanding the repercussions of adopting the draft Code if it is implemented as currently drafted. If you would like to feed in any views then please contact Catherine Gibbons, Peter Hubbard or your usual ACS contact.