The Regulator for Social Housing (“RSH”) has announced that Pathfinder is non-compliant with the governance standard because of alleged s106 breaches.
In this case, Pathfinder acquired social housing units, but held the beneficial interest on trust for the third party funders.
The RSH found no evidence of how the deal(s) would meet Pathfinder’s charitable objectives, together with inadequate management of conflicts of interest.
Pathfinder’s refusal to rule out similar future transactions was also viewed dimly by the RSH.
This finding is one of a number of investigations by the RSH into the new “lease model” transactions by housing providers. Against a backdrop of the Green Paper promising new teeth for the Regulator, it is a critical time for organisations involved in this model.
We are helping several housing providers ensure that they are compliant with the regulatory standards, and are maintaining good governance whilst using innovative structures to increase the supply of social housing to the sector.
The question is - will this model continue as part of the sector?
Pathfinder, the Regulator of Social Housing said, could not provide evidence that its arrangements with third parties had not “inappropriately advance[d] the interests of third parties”.