National Community Homes CIC v Regulator of Social Housing

A statutory appeal against compulsory de-registration is not a rehearing. The High Court applies a judicial-review standard, subject to the regulator’s express statutory duty to act proportionately. A specialist regulator’s assessment attracts considerable weight, although irrationality remains a meaningful ground of challenge.

Ongoing financial viability is distinct from the prospect of resolving immediate solvency problems. A provider may fail the viability requirement where its business model exposes it to substantial long-term risks, even if proposed settlements, loans and cash-flow forecasts might remove current liabilities. The regulator may consider the provider’s historical compliance, governance, risk management and financial information. A public authority need not seek further evidence where the applicant has had a full opportunity to make representations and the omitted material would not affect the outcome.

This was a statutory appeal under section 121 of the Housing and Regeneration Act 2008 against the Regulator of Social Housing’s decision dated 17 December 2021 to remove Larch Housing Association Limited from the register of social housing providers. Larch had since changed its name to National Community Homes CIC.

The Regulator considered that Larch no longer satisfied the registration criteria, particularly the requirement to demonstrate ongoing financial viability. Larch argued that it was close to resolving liabilities connected with the Devon Portfolio, had arranged a loan with a senior landlord, and had produced a two-year cash-flow forecast. It challenged the decision as irrational, disproportionate, premature, procedurally unfair and based on erroneous factual findings.

The central issues were the scope of the statutory appeal, the proper approach to proportionality and specialist regulatory judgment, and whether the proposed financial arrangements demonstrated ongoing viability.

1. Outcome. The appeal was dismissed. The Court granted an extension of time for bringing the appeal.
2. Nature of the appeal. Section 121 did not require the Court to retake the decision or substitute its own view. Because section 118(1)(a) authorised removal where the Regulator thought that a provider was no longer eligible, the applicable approach was essentially judicial review. The Court could intervene for irrationality, procedural unfairness, failure to consider relevant matters or reliance on irrelevant matters.
3. Proportionality and expertise. The Regulator was subject to an express duty under section 92K(5)(b) of the Housing and Regeneration Act 2008 to act proportionately. This was an obligation to achieve a proportionate result, rather than merely to have regard to proportionality. Nevertheless, considerable weight was due to the Regulator’s specialist assessment, while the Court retained a real role in reviewing rationality and proportionality.
4. Ongoing viability. Even assuming that Larch would cancel its Devon liabilities, obtain the proposed loan and achieve its cash-flow forecasts, those matters showed at most a route out of immediate solvency difficulties. They did not demonstrate ongoing viability. The Regulator was entitled to consider the risks inherent in long-term, low-margin leases, dependence on uncertain rental and Housing Benefit income, inadequate stress testing, weak financial controls, creditor forbearance and the history of governance problems.
5. Procedural fairness and evidence. Larch had received extensive engagement and a full opportunity to make representations. The Regulator was not required to request further evidence of the proposed agreements with Henley or SLIL. The principle concerning safeguards where dishonesty or bad faith is alleged did not apply because the issue was financial viability. In any event, the evidence would not have altered the outcome.
6. Subsequent events and alternatives. Later financial developments could not retrospectively affect the legality of the December 2021 decision. The Regulator was entitled to reject less severe measures, including appointing statutory directors, where they were unlikely to resolve the wider viability and governance problems.

This was a first-instance statutory appeal to the High Court under section 121 of the Housing and Regeneration Act 2008. No lower-court decision in the same dispute was stated.