Sector Risk Overview for the Registered Social Landlord (RSL) sector in Wales

1.1 The purpose of this paper is to provide Registered Social Landlords (RSLs) with an update on key risks and challenges faced by the sector as a whole and to set out high level expectations as to how Boards should respond. Strong governance continues to be critical in ensuring RSLs are able to identify and correctly respond to the risks they face. This report sets out what we consider to be the main risks and challenges facing the sector in Wales at the moment. RSLs and their Boards should be actively considering these risks in the context of their organisations, putting in place appropriate mitigation measures. Individual RSLs will also have additional specific risks and Boards must ensure both those and the sector risks are appropriately assessed and managed. 

2.1 Political change

Welsh Government has set out a commitment to increase the supply of social housing, while making progress with decarbonising the existing stock. With Senedd elections due to take place in May 2026, and council elections scheduled in May 2027, there may be material changes in priorities over the medium term. RSLs will need to maintain flexibility to react successfully to these changes.

2.2 Economic change

Changes in the economy affect operations, residents and communities. These may be driven by global, national or regional events, well beyond the control of RSLs. They may impact on factors such as the level of rents charged, rent collection, the viability of housing-related support services, the financial position of residents, and anti-social behaviour. 

(a) Effective financial management is needed in the context of the sector’s tight financial position, partly driven by the sharp increase in costs that took place in 2022. There are many uncertainties in the economic environment, including inflation, which particularly affects the costs of components for asset management, maintenance, and development.

(b) Other financial pressures include:

• The rising costs of employing staff, including the recent rise in National Insurance Contributions, particularly in care and support
• The rising cost of insurance, particularly for high-rise buildings
• Interest rates remaining relatively high, especially for long-term fixed-rate debt.
• Reaching Welsh Housing Quality Standard (WHQS) and decarbonisation of social homes.

(c) RSLs should agree financial plans that are aligned with their corporate strategies and deliver their social purpose, within their risk appetite. The Board should maintain close oversight over progress with delivering these plans, including funding arrangements, liquidity levels, and loan covenant headroom. Key risks to the delivery of these plans should be identified and incorporated into the process of stress testing and scenario planning to ensure the resilience of the plan to a range of adverse circumstances.

(d) Financial plans must be accurate and fit for purpose, including the costing of significant expenditure. RSLs need to balance investment between new housing, existing homes, and services to tenants, taking into account the high level of unmet need, the need for existing homes to meet current and future standards, and to support residents on low incomes or with additional needs.

(e) Suggested good practice

• Undertaking horizon scanning to identify key issues to be fed into the financial planning process
• Carrying out scenario planning and stress testing, covering challenging scenarios and incorporating contingency plans and trigger points
• Allowing for possible changes in the statutory and regulatory environment, e.g. restrictions on rent increases and a gradual tightening of statutory obligations
• Considering a range of measures, including making better use of technology, to increase financial capacity and to deliver efficiency savings.

4.1 Rent receivable

(a) Welsh Government rent policy allows for rent increases of CPI+1% up to 3% of CPI. Where CPI inflation is between 3% and 5%, rent increases in Wales are limited to CPI+0.5%. Where CPI exceeds 5%, limits on rent increases will be at the discretion of ministers. Thus, in a high inflation scenario, rents could be reduced in real terms. Boards may also decide to increase rents by less than the maximum permissible due to the need for rents to remain affordable to the target group.

(b) Boards should require assurance that rent increases are made in accordance with regulatory requirements. They should also ensure that their policy for setting rents and service charges achieves an appropriate balance between maximising revenue and maintaining charges at a level that is affordable to tenants on low incomes.

4.2 Rent collection

(a) Rent arrears may be exacerbated by high inflation, especially when this applies to basics such as food and fuel, or adverse changes to welfare benefits. 

(b) Suggested good practice

• Providing personalised support to tenants who are in rent arrears or who are at risk of falling into arrears. 
• Maintaining relevant, up-to-date information on residents, including their employment status and any disabilities. 
• Engaging with tenants as soon as they fall into arrears to identify the root cause, supporting them to address these issues before the arrears escalate and, where possible, to prevent them from happening again.

5.1 Efficiency

(a) In the context of high levels of housing need and constraints on public finances, Boards should ensure that their organisations take a proactive approach to delivering value for money in line with their social purpose, and that data is collected to evidence the achievement of value for money to residents and other stakeholders.

(b) Mergers can help to increase financial capacity and to deliver efficiency savings. However, the process of integration following a merger can present challenges, such as bringing together different data sets and business software.

(c) Suggested good practice

• Setting challenging targets for efficiency savings and monitoring their achievement, supported by efforts to reduce waste and duplication. 
• Consider alternative approaches, which could include mergers, to achieving the organisation’s strategic objectives.

6.1 Interest rate risk

(a) Financial markets had expected the Bank Rate to continue easing following a cut from 4.00% to 3.75% in December 2025, with consensus forecasts pointing to one or two further quarter‑point reductions by the middle of 2026. However, the outbreak of war in the Middle East at the end of February has resulted in a spike in oil and gas prices and gilt yields. The Bank of England is now expected to pause its easing cycle, keeping Bank Rate at 3.75% in the near term while it assesses the inflationary impact of higher energy costs, with some commentators warning that a more persistent shock could force rates back up. The trajectory beyond this is highly uncertain and will depend on whether inflation can still be steered towards the 2% target as assumed by the OBR, or trends higher driven by higher energy prices for a sustained period. The interest cost for the unhedged portion of an RSL’s debt portfolio is now subject to greater upside risk due to the expectation that the base rate will remain higher for longer or even start to rise again.

(b) Boards should ensure that the impact of volatility in interest rates is evaluated through stress testing, and that an appropriate strategy and processes are in place to manage interest rate risk.

(c) Suggested good practice

• Agreeing an appropriate hedging strategy based on expert advice
• Setting a limit on the proportion of debt at variable rates
• Basing the financial plan on prudent assumptions for interest rates and borrowing requirements
• Undertaking ongoing monitoring of short- and long-term interest rates to inform decisions on further hedging.

6.2 Availability / cost of new finance

(a) The practice of housing associations obtaining credit ratings is now broadly accepted. While very few RSLs in Wales have a public credit rating, the trend in ratings for housing associations across the UK is now broadly stable, following significant reductions over the past few years. Lenders and investors make their own assessments of the credit quality of their counterparties to inform decisions about whether to lend to, or invest in, an organisation, and what margin should be charged on the interest to cover credit risk.

(b) Boards should ensure that sufficient funding and liquidity is in place to support the organisation’s viability and to deliver strategic objectives.

(c) Suggested good practice

• Assessing the level of credit quality that will best support their strategic objectives while remaining within their risk appetite
• Understanding the criteria used in credit ratings / evaluations
• Ensuring that financial plans are constructed in the light of these criteria.

6.3 Sources of funding

(a) RSLs can access a range of possible sources when seeking to raise additional funds or to refinance existing debt. Each of these have different advantages and disadvantages. Boards should choose between these options on the basis of specialist advice, taking into account the cost and risks associated with each of them

(b) Facilities from banks or building societies may take the form of term loans or revolving credit facilities (RCFs). Barriers to entry are low and RCFs in particular provide flexibility and value for money. On the other hand, bank / building society loans are often limited to five or ten years, they are usually subject to fairly stringent covenants, and hedging will be required (at additional cost) to reduce the exposure to interest rate risk since these loans are generally on the basis of variable rates.

(c) Raising funds on the public bond market typically involves more limited financial covenants than bank loans, while providing the lowest cost of long-term debt. They are generally on a fixed-rate basis, which removes interest rate risk, although this approach does give rise to execution risk, due to uncertainty over the gilt rate on the day of the transaction as well as the credit spread required by investors. The disadvantages of this approach include higher fixed costs. Own-name bond issues are usually only suitable for organisations seeking to raise at least £100 million, although smaller sums can be raised on the capital markets by using an aggregator.

(d) Raising funds through private placements typically gives RSLs the ability to negotiate a greater degree of flexibility over matters such as drawdown and repayment dates. These are also usually issued on a fixed-rate basis. However, the interest rates are usually higher, and covenants may be more onerous, than for public bond issues.

(e) Other potential sources of funding include loans from local authorities, public-private partnerships, and equity investment. Boards should undertake a detailed assessment of the costs and risks of these options prior to commitment.

6.4 Compliance with loan covenants 

(a) The sector’s headroom against loan covenants has fallen over recent years due to a combination of high inflation, increased demand for repairs, and the need for increased investment in the existing stock. In many cases, this has been mitigated by changes to the basis of covenants to provide additional financial capacity, at the expense of higher interest costs. A breach of loan covenants would result in significant extra costs to the organisation as well as regulatory action. 

(b) Financial plans should be constructed to maintain a reasonable level of headroom against loan covenants. The outturn position should be monitored and regularly reported to ensure that the organisation continues to comply with its requirements in this area.

(c) Suggested good practice

• In accordance with the agreed risk appetite, establishing golden rules to ensure that the financial plan contains sufficient headroom to absorb the impact of a reasonable level of downside financial risk
• Monitoring of performance against the golden rules and the headroom against loan covenants on an ongoing basis.
• Awareness of the impact on longer term viability when RSLs have more freedom to incur capital expenditure on existing properties if this is excluded in their covenant calculations.

6.5 Liquidity failure

(a) Most RSLs have a strong liquidity position, with sufficient cash and undrawn facilities to meet their expected cashflows for a reasonable period. An RSL going into a liquidity crisis would be unable to meet its financial obligations as they fell due and would thus not be able to maintain services to tenants, or its development programme. This would likely result in enforcement action by lenders and intensive regulatory engagement.

(b) A key requirement for boards is to ensure that sufficient liquidity is maintained.

(c) Suggested good practice

• Setting minimum liquidity requirements in accordance with the agreed risk appetite
• Updating short- and medium-term cashflow forecasts on a regular basis to confirm that the organisation is complying with those requirements
• Arranging finance to fund investment activities or to replace maturing facilities well ahead of when it is needed
• Maintaining robust oversight of activities whose cashflows are particularly volatile, including any commercial subsidiaries.

7.1 Data security / cybercrime

(a) The need to preserve the security of data and to maintain resilience against cybercrime is an imperative for all RSLs. Failure to do so can result in unauthorised access to data and to the interruption or loss of IT systems. Around a quarter of UK housing associations faced a cyber-attack in the last twelve months, with ransomware and extortion identified as growing threats.

(b) Suggested good practice

• Maintaining effective cyber security arrangements with the aim of withstanding cyber-attacks wherever possible, minimising the impact of a successful attack, and recovery from an attack as quickly as possible
• Constantly reviewing these arrangements to keep up with the increasing sophistication of cyber criminals

7.2 Data integrity

(a) Supporting regulatory standard RS1e, comprehensive, accurate and timely data is needed to inform decision making, including investment priorities, and to demonstrate compliance with statutory and regulatory requirements.

(b) Boards should require assurance that all regulatory returns are based on complete and accurate data. 

(c) Suggested good practice

• Maintaining an appropriate Data Governance Policy, which defines the roles, processes and systems in place to manage and protect the organisation’s data assets
• Seeking to ensure that data is always intelligible, correct, complete, trustworthy and discoverable

7.3 Business continuity / disaster recovery

(a) There are a number of potential causes of disaster scenarios affecting the offices, ICT systems, or housing stock of RSLs. While many of these are foreseeable, it is not possible in all circumstances to prevent these adverse events. The likelihood of some of these drivers is increasing, for example the incidence of flood events is rising due to climate change.

(b) According to Natural Resources Wales, between 274,000 and 342,000 properties in Wales (approximately one in seven) are at risk of flooding from rivers, the sea or surface water. This number is projected to increase by 113,000 by 2120 due to climate change, which is resulting in more frequent and more severe storms, rising sea levels, and coastal erosion.

(c) Boards should ensure that their organisations maintain accessible business continuity, contingency and disaster recovery plans and that these are kept up to date.

(d) Suggested good practice

• Deploying robust preventative measures for the identified causes of disasters, including fire prevention and protection arrangements
• Maintaining up-to-date disaster recovery / business continuity plans for premises, ICT systems and the housing stock, subjecting these to regular testing
• Undertaking flood risk assessments as part of all development appraisals
• Analysing and seeking to mitigate the flood risk affecting their existing assets
• Ensuring that the organisation’s flood emergency response plan is up to date and fit for purpose.

7.4 Fraud

(a) In addition to the financial impact, a major fraud can result in significant damage to the reputation of the organisation, as well as affecting staff morale.

(b) Boards should ensure that they have an effective internal control framework in place, including the prevention, detection and mitigation of fraud, including tenancy fraud.

(c) Suggested good practice

• Agreeing a comprehensive fraud policy and contingency plan
• Segregation of duties
• Maintaining appropriate arrangements for whistleblowing
• Undertaking fraud awareness training.

8.1 Culture

(a) A strong organisational culture is essential to maintaining a satisfied and well-motivated workforce, helping to boost customer satisfaction and to achieve strategic objectives.

(b) An effective risk management culture highlights the importance of good governance in managing risks and strategic decision making, supported by complete and accurate data.

(c) Suggested good practice

An RSL’s culture should:

• Promote openness and transparency with staff, residents, regulators and other stakeholders
• Support innovation and change, including making better use of technology, to deliver continuous improvement
• Encourage people to identify and tackle fraudulent or inefficient activity.

8.2 Diversification

(a) Diversification encompasses a broad swathe of activities from commercial operations such as development for market sale and the operation of a market rent portfolio, to those with a high level of social value such as care and support provision. These activities expose organisations to different and often higher risks than the core social housing business, although the returns may also be higher. 

(b) In relation to diversification possibilities or proposals, RSLs should make logical decisions based on clear, good quality information which includes alignment with strategic objectives, an assessment of risk and, where appropriate, the views of tenants.

(c) Suggested good practice

• Thoroughly scrutinising diversification plans to ensure that their requirements are well within the organisation’s financial capacity, taking into account the potential for adverse changes in the political and economic environment
• Undertaking a detailed analysis of risks and returns prior to commitment.

8.3 Risk management and internal control

(a) The effectiveness of risk management arrangements becomes increasingly critical as the expectations on RSLs increases, particularly in economic conditions that are vulnerable to the adverse impact of global events.

(b) Boards should ensure that their risk management and assurance frameworks enable them to successfully identify and manage existing and emerging risks to the delivery of their strategic objectives or compliance with statutory or regulatory requirements.

8.4 Assets and liabilities

(a) Accurate and timely information on an organisation’s assets and liabilities, including property condition and loan security status, helps to support effective decision making and risk management.

(b) Boards should ensure that they maintain an accurate and up to date understanding of the assets and liabilities of their organisations, based on accurate record keeping.

(c) For reasons of affordability, where business plans do not accurately reflect the expenditure required to meet the needs identified in their Asset Management strategies, these must be clearly articulated to the Board and highlighted to the Regulator.

9.1 Strategy

(a) Significant investment is needed in existing homes to maintain their quality, ensuring that they remain at a high standard, while making progress in the improvement of the asset base, including decarbonisation on the journey towards net zero carbon. In the past, it has proved difficult to exert control in these areas. But it is now clear that complete, accurate and timely data is essential to inform these investment plans.

(b) Boards should ensure that their strategic approach to asset management is aligned with their social purpose and the objectives of their organisations.

9.2 Disposals

(a) Over the long term, the assets of RSLs can become obsolete. Strategies for mitigating this effect include:

• Refurbishment programmes
• Demolition of existing properties and building new homes to higher standards on the same site
• The disposal of existing homes and their replacement with new homes built on a different site.

(b) If the latter strategy is chosen, RSLs need to engage with stakeholders regarding the benefits of their approach. This should demonstrate how the units lost will be replaced with new homes built to higher standards.

(c) Suggested good practice

• Consulting with tenants on proposals for asset management disposals and taking their feedback into account
• Monitoring of progress with the planned programme
• Taking into account the potential impact on the organisation's reputation of disposals, including the view of the regulator.

9.3 Standards

(a) Asset management strategies and financial plans need to take into account the cost of achieving the requirements of the Welsh Housing Quality Standard (WHQS), including decarbonisation.

(b) RSLs must demonstrate compliance with the WHQS, including the thermal efficiency target, within the agreed timescales (see page 36 of the Standard). This includes producing Target Energy Pathways, informed by their Whole Stock Assessment, by 31 March 2027.

9.4 Compliance

(a) Changes to building regulations can resulting in higher specification requirements for new and existing homes. 

(b) Boards should require assurance that their organisation have complete, accurate and up-to-date information on their assets to demonstrate compliance with statutory and regulatory requirements. This should cover the condition of individual properties, including the presence of, or vulnerability to, damp and mould, together with resilience against the threats associated with climate change. 

(c) Suggested good practice

• Monitoring plans and proposals for changes in the standards for buildings that would have an effect on responsive and cyclical maintenance costs, e.g. changes to Building Regulations requiring the provision of additional equipment in new buildings that has to be maintained and replaced over time
• Factoring these requirements into short- and long-term financial plans
• Undertaking a rolling programme of surveys to support this, with regular updates on progress with the programme to the board.

9.5 Insurance

(a) Due to a hardening of the insurance market following the building safety crisis, RSLs may find it difficult to obtain insurance for their property assets at reasonable cost, especially for high-rise blocks. If so, they should seek specialist advice with a view to identifying additional insurance providers or alternative strategies for obtaining cover for these assets.

(b) Suggested good practice

• Having a clear understanding of insurance cover and policy limits
• Maintaining robust data on construction and insulation to support insurance valuations
• Understanding the advantages and disadvantages of alternative insurance options, including any impact on covenant compliance.

9.6 The impact of climate change

(a) Climate change presents significant risks to RSLs, including both the cost and difficulty of complying with net zero carbon requirements and the effects of more extreme weather. Homes will need to need to be better insulated to reduce emissions and cut the cost of heating, be easier to keep cool to mitigate higher summer temperatures, and be resilient to storms, floods and higher sea levels.

10.1 Customer satisfaction

(a) There is a risk that customer satisfaction levels could decline if services fall short of tenant expectations or fail to meet their needs. Areas where challenges are more likely include response times, communication during disruption, and the handling of complex repairs and renovations, including damp and mould.

(b) Boards should ensure that effective arrangements are in place to achieve and maintain high levels of tenant satisfaction with the services provided by their organisation.

(c) Suggested good practice

• Ensuring that repairs and maintenance services are focused on the needs of their customers
• Closely monitoring operational performance, customer satisfaction and complaints.

10.2 Damp, mould and condensation

(a) The effective treatment of damp, mould and condensation (DMC) is the proposed subject of an own initiative investigation by the Public Service Ombudsman for Wales. Older homes with poor insulation, single glazing, inadequate ventilation and sold walls are likely to be more vulnerable to this issue. Misdiagnosing the cause of the problem or a slow response could adversely impact the health of tenants, particularly those with medical vulnerabilities. Previous Ombudsman cases have also identified issues with tenant communication and RSLs failing to adhere to their own policies. 

(b) From 01 April 2026, under an Addendum to the Welsh Housing Quality Standard, RSLs will be required to investigate hazards which may present a significant risk with an assessed likelihood of imminent harm to the tenant/occupier including damp / mould, within 24 hours, with fixed timescales for remediation. Hazards which may present a significant risk with no assessed likelihood of imminent harm will be investigated within 10 working days and remedied within a further 5 working day period. Where it is not possible to remedy a hazard within the timescales above, a written summary plan must be provided to the tenant (hard copy or electrical) within 5 working days. RSLs should ensure that they prepare effectively for this change.

(c) Suggested good practice

• Updating policies, training staff, and allocating resources as required in response to the new requirements coming into force in April
• Taking a methodical, proactive and zero-tolerance approach to identifying and tackling all hazards, carefully avoiding putting the blame on tenants
• Making available sufficient resources to tackle these problems effectively.

10.3 Finance

(a) Rising maintenance costs, which can adversely impact financial viability, may be driven by a number of factors, including:

• The age of the stock and key components
• Tenants are now more likely to make formal complaints or legal claims for disrepair
• Rising labour costs due to a shortage of skilled workers and the April 2025 increase in Employers’ National Insurance Contributions
• Statutory and regulatory requirements following the Grenfell Tower disaster and the death of Awaab Ishak due to damp and mould
• Differential inflation affecting certain components, exacerbated by Brexit and the pandemic. 

(b) Suggested good practice

• Making prudent assumptions for the cost and volume of responsive repairs
• Allocating sufficient resources to meet expected demand
• Closely monitoring repairs work in progress to ensure that the service continues to meet that demand.

11.1 Finance

(a) Rising costs have affected the development capacity of RSLs in general, as well as the viability of particular schemes.

(b) The economic environment has affected the viability of contractors, with some development schemes suffering from delays and increases in costs following the insolvency of the main contractor.

11.2 Land

(a) There is a limited amount of land available for development, and competition for that land from inside and outside the sector. 

(b) Suggested good practice

• Improving the organisation’s competitive position through the delivery of efficiency improvements
• Ensuring that their appraisal process strikes an appropriate balance between prudence and competitiveness
• Making greater use of the organisation’s own land for development, for example by building new homes on disused garage sites
• Consider the benefits of working strategically with partners to deliver better value for money.

11.3 Planning risk and other sources of delay

(a) The delivery of planned new homes can be delayed for a variety of reasons, resulting in an RSL failing to achieve its development targets. The causes include:

• Slow progress through the planning system
• Delays awaiting statutory approvals, e.g. SUDS (sustainable drainage systems)
• Nitrate neutrality requirements
• The limited capacity of contractors
• Scheme viability issues following increases in the cost of components.

(b) Suggested good practice

• Making prudent assumptions for the time taken to achieve planning consent
• Making land purchase subject to achieving planning permission for the expected number of new homes.

11.4 Housing market risk

(a) The housing market in Wales is currently stable, with prices rising slightly above price inflation in the context of falling interest rates. Demand is strongest in the M4 corridor, with some areas affected by measures taken to discourage the purchase of second homes. A major external shock to the economy could result in a sharp decline in house prices and much longer sales periods. This would affect RSLs building for sale, including those with a commercial subsidiary dedicated to building homes for outright sale.

(b) Inappropriate or disproportionate exposure to the housing market could constitute a material risk the delivery of financial plans, with control arrangements including scenario planning, stress testing, and exposure limits in line with the organisation's risk appetite. Boards should ensure that they have the required skills, information and advice to manage this risk effectively.

(c) Suggested good practice

• Setting appropriate limits on the organisation’s exposure to the housing market to minimise the risk of loan covenant breaches or liquidity failure
• Including a realistic exit strategy into appraisals for schemes involving development for sale
• Closely monitoring current and predicted future trends in house prices in the organisation’s areas of operation, as well as their own sales performance.

11.5 Strategy

(a) The development strategies of individual RSLs should seek to address the national shortage of affordable housing, taking into account the investment requirements of the existing homes and the need to maintain viability.
 

(b) Suggested good practice

• Considering existing levels of housing supply and need / demand in the organisation’s areas of operation and the number of new households being created
• Taking into account the financial profile of different tenures and the need to develop communities that are socially and economically sustainable
• Undertaking scenario analysis to inform the development strategy
• Basing the Development Strategy, Annual Development Programme, and plans for individual development and regeneration schemes on prudent assumptions.

11.6 Quality

(a) Effective measures are required to ensure that new homes meet all statutory and regulatory requirements for the quality of accommodation, including compliance with Building Regulations and the Welsh Housing Quality Standard.

(b) Suggested good practice

• Maintaining robust quality control before and after the handover of new homes, e.g. through the use of a clerk of works
• Making it easy for the residents of new homes to report issues and ensuring that these are taken into account in future schemes.

12.1 Landlord health and safety

(a) Tenant safety remains a significant area of focus for the sector and an area of high political and media interest. RSLs need to comply with landlord health and safety requirements to keep customers, contractors and third parties safe from significant hazards, including fire.

(b) Suggested good practice

• Requiring regular assurance to the board that robust arrangements are in place to manage health and safety risks and to comply with all statutory and regulatory requirements in this area
• Undertaking a comprehensive programme of Fire Risk Assessments, with intrusive surveys being required for higher-risk buildings.

12.2 Employer health and safety and safeguarding

(a) In addition to their landlord responsibilities, RSLs have health and safety obligations as an employer, as well as protecting their residents from abuse or neglect. 

(b) Suggested good practice

• Maintaining a strong set of controls in the area of safeguarding, including requiring DBS checks for relevant staff, training programmes, supervision arrangements, and appropriate policies and procedures
• Regularly reviewing policies and governance arrangements for health and safety to ensure that they are fit for purpose.

12.3 Changes in statutory requirements

(a) There was an oversight in RSL provision of Electrical Condition reports to existing tenants when the Renting Homes (Wales) Act 2016 came into effect. This highlighted the importance of collaborative working and early preparations for the introduction of complex legislation.

(b) Compliance with legislation is a fundamental requirement for RSLs. Boards should closely monitor changes in legislation, ensuring that effective preparations are made before new requirements come into force and obtaining specific legal advice where there is any uncertainty over what is required. 

(c) Suggested good practice

• Monitoring proposals for new legislation and the passage of relevant bills through both the UK Parliament and the Senedd
• revising policies, procedures and training programmes accordingly, and allocating sufficient resources to effect timely change.

12.4 Data

(a) Complete, accurate and timely data is needed to evidence statutory and regulatory compliance. Specific statutory requirements for data protection are contained within the General Data Protection Regulation (GDPR), alongside the Data Protection Act 2018. 

(b) Suggested good practice

• Maintaining effective arrangements, including a robust assurance framework around data quality and integrity, to ensure that the organisation collects and records accurate data to evidence compliance with statutory and regulatory requirements
• Having in place data management and data governance arrangements to ensure that data is properly validated and securely stored, with effective controls over use and access
• Ensuring that RSLs have appropriate arrangements are in place to maintain compliance with GDPR and the Data Protection Act.

13.1 Tenant satisfaction

(a) In addition to deficiencies in the repairs and maintenance service discussed in paragraph 9.1 above, customer satisfaction can be affected by the quality of communication, the affordability of rents and service charges, the quality and safety of homes and neighbourhoods, and the effectiveness of tenant engagement frameworks. Organisations that are perceived as easy to deal with, that listen to tenants and act upon their input, and that treat customers with fairness and respect tend to achieve higher satisfaction levels.

(b) Boards should seek assurance that their organisations are delivering services that meet the diverse needs of their tenants. Effective arrangements should be in place to enable RSLs to demonstrate that diverse tenant views and expectations inform the development and review of these services, and the response to any under-performance.

(c) Suggested good practice

• Continually monitoring the results of customer feedback, including complaints, and satisfaction surveys
• Analyse this data to identify the key drivers of both high and low satisfaction
• Prioritising services with low satisfaction levels for review and taking appropriate action to remedy this.

13.2 Tenant engagement

(a) RSLs must actively listen to the tenants’ voice and integrate this into decision making. Engagement is strongest where tenants are treated as legitimate partners, not just consultees, with the ability to influence priorities early in the process. Where tenants see that their input makes a visible difference, participation and satisfaction levels rise. Engagement is stronger when RSLs actively involve under‑represented groups, such as younger tenants, disabled people, Welsh speakers, and minority ethnic communities.

(b) Suggested good practice

• Giving tenants a voice and influence over all aspects of the organisation, including strategic priorities, taking into account the diversity of their views
• Recognising residents as key partners in delivering the organisation's purpose and involving them in setting its priorities
• Providing tenants with feedback on what will change as a result of their engagement and, if any suggestions cannot be implemented, the reasons for this.

13.3 Impact on residents of adverse changes in the economy

(a) The sharp increase in costs that occurred during the cost-of-living crisis of 2022/23 continues to have an adverse impact on customers. Financial constraints and reduced services that support people on low incomes, can adversely affect residents. These issues may manifest themselves in higher rent arrears and anti-social behaviour.

(b) Suggested good practice

• Taking steps to demonstrate that the organisation’s rents are affordable to the target group
• Putting in place appropriate measures to mitigate the impact of poverty and the high cost of living, through a combination of direct support and signposting organisations who can provide further assistance.

13.4 Lettings

(a) The Homelessness and Social Housing Allocation (Wales) Act will, among other things, enable local authorities to compel RSLs to make an offer of suitable accommodation to specific homeless applicants.

(b) RSLs should prepare for this Act as a major shift towards earlier, more universal homelessness duties, with greater expectations of cooperation. 

(c) Suggested good practice

• Preparation should cover legal compliance, allocations, operational capacity and partnership working with local authorities and other public bodies. 

13.5 Neighbourhoods

(a) Community cohesion in Wales is shaped by a mix of structural economic pressures, social tensions, and long‑term demographic and cultural change. While overall indicators remain relatively high, there is some fragility, with marked variation between places and groups. Community cohesion scores are significantly lower in more deprived areas. A decline in community cohesion could have an adverse impact on residents and on the sustainability of the communities in which an RSL operates. 

(b) Suggested good practice

• Working in partnership with local authorities and voluntary organisations to improve social cohesion in the organisation’s areas of operation.

13.6 Supported housing

(a) Due to rising demand, high labour costs and historic real‑terms funding cuts, the viability of some supported housing services is marginal. While the allocation of funds for Housing Support Grant has risen recently, the cost of providing these services has risen due to Real Living Wage commitments, National Insurance changes and the increasing needs of service users.

(b) Suggested good practice

• Carefully scrutinising supported housing contracts to gain a clear understanding of the balance between income and expenditure, taking into account voids and arrears risks, and the alignment with strategic priorities
• Engaging actively with local authorities and Welsh Government budget and commissioning processes, presenting robust evidence of costs and outcomes
• Seeking to renegotiate underfunded contracts, being prepared to withdraw from providing these services where risks to financial viability or the quality of support become unacceptable.

14.1 Recruitment and retention

(a) Challenges with recruitment and retention may be driven by the capacity of the private sector to pay higher salaries, or high workloads due to the rising needs of tenants (especially in the supported housing sector). This is expected to be a more significant risk where there is competition from a major infrastructure project, such as the construction of a new power station. 

(b) Suggested good practice

• Developing and sustaining a positive corporate culture
• Maintaining a strategy to support the career development of the organisation’s employees
• Agreeing clear criteria for recruitment that are aligned with organisational values
• Committing to training programmes to enhance the skills of the workforce.

14.2 Costs

(a) Staffing costs can be driven up by wage inflation, e.g. following a significant increase in prices, competition for staff (including from contractors), or by changes in legislation, such as the 2025 increase in Employers’ National Insurance Contributions.

(b) Suggested good practice

• Making prudent assumptions in budgets and business plans for salaries and related costs
• Maintaining effective control over the recruitment of replacement or additional staff.

15.1 Artificial intelligence

(a) There are both opportunities and threats from the development of artificial intelligence (AI). Risk averse organisations will fail to capture the potential benefits from this technology, while those that do not control the downside risks adequately are likely to suffer adverse consequences, such as confidential information getting into the public domain.

(b) Suggested good practice

• Taking a balanced approach to AI, monitoring carefully the progress of applications in the sector
• Proactively investing in the technology to help deliver organisational goals
• Maintaining robust controls to avoid adverse consequences on staff, the leaking of resident information, or damage to the reputation and positive culture of the organisation.

The Housing Regulation Team would like to thank:

• Chris Mansfield / John Hargreaves – The Housing Finance Corporation trading as Hargreaves Risk and Strategy