Experts support new code of governance for affordable housing

The British Property Federation has released a Code of Governance for For-Profit providers of affordable housing across the UK. The Code was developed in conjunction with external advisors and lawyers.

The British Property Federation (BPF) is a not-for-profit membership organisation representing companies involved in property ownership and investment. Its new code establishes a set of standards to promote best governance practice in the for-profit registered provider (FPRP) sector in England.

As institutional investment, such as pension funds, plays an increasingly significant role in the provision of affordable housing, the BPF’s members recognise the importance of good governance among FPRPs to be able to attract further investment, with assurances that the reputation of their stakeholders is safe.

The code’s creation culminates almost a year of work between the BPF, an advisory group of professionals and investors, and Campbell Tickell, a management consulting firm with deep expertise in the social housing arena, alongside a significant track record in governance consulting across a number of sectors, including public bodies, trade and membership organisations, social care, charities and sports.

Commenting on the launch of the plans, Ian Fletcher, director of policy at the BPF, said that the publication of the code “provides a framework that will enable providers to demonstrate to stakeholders the highest standards of good governance and positive stewardship of affordable housing.”

He added, “Housing is essential to the UK’s economic and social prosperity. Pension funds are a key source of new capital for delivering homes and, as we set out in our manifesto for housing – Building for Generations, our offer to the next government is to deliver a step change in output of homes across all tenures, including affordable housing.”

The Code is structured around seven themes summarised below.

1. Leadership and strategy
   This emphasises the role of the Board to act in the best interest of the organisation, including those in part of a group structure, and to maintain adequate control of their organisations. It requires the Board to establish and promote the FPRP’s purpose and strategy; exert appropriate control over decisions relating to those goals; and embed sustainability and value for money into their plans.  
2. Culture and values

This requirement emphasises the role of the organisation and its Board to establish and role model the organisation’s culture and values and that these filter through to how it engages with residents and other key stakeholders including investors. This principle also lays emphasis on current and future residents’ safety should be foremost among the Board’s decision making. Boards should also make sure they have mechanisms in place to engage residents and key stakeholders over their welfare; and demonstrate clear commitments to equality, diversity and inclusion.

3. Board composition and effectiveness
   This requirement covers the size, composition and tenure of the Board, which is regularly reviewed to ensure that appropriate skills, knowledge and diversity is maintained to reflect current and future challenges. As with other codes, appointments to the board need to be transparent, and on merit with due regard given to EDI. Any Board remuneration package should be objectively set and published. The Board and individual member’s performance are also subject to periodic appraisal to maintain the board’s overall effectiveness.
4. Board roles and functions
   Arrangements for effective leadership require clarity about the remits and responsibilities of board members. The code adds that there should be “a record of the functions of the board”, including matters where decisions cannot be delegated – helping tie the actions of the board to the needs of residents and stakeholders. Committees should be established where the board determines they will add value and provide necessary assurance.
5. Delegation of delivery
   The code outlines defined arrangements to facilitate the delivery of the organisation’s strategy. This includes the role and relationship with Executive staff, whether directly employed or via other parts of a group. The code lays emphasis on the Board’s role to maintain control over the quality of their homes and services and evidence robust assurance of the FPRP’s performance.  
6. Integrity and probity
   Boards of FPRPs need to maintain high standards of conduct – leading by example when it comes to managing perceived conflicts. This includes adopting a code of conduct, publishing information about the Board on the website and how it engages with residents. There should be well-publicised arrangements to protect whistleblowers – enabling problems to be addressed in a timely and safe fashion. Finally, the registered provider should publish information about its compliance with this part of the code in its annual report.
7. Audit and risk
   Lastly, boards of FPRPs need to ensure that measures are in place to allow for effective internal and external audit functions to occur. The board must also ensure that adequate risk management arrangements are in place, and that the organisation meets all legal, regulatory and constitutional requirements relevant to the FPRP.

Commenting on the newly released code, Greg Campbell, partner at Campbell Tickell, who drafted the code with colleague Ceri Victory-Rowe, stated, “The existing codes of governance used by many organisations in the sector, such as the National Housing Federation Code, the UK Corporate Code and ecoDa, all have particular strengths. None of them however is quite right for FPRPs, in recognising the distinct elements of these organisations while ensuring a commitment to the highest standards in governance for the regulated social housing sector. This code is designed to fill that gap, and we are confident it will be welcomed by FPRPs.”

Campbell Tickell recently hosted a webinar exploring the ideas behind the code; its content (including how it compares with others); and the practicalities of adoption. The full recording of the event is available to view for free online.