The Council of Mortgage Lenders (CML) says it supports the principle that the regulation of social housing should be completely independent from the Homes and Communities Agency (HCA), as the government provider of funding and land for social and affordable housing in England.  

The trade body said lenders continue to fund housing in all tenures, and its members have so far provided more than £60 billion in finance for the social and affordable housing sector. Independent and effective regulation is crucial in safeguarding this lender investment, and in encouraging firms to continue to fund the sector, it said.

The CML said it therefore welcomed the decision, confirmed last November in the Tailored Review of the Homes and Communities Agency, that the Department for Communities and Local Government was in favour of establishing a regulator separate from the Homes and Communities Agency (HCA).

Last week, the CML responded to a consultation in support of the use of a legislative reform order as a means of establishing an independent social housing regulator. The CML says it supports regulation that is independent from government funding of housing associations, and from land transactions affecting them.

In the CML’s opinion, the proposal to separate the regulator from the HCA and establish it as a stand-alone non-departmental public body would be consistent with the principles of better regulation.

Up to now, the HCA has operated an ‘ethical wall’ in regulating the sector, and the CML accepts that there has been no conflict of interest. But the new proposal presents an opportunity to put in place an independent regulator, which will help reinforce confidence in robust oversight of social housing provision, it says.

The lender body believes the funding of social and affordable housing is becoming increasingly complex, which reinforces the case for a regulatory body that is clearly independent. Without reform, the proposal for the regulator to raise more income from charging fees – which could begin in April – would succeed in making it it more financially independent from the government, but leave the regulator and the government structurally bound together, the CML says.

It adds that an independent regulator could establish its own governance arrangements, and set out how it would be accountable. This would strengthen it as a regulatory authority, and reinforce the confidence of lenders and others.