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What is a living will and do Registered Providers need one?

UK Housing development at night foggy

It is no secret that social housing providers are currently facing significant challenges. The range of these challenges is considerable: high inflation, increased supply chain costs, significant cost of living pressures on tenants and greater numbers of disrepair claims, all coinciding with caps on providers’ main source of income (rents) and a weakening housing market.

In light of these pressures, many prudent providers are checking their contingency plans are in good shape should they fall into financial difficulty. One of the key tools in this regard is a ‘living will’.

What is a living will?

A living will is a contingency plan prepared by a provider when times are good so that, if the worst does happen, the provider is able to swiftly implement a pre-considered and orderly path to rescue.

The G15 have recently published a guide to support providers with this financial contingency planning, building on the requirements prescribed by the Regulator for Social Housing.

Why should providers create a living will?

  1. Residents

Residents rely on providers to provide safe homes and the delivery of essential landlord services. A well-drafted living will go to the heart of ensuring that the services to residents would continue to be properly delivered in the event of a disaster.

A living will can ensure that the interests and welfare of residents is prioritised, even if the organisation itself experiences difficulty.

  1. Reputation

A living will can provide for a cross-sector approach with providers working together to maintain financial viability. This is core to maintaining the reputation of each provider as well as the sector’s wider no-default status.

  1. Ongoing legal and financial obligations

A living will assists providers to meet regulatory obligations by expanding on the contents of their asset and liabilities register (and other business plans) by setting out in detail what would happen in a disaster situation.

How do providers create a living will?

We suggest a good starting point is to review the G15’s guide which sets out many of the headline considerations for creating a living will.

Where a provider already has a living will, it is good practice to periodically assess whether it remains up to date. A living will should be a dynamic document, taking account of the provider’s changing organisational structure, governance arrangements and financial and business planning.

The Bottom Line

In today’s volatile financial landscape, it is good governance for providers to plan for the worst. A living will is a key component of this contingency planning and providers should ensure these are well-drafted and up-to-date.

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