Categories of registration (Tiers)

Overview

Tiers support a risk based approach to regulation

The registration category, referred to as tier, is determined by an organisation’s level of risk due to the scale and scope of its activities.  This is the first level of risk stratification to support a risk-based approach to regulating community housing providers.  The tier of registration determines the performance requirements and intensity of regulatory engagement.

Assessing performance data is the second level of risk stratification, which deals with the nature and intensity of regulatory engagement and, where necessary, action.

Community housing providers are registered under the National Regulatory System for Community Housing in one of three categories of registration referred to as Tier 1, Tier 2 and Tier 3.

To be registered in a particular tier, an entity must:

  • meet the incorporation requirements for the particular tier
  • demonstrate it meets the evidence requirements for the particular tier
  • demonstrate that if it has affiliated entity arrangements it maintains control over activities and decisions that impact on its compliance with the National Law.

Information to assist community housing providers to determine when, how and what affiliated entity arrangements should be disclosed is located on the Affiliated Entity Arrangements page.

An entity or a registered community housing provider may apply to be registered in any tier. The onus is on the applicant to show that it meets the requirements. This applies to applications for registration and ongoing compliance assessments.

Eligibility requirements

Tier 1

A Registrar may only place an entity in registration Tier 1 if the entity:

  • is incorporated as either a company limited by shares or a company limited by guarantee under the Corporations Act
  • demonstrates that if it has affiliated entity arrangements it maintains control over activities and decisions that impact on its compliance with the National Law (see section 8 of these guidelines)
  • demonstrates it meets the evidence requirements for a Tier 1 provider as specified in the Evidence Guidelines.

Tier 1 providers face the highest level of performance requirements and regulatory engagement – reflecting the fact that Tier 1 providers are involved in activities that mean they manage a higher level of risk based on:

  • operating at large scale, meaning any serious non­compliance has the potential to impact on a large numbers of tenants and assets
  • ongoing development activities at scale, meaning any serious non-compliance has the potential to affect the viability of the provider.
Tier 2

A Registrar may only place a community housing provider in registration Tier 2 if the entity:

  • is a body corporate created through state/territory or Australian government legislation, which are:
    • companies limited by shares under the Corporations Act
    • companies limited by guarantee under the Corporations Act
    • corporations incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth)
    • co-operatives or incorporated associations under state/ territory legislation
    • other bodies corporate created through other state/ territory or national legislation (eg a trust which legislation declares to be a body corporate)
  • demonstrates that if it has affiliated entity arrangements it maintains control over activities and decisions that impact on its compliance with the National Law (see section 8 of these guidelines)
  • demonstrates it meets the evidence requirements for a Tier 2 provider – as specified in the Evidence Guidelines.

Tier 2 providers face an intermediate level of performance requirements and regulatory engagement – reflecting the fact that Tier 2 providers are involved in activities that mean they manage a level of risk that is lower than Tier 1 providers but higher than Tier 3 providers based on:

  • operating at moderate scale, meaning any serious non­compliance has the potential to impact on a moderate number of tenants and assets
  • small-scale development activities, meaning any serious non-compliance has the potential to affect the viability of the provider.
Tier 3

A Registrar may only place a community housing provider in registration Tier 3 if the entity:

  • is a body corporate created through state/territory or Australian government legislation, which are
    • companies limited by shares under the Corporations Act
    • companies limited by guarantee under the Corporations Act
    • corporations incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth)
    • co-operatives or incorporated associations under state/ territory legislation
    • other bodies corporate (e.g. trusts created through other state/territory or national legislation)
  • demonstrates that if it has affiliated entity arrangements it maintains control over activities and decisions that impact on its compliance with the National Law (section 7 of these guidelines)
  • demonstrates it meets the evidence requirements for a Tier 3 provider as specified in the Evidence Guidelines.

Tier 3 providers face a lower level of performance requirements and engagement – reflecting the fact that Tier 3 providers are involved in activities that means they manage a lower level of risk based on:

  • operating at smaller scale, meaning any serious non-­compliance has the potential to impact on a smaller numbers of tenants and assets
  • no ongoing development activities or one-off and/or very small scale development activities.

Assessment of category of registration 

A Registrar’s determination about the category of registration under section 14 (2) (c) of the National Law will be based on evidence provided by the entity:

  • about its incorporation status
  • about affiliated entity arrangements and its ability to maintain control over activities and decisions that impact on its compliance with the National Law
  • to demonstrate that it meets the evidence requirements for a particular registration tier.

In determining the registration tier under section 13 of the National Law, the Registrar will consider:

  • information or documents the entity submits with the application form and further information or documents requested by the Registrar for the purposes of determining the application
  • whether the information or documents submitted or requested unambiguously demonstrate that the requirements for a particular tier have been fully met.

Tier characteristics

The description of registration tiers refers to attributes of community housing activities such as operating at scale, involvement in development activities and finance and leverage arrangements.

The following interprets these terms in the context of registration tiers. Importantly, the definitions are framed in qualitative terms to reflect that there is not a single ‘black box’ formula for registration tiers and an element of judgement is required to assess the risk associated with a provider’s community housing activities.

Scale of community housing tenancy and property management activities

The scale of community housing tenancy and property management activities is typically classified as:

  • small-scale or lower risk if the provider has responsibility for managing fewer than 100 tenancies
  • moderate-scale or moderate risk if the provider has responsibility for managing between 50 and 500 tenancies
  • large-scale or higher risk if the provider has responsibility for managing more than 350 tenancies.

The definitions are deliberately presented as a range to highlight that provider ‘scale’ is always considered relative to other attributes such as development activities and finance arrangements. In addition, it is recognised that a new entrant may initially have a zero base but a specific plan to operate at a certain scale.

Development activities

Community housing development activities refer to property development involving the construction or major refurbishment of community housing assets. Development activities are classified as:

  • lower risk if the provider is involved in no development activities or one-off and very small scale development activity
  • moderate risk if the provider is involved in ongoing small-scale development activities
  • higher risk if the provider is involved in ongoing development activities at scale.

Development scale is set relative to the national market, the size of which will be influenced by a range of factors, notably the economic outlook and funding opportunities. The assessment of development activity by registrars will take into account the number of units involved, the costs, financing arrangements and complexity of the development(s) in their tier assessment.

Registrars will also take into account whether a provider’s development programme is ‘ongoing’. This refers to the existence of a committed forward program. It does not necessarily require that particular schemes are ‘shovel ready’ but that for example:

  • there is a contract or agreement to meet development targets
  • there are well advanced plans for sites that have been acquired possibly with development approvals.

Finally, in coming to a decision about an appropriate tier, Registrars will also consider the scope of a provider’s affiliated entity arrangements. Providers engaged in complex relationships and interdependencies with parent or subsidiary entities; contractual partnerships or some form of cross-guarantee may be determined to be in a different tier to another with the same number of tenancies, assets and development.

Change in registration tiers 

Risk is not static and may change over time; this in turn may lead to a change in the registration tier.  A change to the registration tier of a registered community housing provider may be initiated by either:

  • an application from the provider to change tiers
  • a compliance assessment by the registrar that identifies a change to the scale or scope of operations of the provider, or
  • an advice or notification to the Registrar that indicates a change in scale or scope of operations of the provider.

When making a determination to change the registration tier of an entity under section 12 (4) of the National Law, the Registrar will:

  • provide a notice in writing to the entity stating their reasons for the change and any requirements that will need to be met for a different registration tier
  • give the entity the opportunity to submit additional information or documents to demonstrate that the requirements for the new tier have been fully met.

Review of decisions 

A Registrar’s decision to change a provider’s registration tier or to refuse a provider’s application to change its registration tier is an appealable decision under section 25 (1) (a) and (d) of the National Law.

Registration matrix 

To assist community housing providers to understand the likely registration tier under which they would need to seek registration, a matrix has been prepared to provide examples of registration tiers. In practice, a provider may choose to seek registration in a higher tier (if the provider can demonstrate that the provider meets the requirements) or a Registrar may require registration in a higher tier (if the Registrar assesses there is a higher level of regulatory oversight required).

For example, a Registrar may reject an application for Tier 3 registration if the Registrar makes a determination that Tier 1 or Tier 2 regulatory oversight is required based on the entity’s community housing activities. A Registrar may reject an application for Tier 2 registration if the Registrar makes a determination that Tier 1 regulatory oversight is required based on the entity’s community housing activities.

Example of the typical registration tier for different community housing activities

Select the scope of different community housing activities below to view the registration tiers.

This is an image of a table that shows the scale of community housing tenancy and property management activities against the ongoing scope of activities. The accessible version of this image can be found on the page Example of the typical registration tier for different community housing activities.

To view the accessible version of the above table, please see Example of the typical registration tier for different community housing activities.

Relevant Information

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