The 2020 global accounts of private registered providers, published today (25 March 2020) by the Regulator of Social Housing shows that, before the pandemic the sector delivered a strong year of investment in new and existing social housing properties through to the end of March 2020.
This was funded by a combination of using their own cash flow, raising debt from banks and institutional investors and support through capital grant from government.
The main findings for 2020 are:
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The sector invested £13.7bn in new supply - a 13% increase on the previous year and the highest since we began collecting this data.
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This was driven by spend on new social housing properties for rent which increased from £7.7bn in 2019 to £10.2bn in 2020.
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Expenditure on repairs and maintenance of existing social stock was £5.7bn - up from £5.4bn in 2019.
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The balance sheet value of its property related assets now stand at £174.4bn.
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Drawn debt increased by £6.2bn in the year to £83.1bn.
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The sector raised £10.4bn of new facilities from banks and capital markets in the year. In addition to this, providers received £1.7bn of new grant funds.
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The underlying surplus (excluding movements in fair value) decreased for the second year in a row, falling by £0.3bn to £2.7bn.
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The period to March 2020 was the fourth and final year of 1% rent reductions on general needs social housing properties and the third year of rent reductions on most supported housing properties. Costs continued to rise, including health and safety compliance costs, and the operating margin from social housing lettings decreased from 34% in 2017 to 28% in 2020.
In addition to their accounts, providers submitted financial forecasts containing 30-year projections of financial statements and details of development plans. A summary of the first five years of these forecasts, covering the period from April 2020 to March 2025, is included as an annex to this year's global accounts.
As expected, the 2020 financial forecasts show clear changes compared to 2019 forecasts. The sector overall forecasts continued lower operating margins and a marked increase in spending on maintenance and major repairs. This results in forecast future reliance on debt to fund new development and investment in existing stock.
Fiona MacGregor, Chief Executive at RSH, said:
This year's global accounts show that the social housing sector was in a strong position in March 2020 with increased investment in new and existing homes and having raised more than £10bn in debt finance.
Since then, events have been dominated by the response to the coronavirus pandemic and the long-term economic outlook is uncertain. The sector has responded well to the immediate challenges of the pandemic, but it is more important than ever that providers' boards actively manage the risks they face, both financial and investment pressures, and the quality of the services they provide to tenants, whilst helping address the shortage of affordable housing in the country.
