The Regulator of Social Housing has today (5 March 2024) published the results of its latest quarterly survey of private registered providers' financial health.
The report, which covers the period 1 October to 31 December 2023, shows that providers continue to invest in existing homes and build new homes for people who need them.
Total repairs and maintenance spend in the quarter reached £2 billion (up from £1.9 billion in the previous quarter). Prioritising work relating to damp and mould continues to contribute to providers' higher spend on existing homes.
Providers spent £3.9 billion on building and acquiring new homes in the quarter (up from £3.7 billion). This was the highest quarterly spend for eight years.
The amount providers expect to spend on development over the next 12 months has dropped to £15.9 billion (5% lower than forecast in the previous quarter), of which £11.5 billion is contractually committed.
The wider economic environment remains challenging. To mitigate risk some providers have deferred uncommitted development projects or, in a smaller number of cases, arranged covenant waivers with their lenders. Providers should continue to deliver their services as efficiently as possible.
Annual aggregate cash interest cover (excluding all sales) continued to fall, reaching 71% (the lowest level on record). Providers expect interest cover to rise slightly to 80% over the next year.
The sector continued to attract private investment, with £3.7 billion of new facilities agreed in the quarter. Although available cash and undrawn facilities both decreased slightly, they remain sufficient to cover forecast spend on interest costs, loan repayments and developments for the next year.
Will Perry, Director of Strategy at RSH, said:
It is encouraging to see the sector raising new finance, which is enabling providers to invest in existing homes and build new ones for the future. But as a result of this higher spend and wider economic pressures, their interest cover remains very low.
Boards must manage financial risks carefully and deploy appropriate mitigations when needed.
Notes
- The quarterly survey provides a regular source of information regarding the financial health of private registered providers, in particular with regard to their liquidity position.
- The quarterly survey returns summarised in the report cover the period from 1 October to 31 December 2023. The latest report is based on regulatory returns from 201 PRPs and PRP groups which own or manage more than 1,000 homes.
- RSH promotes a viable, efficient and well-governed social housing sector able to deliver more and better social homes. It does this by undertaking robust economic regulation focusing on governance, financial viability and value for money that maintains lender confidence and protects the taxpayer. It also sets consumer standards and may take action if the outcomes of the standards are not being delivered. RSH's remit on consumer issues is expanding and, from April 2024, it will begin carrying out regulatory inspections of social landlords.
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