The Social Housing Regulator has published today (September 6) the latest quarterly survey on the financial health of registered providers.
The report covers the period from April 1 to June 30, 2022 and was completed before the launch of the Government consultation on rents for 2023/24. It shows that the sector remains financially sound with strong liquidity. Historically high levels of investment in existing stocks continued, but the effects of broader economic pressures are becoming apparent.
The sector continues to raise new debt. Total agreed loan facilities increased by £500m in the quarter, reaching £119.3bn at the end of June. New financing of £1.9bn was agreed in the quarter, with 70% from the capital markets. The sector has liquidity to cover expected expenses in interest costs, loan repayments and investments in new homes during the year.
Capitalized major repairs investment stood at £503m between April and June, the highest total ever recorded for a first quarter, but 33% below forecast. Shortages of labor and materials continue to affect planned investment and cost inflation is evident.
Suppliers continued to invest in new homes, spending £2.9bn during the quarter. However, this was 14% below forecasts for contractually committed schemes. Suppliers reported that supply chain issues and planning delays are holding back some development projects. Total investment is expected to reach £18.2bn over the next 12 months; 4% higher than previously forecast and reflecting the redefinition of lower than previous expenses.
Providers expect to see average interest coverage excluding sales of 98% over the next 12 months, compared to 124% last fiscal year. This is due to higher anticipated expenses for repairs and maintenance, as well as higher interest payments. Providers continue to have room for agreements and flexibility to manage costs, but HSR will closely monitor liquidity in the sector, especially as the income policy is confirmed.
Will Perry, Chief Strategy Officer HSRsaid:
While the social housing sector remains financially strong, broader economic trends are beginning to present providers with challenges. This is most clearly seen in cost inflation and material and labor shortages, as well as higher interest payments and potential rent ceiling changes. Boards will need to closely monitor these trends and have a strong focus on contingency planning to ensure they can respond quickly to emerging risks.
Quarterly surveys are available on the HSR website.
Notes to editors
The quarterly survey provides a regular source of information on the financial health of registered private providers, particularly regarding their liquidity position.
The quarterly survey results summarized in the report cover the period from April 1, 2022 to June 30, 2022. The latest report is based on regulatory results from 204 PRPs and PRP groups that own or manage more than 1,000 homes. .
Added additional disclosures to the April 2022 quarterly survey statement: added new lines to the cash flow statement to provide an improved breakdown of sales receipts and repair costs, and introduced narrative questions about delays or changes to repair and maintenance schedules. .
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The Social Housing Regulator promotes a viable, efficient and well-governed social housing sector capable of delivering housing that meets a range of needs. It does this by adopting sound economic regulation focused on governance, financial viability and value for money that maintains the confidence of lenders and protects the taxpayer. It also sets standards for the consumer and can take action if these standards are violated and there is a significant risk of serious harm to tenants or prospective tenants.