Industry News


Regulator publishes first quarterly survey of social landlords’ finanical health for 2023/24


T


he Regulator of Social Housing has published the results of its latest quarterly survey of registered providers’ financial


health which shows that landlords are continuing to balance investing in existing homes and building new ones while operating in a very challenging and fast-moving economic environment. Te report covers the period from 1 April 2023


to 30 June 2023. High interest rates, combined with increasing spend on repairs and maintenance, put pressure on providers’ interest cover, although the regulator has assurance the vast majority of providers are managing their lender interest cover covenant positions. Cash balances again decreased in the quarter.


However, in combination with undrawn facilities they remain sufficient to cover forecast expenditure for the next year. Spend on total repairs and maintenance reached


£1.8bn in the quarter which, although below forecast, was still the highest Q1 figure on record. Over the next 12 months, providers expect to spend £8.2bn on total repairs and maintenance – another record figure. Providers continued to cite damp and mould repairs as a key area of focus. Providers secured £1.8bn in new finance during the quarter, with bank facilities making up the


Will Perry, Director of Strategy at RSH, said: “Against this challenging economic backdrop, boards need to maintain a strong grip on financial performance so they can continue to provide good-quality homes and services for tenants.”


majority of this. Mark-to-market exposure on derivatives remained low, with current gross expose of £0.1bn. Providers spent £3.7bn on new homes in the


quarter. Tis was 24% below expected levels (although only 3% below forecast for contractually committed schemes), which indicates an investment backlog. Although in line with recently recorded levels, outturn expenditure is consistently failing to keep pace with forecasts. Providers attributed this to operational delivery


issues, including delays to land acquisitions and planning as well as contractor insolvencies. In addition, some providers said they had started to reassess some uncommitted development projects. Will Perry, director of strategy at RSH, said:


“Social housing providers continue to attract private finance and invest in new and existing homes. But they are facing significant financial and supply chain pressures, which are causing investment backlogs. We are also seeing evidence of providers mitigating financial risks by reducing development and agreeing covenant waivers with lenders.” “Against this challenging economic backdrop,


boards need to maintain a strong grip on financial performance so they can continue to provide good-quality homes and services for tenants.” Te quarterly survey returns summarised in the


report cover the period from 1 April 2023 to 30 June 2023. Te latest report is based on the regulatory returns of 202 PRPs and PRP groups which own or manage more than 1,000 homes.


Regulator of Social Housing consults on changes to social landlords’ fees


Te Regulator of Social Housing is holding a consultation on proposed changes to the way it charges fees to social landlords, as it gears up for the biggest regulatory changes imposed on the sector in over a decade. Te changes to regulation include the regular


inspection of larger landlords, including councils who were previously exempt. From July 2024, social landlords will need to pay for the full costs of their regulation, in line with many other regulated sectors. Te proposed changes to the fee principles are


designed to ensure the regulator has the necessary resources, skills and capacity to deliver its new, proactive consumer role, building on its existing regulation of landlords’ viability and governance. Te Social Housing Regulation Act, received Royal Assent in July 2023. It gave new fee-charging


powers to the RSH to ensure it can deliver its expanded role. Te exact fee levels will be confirmed following the consultation. Currently the regulator is funded through a


combination of fees and Government grants. Proactive regulation of the economic standards is funded by fees, while other activities including enforcement and reactive consumer regulation are currently covered by government grant. From 1 July 2024, the regulator will be entirely funded through fees. Te RSH is proposing to: • Increase the fees social landlords pay, to recover the full cost of regulation including its expanded consumer remit.


• Continue to charge a flat annual fee to smaller housing associations (those with fewer than 1,000 homes), and charge larger social landlords for each social home they provide.


14 | HMMOctober/November 2023 | www.housingmmonline.co.uk


• Start charging fees to councils owning over 1,000 homes – this is in response to the Government’s requirements on funding and because councils will be included in the new programme of regulatory inspections.


• Charge organisations when they apply to become registered social landlords (instead of the current approach where landlords pay fees aſter they have successfully registered).


Te consultation will have run for a total of eight weeks, by the time it finishes on 31 October 2023. Fiona MacGregor, chief executive of RSH, said:


“Our stronger regulatory remit will empower tenants and help us to hold social landlords to account. We need to make sure we have the resources to deliver this expanded remit, building on our regulation of landlords’ governance and viability. Tat is why we’re proposing changes to our fee principles, and we encourage landlords, tenants and others in the sector to respond to this consultation.” Te full suite of consultation material


including the questions, proposed fee principles and proposed fee levels, is available on the regulator’s website.


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