If you think things are about to get better, then think again
Could be worse?
Reasons to be cheerful: part one. It’s AGM season for housing associations; finance directors have finished mopping their fevered brows and board members are heaving collective sighs of relief. ‘Thank goodness,’ they exclaim, ‘we made it through 2008/09.’ Truly it was an annus horribilis, but with just a few million pounds written off here and there to impairment, it could have been a lot worse.
Reasons to be cheerful: part two. With rent increases upwards of 5 per cent and interest rates closer to 0.5 per cent, 2009/10 is turning out a lot better. Mortgage availability is up and margins are down; happy days are here again - or are they?
Despite the receding prospect of the government’s -2 per cent floor for social housing rents having to be invoked, rent falls are still a real possibility in many quarters. Furthermore, with the economy showing signs of life, it is a racing certainty that inflation and interest rates will be on the rise next year, perhaps rapidly, heaping pressure on costs. Three month Libor is forecast to rise to 3 per cent by early 2011. By then the parlous of state of the UK’s public finances will be all too evident. The credit crunch bills have to be paid, and there will be nowt left in the coffers of the Homes and Communities Agency to provide bail-outs next time round.
Worse still, the expectations upon registered providers are ratcheting up as well. Higher customer service expectations, green retro-fitting, new performance standards, co-regulation and raising the governance bar are just some of the cost drivers coming our way. All of this has to be paid for before social landlords can start engaging with the communities and place shaping agenda.
Reasons to be cheerful: part three? It doesn’t bear thinking about.
David Levenson is group finance director of Network Housing Group
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