Impairment charges down from last year
More than 60 housing associations expect to make impairment charges of over £113m in their 2010 accounts, a new report from the regulator has said.
The quarterly survey from the Tenant Services Authority said the figure, which is equal to 0.1 per cent of the sector’s £95bn asset base, could change as the 65 associations enter into discussions with their auditors.
Last year the sector’s impairments totalled £159m, although this was a drop on the figure originally anticipated.
The April survey, which covered housing associations in England with more than 1,000 homes, also found the number of unsold low cost home ownership properties had fallen by 7 per cent since last quarter and had halved since January 2009.
The research found associations had arranged £3.5 billion of loans from April 2009 to March 2010. This was less than half the £7.4 billion raised in 2008/09. The report said the drop reflected ‘turmoil in the housing and credit markets and the reluctance of organisations to refinance at a time of higher credit pricing’.
The amount of additional security demanded by lenders on free standing swaps, an instrument for hedging interest rates, fell from about £310m to £260m between January and April 2010.
Jonathan Pryor, director of assurance and business services at accountancy firm Smith and Williamson, said some sites in associations’ land banks could be written down because of the difficulty in obtaining grant to build on them at a time of constraints on public spending.
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