You are viewing 1 of your 1 free articles
Associations face ‘challenging decisions’ over rents amid cost of living crisis, warns Moody’s
Housing associations will face “challenging decisions” over rent increases next year as soaring inflation and rising energy bills weigh on tenants’ finances, credit agency Moody’s has warned.
Housing associations will face “challenging decisions” over rent increases next year, a credit agency has warned #ukhousing In a note, Moody’s said last month’s £15bn government package to help tackle the cost of living crisis was overall “credit positive” for social housing landlords.
The agency said the measures – including £650 for those on means-tested benefits and a £400 energy bill discount – means social housing tenants will be less likely to fall into arrears.
“This will support stable operating cash flows for housing associations despite the pressure on household finances,” Moody’s said.
However, looking ahead, the agency said landlords will “still face challenging decisions over rent increases in April 2023” as inflation is expected to top 10%.
Read more
Moody’s pointed to the fact that many associations increased rents by 1% above the Consumer Price Index (CPI) this year, as they are permitted.
An Inside Housing survey found that all of England’s largest housing associations raised rents by the maximum amount allowed for the year.
But Moody’s added: “This was based on last year’s September CPI of 3.1%. With inflation expected to reach roughly 10% in the third quarter of 2022, associations are unlikely to implement a much higher increase in 2023-24 because of tenants’ affordability constraints.”
At the same time, the agency warned of the cost pressures landlords are facing particularly for construction and
repairs and increased spending on existing stock. The higher costs, it warned, will “dampen margins”.
But Moody’s concluded: “The sector retains strong liquidity and flexibility in its spending, including the ability to pull back on development programmes to slow expenditure.”
A number of landlords, such as L&Q and Optivo, have already revealed plans to curtail their development ambitions.
Sign up for our development and finance newsletter
Already have an account? Click here to manage your newsletters
Related stories
