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English regulator reports increase in homes sitting unsold
Housing associations are seeing more and more homes sitting unsold, increasing the sales risk to the sector, the Regulator of Social Housing has said.
In its quarterly update for the period 1 July 2018 to 30 September 2018, the regulator said that the number of properties unsold for more than six months increased by 39% for affordable homeownership units and 33% for market sale units.
The update, based on responses from 229 housing associations, said that the increase is partly explained by a peak in completed new units in the quarter to March 2018.
The total number of unsold properties remained broadly the same, at 6,100 units.
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In the period, associations made £1.3bn from sales, a similar level to the previous quarter but an increase of 19% compared to the same quarter in the previous year.
Figures from the update show that the pipeline of homes being built for sale is roughly the same as the previous quarter, though it is an increase on historical numbers.
Housing associations predicted they would build 5,000 low-cost homeownership homes and 2,200 for market sale per quarter over the next 18 months.
Simon Dow, interim chair of the regulator, will today tell delegates at a seminar hosted by estate agent Savills: “This is in line with the run rate on completions and wider market conditions, but as we set out in our Sector Risk Profile, it demonstrates that sales risk is an increasingly important risk for providers to manage.
“It is crucial that [private registered providers] undertake challenging stress-testing covering the crystallisation of multiple risks from a macroeconomic shock or wider market downturn.”
The update also found that the sector’s operational finances are better than forecast, with associations’ earnings amounting to 165% of the cost of paying interest on loans (‘interest cover’), compared to a forecast 140%.
According to the update, the sector has £18.6bn in undrawn facilities and £6.6bn in cash, with the sector forecasting spending £15.5bn on new housing supply in the next 12 months.
In the quarter, housing associations spent £420m on major repairs, an increase of 9%, and they predict spending another £2.3bn on major repairs in the next 12 months.
Meanwhile, investment in housing supply during the period was below forecast. This, the regulator said, was “largely as a result of timing differences, slippage and providers exercising prudence in the forecasting of development cash flows.”
