Housing association spend on development 30% below forecasts in first quarter

The RSH uses the quarterly survey as a financial health check of housing associations in England, with a particular focus on liquidity.

It said the latest responses indicate the sector is in a “good position to recover from the impact of the pandemic” with “strong” aggregate liquidity.

Organisations surveyed had total cash and undrawn facilities of £34.5bn at the end of June, enough to cover their £23.2bn spending on interest, loan repayments and development over the next year.

All are “taking appropriate action to secure sufficient funding well in advance of need”, the RSH said.

New finance worth £2.4bn was agreed during the quarter, with 78% from capital markets.

The survey recorded the highest ever first-quarter spend on capitalised major repairs at £459m – but, again, that figure was below forecasts.

Capitalised repairs and maintenance spend is predicted to reach £2.9bn over the next 12 months, compared with £1.8bn during the past year.

Rent collection rates were “slightly lower” than in the previous quarter, the regulator said, but that is “consistent with seasonal trends”.

Void losses “remain at historically high levels” amid pandemic-related backlogs, with the mean figure staying at 2.2% from June 2020, compared with 1.9% in June 2019.

Some 54 associations “have stated that levels of income collection are outside of business plan assumptions”, the regulator said, with 85% of these reporting voids “as being one of the areas that is out of target” and supported housing providers particularly affected.

Asset sales of £1.7bn were completed during the three-month period covered, down 11% on the previous quarter – when they hit record levels due to the stamp duty holiday.

But the sales figure was still 9% higher than forecast with higher-than-expected Right to Buy sales and shared ownership staircasing as the tax break deadline approached.

The number of affordable homeownership properties still held by housing associations having been unsold for more than six months increased by 3% between April and June, while the number of unsold market sale homes fell 15%.

Will Perry, director of strategy at the RSH, said: “The social housing sector is in a good position to recover from the impact of the coronavirus pandemic.

“Providers will need to remain alert and ready to respond to further changes in the operating and economic environment.

“They will need to closely monitor and update their forecasts as the economy reopens and be flexible so that they can effectively manage any increasing risks.”