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Housing associations financially strong despite Brexit uncertainty, regulator says
Housing associations are generally in a strong financial position despite the economic uncertainty surrounding Brexit, the Regulator of Social Housing (RSH) has said.
In the English regulator’s quarterly survey for April to June, it said that the social housing sector had access to sufficient finance.
According to the survey, housing associations still have £20.4bn of debt that they have not yet drawn down, while the sector’s total debt stands at more than £97bn.
The regulator noted that the economic uncertainty caused by Brexit had made the operating environment “challenging in some aspects” during the quarter, but added: “This has not destabilised the sector’s overall strong financial position.”
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Cash interest cover was one challenging area, with cash covering 107% of interest during the period, compared with a forecast of 126%.
According to the regulator, this was due to an increase in the amount of capital that housing associations needed during the quarter for other purposes.
Unsold homes continue to be an issue for the sector, with the numbers of unsold homes for both shared ownership and market sale rising to their highest levels since the regulator began recording figures in 2014.
The regulator, however, said in the survey that this was a result of the increase in development activity and did not credit the ongoing difficulties in the housing market in London and the South East.
Fiona MacGregor, chief executive of the RSH, said: “The latest quarterly survey results indicate that the sector continues to be in a strong position in terms of liquidity, but weakening in the housing sales market is beginning to have an impact, particularly in London and the South East.
“Providers should consider market conditions carefully when making decisions about development commitments.”
Meanwhile, current asset sales receipts were more than 40% below forecast, bringing in around £700m.
Similarly, housing associations spent less than forecast on new homes, investing £3.1bn, compared with a forecast of £3.3bn.
The regulator, however, still expects the sector to significantly increase the amount it is spending on new supply, forecasting a spend of £16.1bn, of which £11.2bn is contractually committed. In the 12 months to June 2019, total investment in new supply was £12.1bn.
