Major credit rating agency cautions landlords to focus on debt containment

Ms Erlander added: “While we estimate that growth of the sector’s debt will be less than in the past three years, reaching £124bn by 31 March 2027, the sector’s debt burden remains relatively high.”

Despite a push to contain debt, S&P estimated that industry consolidation means that only 20 borrowers account for almost half of the industry’s entire debt.

This latest updates comes after a senior figure at S&P told delegates at a conference in March that he expects fewer social landlords to see negative rating actions in the future due to better risk management in the sector.

Felix Ejgel, managing director at S&P, said the agency had largely seen movements within the A rating category so far, with the sector average dropping from A/A+ to A/A-.

“We look at the difference between positive and negative outlooks on our ratings, and it’s below what it was for last decade at the moment. We expect less ratings action than we have seen before,” Mr Ejgel said.

However, there have been several downgrades to BBB in the social housing sector in recent months.

Last year, S&P lowered its credit rating for L&Q from A- to BBB+ due to the substantial investments the association had to make in its existing stock.

It also downgraded the credit rating for Stonewater in November 2024, with the agency expecting the landlord’s “elevated” spending on existing stock to “weaken” its debt metrics.

In January 2025, S&P assigned Warrington Borough Council a BBB+ rating, in part due to homelessness pressures.