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English HAs better able to mitigate rent cut losses than French counterparts, says report

English housing associations will be more successful at mitigating the financial impact of the social housing rent cut than their counterparts in France, which are facing similar government-imposed losses.

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English HAs better able to mitigate rent cut losses than French counterparts, says report #ukhousing

A comparative report by ratings agency Moody’s found that greater flexibility on spending and revenue generation means that English associations will lose just 5% of turnover on average, compared with 13% for French providers.

In 2016, the UK government enforced a 1% per annum rent reduction for four years for English housing associations.

The 2018 French budget saw a similar policy unveiled, with an immediate rent cut equivalent to 3.1% of 2016 turnover to be followed by a further reduction in 2020.

In France, the cuts are expected to see around €4bn (£3.5bn) taken off the cumulative income of housing associations. In England, that figure is expected to be around €1bn (£880m) over the same period, according to Moody’s.


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The ratings agency found that English associations are likely to mitigate around 70% of lost income over the four years of the rent cuts. However, “lower expenditure flexibility” meant that French associations would be forced to absorb greater losses.

For example, in England almost a quarter of the revenue loss has been mitigated through job cuts, their French equivalents “are unlikely to follow suit because they have less payroll flexibility and a lower appetite for job cuts”.

The analysis also said that a move by the French Government to alleviate revenue loss by incentivising housing associations to sell 1% of their stock each year – around 40,000 homes – was “ambitious” and cited a similar scheme from 2007 that “met with little success”.

Jennifer Wong, vice president at Moody’s and author of the report, said: “French social housing providers face sharp and deep rent cuts that will lead to a significant reduction in their income by 2020.

“They have fewer ways to raise additional revenue and less flexibility to cut spending than their counterparts in England.”

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