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Midlands housing association has A+ credit rating affirmed
Leicester-based EMH group has had its A+ credit rating affirmed by ratings agency Standard & Poor’s.
EMH, which owns 20,000 homes across the East Midlands, received the rating yesterday, with the agency saying it was due to the decision to "focus on social housing lettings and keep exposure to sales activity low".
Standard & Poor’s also gave the association a stable outlook, suggesting they do not think the rating is likely to change.
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The rating said: “[EMH] is monitored closely by the Regulator of Social Housing and is naturally anticyclical, which shields EMH’s revenue stream somewhat from a downturn in the housing market.”
Despite this, the agency noted that this benefit is offset by lower demand for social housing in the East Midlands than in other regions.
Social housing in the East Midlands is worth 70% of market rents, making it more likely for prospective tenants to choose market rented accommodation instead.
However, Standard & Poor’s noted that the association’s vacancy rates had improved for the third consecutive year, falling to 1.2% at the end of the financial year in March.
“We continue to view management’s decision to focus on traditional activities as risk-averse and view positively the executive team’s vast experience,” the agency said.
In July, EMH became one of eight strategic partners within Homes England, a government body which aims to stimulate housing delivery in England.
EMH will therefore receive £30m of grant funding to deliver 740 homes by the end of the financial year in 2022. EMH is aiming to deliver 2,600 new homes by 2023.
Standard & Poor’s said it expects two thirds of EMH’s development plan to focus on general needs rented homes and the remainder to be shared ownership. It said the shared ownershop units will “weigh on financial performance slightly,” as it is a riskier tenure.
However, they expect the ability to increase social housing rents from 2021, combined with an increase in the number of homes, will improve EMH’s margins.
Chan Kataria, group chief executive at EMH, said: “The affirmation of our strong credit rating comes at the end of the year in which we were appointed one of Homes England’s strategic development partners.”
The rating leaves EMH in the second highest tier of 36 associations rated by S&P, along with 16 other social landlords.
The announcement comes after S&P said it would downgrade half of its rated housing associations in the event of a no-deal Brexit, citing negative shocks to the social housing sector if the UK leaves the European Union without a deal.
Housing association financial statements 2017/18
Click on the links below to read more reports about individual associations' financial statements:
A2 Dominion reports £92.5m surplus
Aster sees 12% jump in surplus despite margin drop
BPHA sees surplus jump after shared ownership sales boost
Clarion's surplus falls for second year running
Housing & Care 21 records increased surplus
Metropolitan sees surplus fall due to post-Grenfell costs
Midland Heart records £47.8m surplus
Network Homes surplus dips for the second consecutive year
Notting Hill and Genesis post reduced combined surplus
Optivo sees turnover fall in first results since merger
Orbit surplus boosted by jump in value of private rented units
Paradigm surplus drops after £5.6m loan breakage cost
Places for People boosts surplus to £130m
Southern sees dip in surplus due to pensions and safety costs
Sovereign boosts surplus thanks to open market sales
Stonewater increases surplus by 38%
Swan surplus slides after £3.2m cladding provision
Vivid posts increased surplus post-Merger
