Scottish landlords see 37% rise in surplus but regulator highlights ‘uneven’ performance

The figures come from a report on the latest RSL accounts by the SHR.

While highlighting the positive sector-wide results, the SHR stressed that this did not apply to every RSL and said many continued to face “material pressures”.

Shaun Keenan, assistant director of financial regulation at the SHR, said: “Our latest analysis indicates that RSLs remain financially resilient, but continuing declines in cash reserves highlight the pressure of rising costs and ongoing investment demands.

“Overall RSL performance improved in 2024-25, as income grew faster than expenditure and liquidity benefited from new and expanded lender commitments. Performance, however, is uneven. 

“Some RSLs are experiencing cash and short-term liquidity pressures due to weaker operating results and high investment requirements, and financially weaker RSLs remain more exposed despite strong affordable lettings income.”

The regulator attributed the boost in turnover to a 10% rise in rental income, taking this to £2bn, including a 7.2% rise in gross rent receivable and service charges.

The record expenditure on repairs was driven by a 6.4% rise in reactive and 3.4% uplift in planned maintenance, with the average cost per unit now above £3,000.

The SHR also highlighted the “notably challenging” economic conditions social housing providers faced during 2024-25.

These included high construction and maintenance costs driven by labour shortages and rising wages, regulatory and building safety requirements piling pressure on budgets, and failures in the construction sector, including 18 insolvencies in March 2024 alone.

Many RSLs had to reduce or reprofile their housebuilding plans as a result, it said, and landlords were also finding it difficult to get contractors for void repair work, especially reconnecting utilities.

The SHR stressed that further challenges lie ahead this year, including a likely rise in inflation due to conflict in the Middle East.

Looking at how individual RSLs compare, the vast majority had operating surpluses of less than £2.5m.

There was a fall in the number reporting deficits, from 12 in 2023-24 to five last year, while nine RSLs had surpluses of more than £10m.

Net surplus, however, reduced by a fifth overall, due to changes in how housing properties are valued, with 17 RSLs recording net deficits.

The report highlighted an improvement in the debt burden for RSLs, which is currently at 2.6, but 25 landlords still have debt that is three times their turnover. The SHR said this indicated possible financial pressure for a significant part of the sector.

It added that, as these measures are often used in loan covenants, these RSLs were experiencing a reduced ability to take on more borrowing.