The Regulator of Social Housing (RSH) has published the results of its latest quarterly survey of private registered providers’ financial health, revealing that the sector has strong liquidity and continues to attract new finance.

However, the report, which covers the period from 1 October 2022 to 31 December 2022, shows that wider economic pressures – including inflation, higher borrowing costs and a softening housing market – are impacting on providers’ finances.

Providers spent £1.7 billion on repairs and maintenance by the end of December, which was 8% above the previous quarter and among the highest quarterly totals on record. However, providers reported that material and labour shortages continued to cause delays to repair programmes.

Providers report that average interest cover from operating cashflows, excluding sales, was 102% in the 12 months to December, the lowest level on record. Providers expect to see average interest cover drop further to 93% over the next year. This is mainly a result of higher spend on repairs and capital investment, as well as rising interest costs, the RSH says.

The sector secured £3.4bn in new finance in the quarter, with bank facilities at their highest level for six years. Total agreed borrowing facilities stood at £121.8bn, up £2.1bn from the previous quarter. Mark-to-market exposure on derivatives remained low, with current gross exposure of £0.3bn.

Providers invested £3.8bn on building and acquiring new homes in the quarter. This was significantly higher than the previous quarter and above forecasts for contractually committed schemes. Investment of £16.6bn is forecast for the next 12 months (compared to £17.3bn forecast in September 2022), with £11bn contractually committed.

Will Perry, Director of Strategy at RSH, said: “Social housing providers continue to attract private finance and invest heavily in new and existing homes. But they are facing significant economic headwinds which, combined with higher spend on repairs, are impacting on the sector’s finances.

“Providers need to take a strategic approach to managing these risks, so they can continue to deliver their objectives and ensure that their tenants are living in safe, good-quality homes.”

The regulator’s quarterly surveys are available on its website.