The Regulator of Social Housing has published the results of its latest quarterly survey of registered providers’ financial health.
The report covers the period from 1 July to 30 September 2021, with the Regulator stating that the social housing sector “continues to recover from the pandemic with strong liquidity and robust interest cover and income collection indicators.”
The sector’s total agreed borrowing facilities increased by £1.8bn, to reach £115.3bn at the end of September. New finance of £2.9bn was agreed in the quarter, with 71% of this from capital markets. There was further refinancing activity in the quarter due to the expiry of the Covid Corporate Financing Facilities.
Providers continue to invest capital in new and existing homes, although current uncertainties make accurate forecasting difficult. £2.9bn was invested in the acquisition and development of new homes between July and September 2021; 7% less than in the previous quarter, and 32% below the forecast for this quarter.
Capitalised major repairs spend increased to £479m, but again less than previously forecasts for the quarter. The difference from forecasts was due to the impact of supply chain issues over the quarter.
As a result of seeking to make up these shortfalls, forecast capital expenditure for the twelve months ahead is at a record high with both development spend (at £18.3bn) and capitalised major repairs spend (at £3.1bn) predicted to be over 50% higher than in the previous twelve months.
However, given the current challenges being experienced with delays relating to labour and material shortages, we expect some variation from forecasts: this is an area RSH says it will continue to monitor.
The number of unsold properties reduced in the quarter. At £531m, Affordable Home Ownership first tranche sales are the highest value ever recorded and the unit sales are higher than pre-pandemic levels, with a fall of 11% in the number of units unsold in six months. There was also a 24% fall in the number of market sale units unsold for more than six months.
Will Perry, Director of Strategy at RSH, said: “While the social housing sector continues to recover from the coronavirus pandemic, current economic conditions continue to provide challenges for providers in the form of labour and material shortages.
“Providers will need to closely monitor these and wider pressures to ensure they are able to manage the range of risks their organisation is facing.”