The Regulator of Social Housing has published its 2022 Global Accounts which reveal that the sector had strong liquidity and continued to secure new finance in the year.
However, the accounts, which provide a financial overview of private registered providers of social housing for the year up to 31 March 2022, show that record levels of spend on existing stock resulted in lower operating margins and levels of interest cover.
The RSH says that the economic backdrop has since become significantly more challenging with higher inflation, higher interest rates and a softening housing market. These trends have continued into the current financial year.
The sector had strong aggregate liquidity in 2022 and remained attractive to investors. £12.5 billion in new facilities were agreed in the year, with £7.4 billion coming from capital markets.
Providers’ investment in existing homes increased to record levels, with total spend on repairs and maintenance reaching £6.5 billion. This was 20% higher than the previous year and significantly above pre-pandemic levels. As a result of this high spend on existing homes the aggregate operating margin fell to 19% (from 22% in 2021) and interest cover (including all spend on major repairs) fell to 128% (from 151% in 2021). Both figures reflect the lowest level reported for several years. Providers’ underlying surplus, also fell (£2.4bn in 2022 compared to £2.6 billion in 2021).
Providers invested a total of £12.3 billion in new homes – a 12% increase on 2021 – and completed 49,000 new social homes (9,000 more than in 2021).
Providers remain committed to future investment, with record spend on existing homes forecast for 2022-23. In the context of significant ongoing economic uncertainty, the regulator expects providers to monitor their risks closely, and RSH will engage with providers when it has concerns about their financial viability.
Jonathan Walters, Deputy Chief Executive of RSH, said: “Social housing providers maintained their strong liquidity in 2021-22, attracted new finance, and continued to invest in the homes they provide. However, wider economic pressures that were starting to impact their finances have now become serious challenges.
“Providers need to continue taking a strategic approach to managing economic risks and focus on their fundamental objectives of investing in new social homes, and providing safe, well-maintained homes for their tenants.”
The annual publication is available on the Global Accounts page.