The Regulator of Social Housing (RSH) has warned that social housing providers are grappling with a range of significant external pressures, including high inflation, higher borrowing costs, difficulties in accessing skilled labour, and a declining housing market which threatens to dampen income from development sales.
The regulator has set out its view of the key risks and challenges facing the sector in its latest Sector Risk Profile.
The RSH says these factors are continuing to weaken the sector’s financial capacity and put pressure on providers’ business plans. However, it adds that against this very challenging backdrop, the sector is making record investment in existing homes to meet quality and building safety commitments, as well as building much-needed new homes. Providers are also working towards longer-term net zero targets by improving the energy efficiency of their homes.
According to the RSH, boards will need to make difficult trade-offs to manage these risks while ensuring their organisations remain viable and continue to deliver strategic objectives. To deliver new homes and invest in existing ones, providers must remain viable and able to raise new finance, and they must be ready to implement mitigations and maintain appropriate headroom to manage further potential shocks, the RSH says.
Some of the key challenges identified in the RSH’s report are also relevant to lead councillors at local authorities which own social homes.
The regulator says all social housing providers need to get ready for its stronger consumer regulation. The Social Housing Regulation Act, which received Royal Assent in July 2023, places a strong focus on the quality of social housing and the services landlords provide to tenants. The RSH will have new powers to hold landlords to account from next April, including a new programme of inspections, and it recently consulted on a new set of consumer standards that all providers will need to meet.
The regulator has warned that providers must prioritise the safety of their tenants and ensure they hold accurate, up-to-date and robust stock data that assesses the presence of serious hazards in tenants’ homes, including damp and mould.
Jonathan Walters, Deputy Chief Executive at RSH, said: “Social housing providers are navigating difficult economic terrain. Boards must be clear-eyed and strategic about the risks they face, and deploy appropriate mitigations when needed. They must also make sure they are ready for our stronger programme of consumer regulation from next April.
“Providers have a core role of providing safe and decent homes for tenants and building new homes for people who need them. It is vital that they continue to meet our regulatory standards as they do this.”