Regulator warns of “headwinds” weakening financial capacity of social housing providers and putting pressure on business plans
Providers of social housing 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 of Social Housing (RSH) has warned.
Publishing the 2023 edition of its Sector Risk Profile, the RSH said: “These headwinds continue to weaken the sector’s financial capacity and put pressure on providers’ business plans. 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.”
The Regulator warned that boards would 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, housing 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.”
Some of the key challenges identified in RSH’s report are also relevant to lead councillors at local authorities which own social homes, it added.
The Regulator also called on all social housing providers to prepare for stronger consumer regulation. It 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.
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, the RSH said.
Jonathan Walters, Deputy Chief Executive at RSH, acknowledged that 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,” he said.
“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.”
Harry Rodd
