Development of social homes by housing associations “fairly stable” despite ongoing pressures, says regulator

In its latest Value for Money report, RSH said reinvestment in new and existing homes by housing associations reached record levels despite mounting costs.

It warned, however, that changes to the sector’s operating environment, financial challenges arising from higher interest rates and the need to increase investment in existing housing stock had continued to put pressure on housing associations.

RSH said there had been a fall in new supply as a result, particularly for non-social housing development, “though the development of new social homes remains fairly stable”.

The report said the sector invested record levels of capital into existing and new homes of £14.8bn. Capital reinvestment into existing homes increased by 15% to £3.8bn.

RSH said pressures across the sector were not distributed evenly as some large landlords highlighted particular issues.

“Regional differences were also stressed – with London landlords exposed to higher building safety costs than other areas, which impacted their wider business plans. This meant capacity to fund new supply was most acutely affected in London, as the region continues to show the lowest level of social housing supply as a proportion of existing housing stock.”

The report calls on housing association boards to take a more active and strategic leadership role by ensuring landlords understand their costs and are using their resources in the best possible way.

“Boards have a responsibility to intervene where there is ongoing underperformance and ensuring corrective action is taken where the organisation’s activities no longer align with delivering against its purpose,” RSH said.

Will Perry, Director of Strategy at RSH said: “While these are challenging times for some landlords, there is also greater certainty around policy for the sector to actively plan for the longer term.

“Boards must provide robust challenge where landlords are not making the most effective use of their resources to achieve the strategic objectives of the organisation. This requires a clear understanding of what the organisation is intending to achieve, in both serving existing tenants and developing new homes, and how it maximises its efficiency and effectiveness in doing so.”

Perry added: “Landlords need to be open about how well they are delivering value for money and show evidence that they are meeting the requirements of the VFM Standard. This includes clear and transparent reporting in their accounts of their performance and setting out improvement plans where they have not delivered as intended.

“We will continue checking that landlords are meeting the standard through our inspections and if we do not see enough evidence-based assurance, it will be reflected in our regulatory judgements.”