The latest quarterly survey from the Regulator of Social Housing shows that the sector’s overall strong financial position has been maintained despite weakening sales performance and concerns over increased safety costs.
The regulator found the HA sector has access to £20.4bn in undrawn facilities and agreed new finance of £1.4bn in the quarter. The report covers the period 1 April to 30 June 2019 and includes forecasts up to 30 June 2020.
Investment in new housing supply was £3.1bn in the quarter to June 2019 with 3,275 Affordable Home Ownership (AHO) homes and 1,193 market sale homes completed. This is expected to increase with a £16.1bn investment forecast over the 12 months to June 2020.
Based on responses from 218 private registered providers (PRPs), who own or manage 1,000 homes or more, it provides a regular source of information regarding the financial health of providers, in particular with regard to their liquidity position. The other main findings this quarter include:
- Cash balances total £5.3bn – this is forecast to reduce to £3.4bn over the next 12 months to fund planned capital expenditure;
- Total sales receipts were £1.1bn generating surpluses of £0.3bn. However, current asset sales receipts were more than 40 per cent below forecast at £0.7bn reflecting both fewer completions than forecast and market conditions, particularly in London and the South East;
- There was a two per cent increase in the number of unsold AHO homes to 7,031 (the highest level in ten years) and unsold market sale properties increased by seven per cent to 2,073 (the highest level recorded since 2014). This is partly due to more homes for sale and AHO being built (completions being 17 per cent higher than the same quarter last year) but also reflects wider market conditions;
- The number of AHO homes unsold for more than six months saw an increase of 56 per cent to 2,133. Conversely, market sale properties unsold for more than six months reduced by 13 per cent to 554; and
- The sector’s spending on capitalised major repairs in the quarter at around £400m was 20 per cent below forecast, attributable to delays in starting new contracts for works and the re-profiling of programmed works.
Fiona MacGregor, Chief Executive of the Regulator of Social Housing said: “The latest quarterly survey results indicate that the sector continues to be in a strong position in terms of liquidity, but weakening in the housing sales market is beginning to have an impact, particularly in London and the South East. Providers should consider market conditions carefully when making decisions about development commitments.
“The findings underline the need for Boards to manage their resources and have robust contingency plans in place to ensure that their financial viability is maintained under a range of economic assumptions. We also expect Boards to ensure they have clear information that they are investing so that properties are in a good state of repair and meet statutory health and safety requirements.”
By Patrick Mooney, Editor