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Social Housing Speed Read – Regulator of Social Housing Global Accounts 2018

In this week's Speed Read, we discuss this year's Global Accounts of private registered providers (RPs), published by the Regulator of Social Housing on 14 December 2018.

About the accounts

The Global Accounts Report is published annually by the Regulator of Social Housing, and provides information relating to the income and costs, borrowing and the value of housing assets of RPs who own or manage at least 1,000 homes.

The Report comprises a financial review of 2017/2018, aggregate financial statements and accompanying notes and details of significant entries and balances.

Key findings

The Report noted a small increase in underlying surplus this year, and noted that this ‘was used to support additional borrowings to fund capital investment’. The Report stated that the sector’s ‘future ambition’ was represented by this increase in committed capital investment, which reached £28.6bn (£12.4bn of this figure has been contracted but not accounted for in financial statements). The commitment to future investment is also demonstrated by the increase in new debt (£10bn was raised in 2018 in comparison to £7.6bn raised in 2017) and drawn debt, which increased by £3bn to £72.5bn.

The Report also found that the sector’s operating surplus on social housing reduced from £5.2bn to £5bn, a 2% decrease. It was suggested in the Report that this was due to the second year of 1% rent reductions on general needs units and reduced rents on most supported housing properties. It was also noted that the overall operating margin fell to 28% because of increased costs, including management costs and expensed major repairs which rose by 3%.

Although average house prices increased by 4% across England, there were significant regional differences; for example in London average house prices decreased by 0.5%. The Report identified exposure to the housing market as a ‘key risk’ but noted that the sales performance remained robust; total sales income was £4.8bn, up £0.2bn from 2017.

The economic environment

The Report states that although the economic operating environment was generally stable for RPs, due to the economic uncertainty surrounding Brexit “providers should be prepared for adverse economic conditions”‘. This echoes comments made by Simon Dow, the Interim Chair of the Regulator of Social Housing, speaking at the Social Housing Annual Conference on 5 December. Mr Dow advised that RPs should be “stress-testing for Brexit” and ensure they have “mitigation strategies” in place in the event that a “disorderly Brexit” leads to a significant fall in GDP and house prices. However, the Report concluded that “despite an increasingly uncertain and complex operating environment”, overall RPs are “well placed to continue to invest in existing stock and new supply”.

Comments on the Report

The Chief Executive of the Regulator of Social Housing, Fiona MacGregor, stated that “2018 saw the sector deliver a strong financial result whilst increasing its investment in both new supply and existing properties”, and reiterated the fact that the record levels of debt finance means that the sector is “well-funded for the future”.

Ms MacGregor also viewed the increased expenditure as a positive, as the sector’s focus on providing “good quality homes to meet a range of needs” is to be welcomed. Nick Yandle, policy leader at the National Housing Federation, agreed, stating “these figures show that housing associations are continuing to invest” in new and existing residents and homes.

Mr Yandle also praised the sector for its “vital contribution to tackling the housing crisis”, noting that the number of homes built this year increased by 9% in comparison to 2017 figures. A total of 41,556 homes were built within the sector this year. Mr Yandle stated that the Report “shows how well placed housing associations are to create well built, well managed, sustainable communities” which is ever more important “in the context of Brexit and potential future economic uncertainty”. However, Ms MacGregor noted that the unclear economic backdrop intensifies risk, especially when paired with increased financial activity, and it is crucial that “provider boards continue to monitor, manage and mitigate the potential effects of [such] risks”.

In summary, the sector has focused on ensuring that they are providing good quality social homes, and more of them, which is positive news as the year draws to a close. However, the key message seems to be that RPs must prepare for all scenarios and ensure they are continually and effectively managing financial risk as we head into 2019, even less than certain as to what Brexit may bring.

If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.


Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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