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RSH publishes quarterly survey for Q1 2023-24

The Regulator of Social Housing publishes the results of its latest quarterly survey of registered providers’ financial health.

The report covers the period from 1 April 2023 to 30 June 2023. It shows that providers are continuing to balance investing in existing homes and building new ones while operating in a very challenging and fast-moving economic environment.

The external financial challenges are reflected in providers’ interest cover. On a conservative cash basis (excluding all sales), rolling 12-month interest cover was 78% for the year to June 2023 (the lowest level on record). High interest rates, combined with increasing spend on repairs and maintenance, are expected to continue to put pressure on providers’ interest cover, although we have assurance the vast majority of providers are managing their lender interest cover covenant positions.

Cash balances again decreased in the quarter. However, in combination with undrawn facilities they remain sufficient to cover forecast expenditure for the next year.

Providers spent £3.7 billion on new homes in the quarter. This was 24% below expected levels (although only 3% below forecast for contractually committed schemes), which indicates an investment backlog. Although in line with recently recorded levels, outturn expenditure is consistently failing to keep pace with forecasts. Providers attributed this to operational delivery issues, including delays to land acquisitions and planning as well as contractor insolvencies. In addition, some providers said they had started to reassess some uncommitted development projects.

Spend on total repairs and maintenance reached £1.8 billion in the quarter which, although below forecast, was still the highest Q1 figure on record. Over the next 12 months, providers expect to spend £8.2 billion on total repairs and maintenance – another record figure. Providers continued to cite damp and mould repairs as a key area of focus.

Providers secured £1.8 billion in new finance during the quarter, with bank facilities making up the majority of this. Mark-to-market exposure on derivatives remained low, with current gross expose of £0.1 billion.

Will Perry, Director of Strategy at RSH, said: “Social housing providers continue to attract private finance and invest in new and existing homes. But they are facing significant financial and supply chain pressures, which are causing investment backlogs. We are also seeing evidence of providers mitigating financial risks by reducing development and agreeing covenant waivers with lenders.

“Against this challenging economic backdrop, boards need to maintain a strong grip on financial performance so they can continue to provide good-quality homes and services for tenants.”

The RSH’s quarterly surveys are available on its website.

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