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RSH publishes quarterly survey for Q2 2023-2024

The Regulator of Social Housing has published the results of its latest quarterly survey of private registered providers’ financial health.
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The report covers the period from 1 July to 30 September 2023. It shows that providers are continuing to make record investment in new and existing homes while grappling with significant external economic pressures. This includes higher inflation and borrowing costs, as well as ongoing supply-chain issues.

Providers invested significantly in repairs and maintenance, with damp and mould repairs continuing to be a priority. Total revenue spend reached £1.2bn in the quarter, which was 5% higher than forecast.

As a result, annual interest cover decreased again. Excluding all sales, rolling 12-month cash interest cover was 74% (compared to 78% in the previous quarter). Providers forecast that interest cover increases slightly to 76% over the next year. Despite this pressure, RSH continues to have assurance that the vast majority of PRPs are managing their lender interest cover positions.

Providers continued to build homes for the future, spending £3.7bn on new development in the quarter. This was higher than the previous quarter but 18% below forecast. Providers ascribed the shortfall to operational delivery issues, as well as contractor insolvencies.

The sector’s total agreed borrowing facilities increased by £1.4 bn in the quarter, reaching a total of £125.3bn. Providers are expected to draw a further £2.2bn in debt over the next year from facilities that have not yet been agreed, which will be affected by higher interest rates.

Boards will need to consider the timing of future investment spend, as delays could leave providers exposed to higher interest costs on new or re-financed facilities.

Will Perry, Director of Strategy at RSH, said: “Social housing providers continue to operate in a very challenging economic climate, and they need to maintain a strong focus on risks and deploy mitigations when needed.

“Providers must be prepared for further increases in interest payments and operating costs, particularly if they currently have high levels of cheap, fixed rate debt. Boards will want to make sure they don’t delay investment in new and existing homes while they manage their cash and covenant positions carefully.”

RSH’s quarterly surveys are available on its website.

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