Regulator warns providers’ capacity to absorb risk has reduced 

The Regulator of Social Housing’s (RSH) latest quarterly survey that housing providers’ aggregate cash interest cover, excluding sales, has reduced to 74%, for the year to September. This marks the lowest cash interest cover level on record. 


Housing providers’ cash interest has reduced, reducing their capacity to manage additional costs, RSH says

Cash interest cover in the second quarter of 2022/23 was 87%, in line with forecast, however, it remains below 100% for the fourth consecutive quarter.  Interest cover compares earnings to interest payments and is used as a measure of financial capacity 

RSH warned that: ”Individual providers have less financial headroom than usual and their capacity to absorb further downside risk is reduced”

Alongside this reduction in cash interest cover, the survey also shows registered providers invested £3.7bn in building new homes during the last quarter, which is 18% below the £4.5bn forecast for the quarter.

The £3.7bn development spend between July and September is, however, above the £3.3 billion average quarterly expenditure incurred over the last three years.

The RSH’s latest quarterly survey of registered providers’ financial health was published today and covers the period from 1 July to 30 September 2023. 

The survey, of 204 providers with more than 1,000 homes, found that development spending was concentrated, with 15 housing providers accounting for over half of the development spend in the quarter.

The total repairs and maintenance spend during the quarter increased slightly, from £1.8 billion between 1 April and 30 June 2023, to £1.9 billion during the latest quarter, up to 30 September.

During the quarter, 55% of providers reported delays or changes to repairs and maintenance programmes.

Almost 60% of providers who reported delays stated that they were due to increased demand in damp and mould issues, reactive works and void repairs.

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Market sales also remain significantly below average, with 785 sales achieved in the last quarter, compared to a three-year average of 1,266 sales per quarter. 

The report states that it is “evident that the sector is still experiencing the effects of ongoing economic challenges and is in a weaker financial position now than it has been in the recent past. Outturn and forecast investment in existing stock have continued to increase”.

The RSH says that in general there is confidence that housing providers are appropriately addressing emerging risks, but that the scaling back of uncommitted development or seeking waivers for loan covenants indicates they have limited capacity to manage additional costs.