Registered providers’ cash balances fall to 12-year low

Cash on registered providers’ balance sheets has fallen to its lowest level for 12 years, according to the Regulator of Social Housing (RSH).

RSH’s latest quarterly survey shows landlords’ available cash, excluding amounts held in secured accounts, fell by £800m to £3.4bn during April to June, compared to the previous quarter.

It said that one provider accounted for a third of the reduction, however cash reductions were widespread across the sector with 70% of landlords reporting a net cash outflow. Available cash is forecast to reduce further to £2.9bn by the end of June 2026.

RSH said however available liquidity (£33.5 billion) remains sufficient to cover forecast expenditure on net interest costs, loan repayments and net development for the next year.

Cash interest cover – which measures income to interest costs and is used as a measure of financial capacity – reduced to 61% from 83% the previous quarter although this was higher than the forecast of 58%. Cash interest cover typically drops in the first quarter as year-end accruals are settled, but the 61% figure was also lower than the 67% posted for the same quarter in 2024.

RSH said higher repairs and maintenance costs have resulted in net operating cashflows alone being insufficient to fund increasing net interest payments leading to an “average cash shortfall of £210 million per quarter experienced in the year to June 2024”.

Total repairs and maintenance spend was £2.2 billion in the quarter, 6% higher than the same quarter of the previous year. Expenditure on capital works totalled £0.9 billion in the quarter; 16% higher than the same quarter of the previous year, and the highest quarter one spend on record.

RSH said: “The regulator will continue to monitor the financial viability of private registered providers (PRPs) that are forecasting low liquidity levels or restricted interest cover and will engage with PRPs as necessary, especially if there is reliance on fixed asset sales to support operating cashflows or to meet loan covenants. Findings will be reflected in regulatory judgements where appropriate.”

>>See also: Government needs to double private investment in social housing sector to hit 1.5m target, says regulator

Development spend in the quarter was £3.4 billion, broadly in line with the £3.5 billion per quarter over the last three years. However 12-month development expenditure dropped slightly with £13.6bn invested in the year to June, down from £14.2bn the previous year. Forecast development spend has remained unchanged at £14.8bn.

The survey reveals landlords are increasing their spend on existing homes, spending £9.1bn on repairs and maintenance in the year to June, up from £8.2bn the previous year. Providers have also increased their forecast 12-month spend by 3% to £10.3bn.

The RSH quarterly survey findings are based on data from 198 providers who own or manage more than 1,000 homes.

Will Perry, director of strategy at RSH, said:  “Landlords continue to invest significantly in new homes, and we know that they are looking to update their business plans in light of the substantial package of funding and other measures announced in the June Spending Review.

“The robust pipeline of private investment into the sector is essential for enabling landlords to both make important improvements to existing homes, as well as building new homes for the future. We remain committed to maintaining a financially robust sector and will take early action if we identify serious financial weakness.”