Here at Advantage, we work with leading social housing providers, supplying latent defects cover for their projects. So we take a keen interest in this key area of the UK housing market.
Earlier this month, The Regulator of Social Housing published the results of its latest quarterly survey of registered providers’ financial health. The report covers the period from 1st July to 30th September 2020.
According to the survey, the social housing sector remains financially strong with access to sufficient finance. Performance in the quarter continues to reflect some of the challenges arising from the coronavirus pandemic. However, the sector retains a good financial position overall.
Development spending increased
The sector has good access to finance with total cash and undrawn facilities totalling £34.7 billion at the end of the quarter. During the quarter, new facilities totalling £4.5 billion were arranged by 44 providers, with £1.2 billion of that relating to the COVID Corporate Financing Facility.
Development spending in the quarter increased from the previous quarter as restrictions on construction sites were removed, but is still 18% lower than in the same quarter of the previous year. Current asset sales in the quarter totalled £1.0 billion; 23% higher than the forecast. The coronavirus restrictions and associated increase in unemployment continues to affect arrears and void loss figures, though not to the extent anticipated in June. Rent collection rates have increased to a level more consistent with normal seasonal trends, with underlying cashflow performance remaining strong.
Forecasts for the next 12 months indicate that performance and plans are beginning to return towards levels seen before the coronavirus pandemic. Forecast major repairs spend is now back in line with December 2019 projections and forecasts for both sales receipts and development expenditure have increased since June. While encouraging, these forecasts are clearly subject to change as the COVID situation develops.
Will Perry, Director of Strategy at RSH said:
“The social housing sector continues to maintain a good financial position with forecasted improvement. Considerable challenges still remain, and providers will need to manage risk effectively to ensure that they can maintain services to tenants and plan and invest for the future.”
Local authority spending challenges in the future?
Although The Regulator of Social Housing’s survey will give readers some reassurance regarding the sector’s performance in 2020, there are still likely to be challenges ahead in the coming years. In a feature for Architects’ Journal, Brendan Kilpatrick raises several concerns about what the future holds for social housing. As well as looking at central government policy and the immediate impact of the pandemic, he also warns that:
“The Covid-induced diversions on government and local authority finances are sure to impinge on what was an increasing propensity for councils to build more of their own social housing. The austerity provisions within the chancellor’s spending review, including pay freezes for public sector workers, will not assist in increasing housing numbers from this potentially rich vein.”
While welcoming the resilience of the social housing sector in the face of adversity this year, it’s clear that if the government’s affordable housing targets are to be met, both central and local government will have to look beyond the substantial immediate demands on their resources and continue to prioritise the provision of social housing. However, The Regulator of Social Housing’s figures provide some reassurance that, although there are considerable new challenges ahead in order to meet the shortfall in affordable housing, the sector has withstood the immediate impact of the coronavirus pandemic.
Whether you’re a social and affordable housing specialist or a commercial developer or you’re planning to build or convert your dream home, Advantage can provide structural warranties for projects ranging from multi-million pound developments to individual self-builds. If you would like more information, please call: 0845 900 3969, email: firstname.lastname@example.org or pay a visit to our homepage: https://ahci.co.uk/