Global accounts show sector in a strong position in March 2020
The Regulator of Social Housing has published its annual global accounts of private registered providers.
The 2020 global accounts of private registered providers, published today (25 March 2020) by the Regulator of Social Housing shows that, before the pandemic the sector delivered a strong year of investment in new and existing social housing properties through to the end of March 2020.
This was funded by a combination of using their own cash flow, raising debt from banks and institutional investors and support through capital grant from government.
The main findings for 2020 are:
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The sector invested £13.7bn in new supply – a 13% increase on the previous year and the highest since we began collecting this data.
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This was driven by spend on new social housing properties for rent which increased from £7.7bn in 2019 to £10.2bn in 2020.
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Expenditure on repairs and maintenance of existing social stock was £5.7bn – up from £5.4bn in 2019.
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The balance sheet value of its property related assets now stand at £174.4bn.
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Drawn debt increased by £6.2bn in the year to £83.1bn.
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The sector raised £10.4bn of new facilities from banks and capital markets in the year. In addition to this, providers received £1.7bn of new grant funds.
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The underlying surplus (excluding movements in fair value) decreased for the second year in a row, falling by £0.3bn to £2.7bn.
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The period to March 2020 was the fourth and final year of 1% rent reductions on general needs social housing properties and the third year of rent reductions on most supported housing properties. Costs continued to rise, including health and safety compliance costs, and the operating margin from social housing lettings decreased from 34% in 2017 to 28% in 2020.
In addition to their accounts, providers submitted financial forecasts containing 30-year projections of financial statements and details of development plans. A summary of the first five years of these forecasts, covering the period from April 2020 to March 2025, is included as an annex to this year’s global accounts.
As expected, the 2020 financial forecasts show clear changes compared to 2019 forecasts. The sector overall forecasts continued lower operating margins and a marked increase in spending on maintenance and major repairs. This results in forecast future reliance on debt to fund new development and investment in existing stock.
Fiona MacGregor, Chief Executive at RSH, said:
This year’s global accounts show that the social housing sector was in a strong position in March 2020 with increased investment in new and existing homes and having raised more than £10bn in debt finance.
Since then, events have been dominated by the response to the coronavirus pandemic and the long-term economic outlook is uncertain. The sector has responded well to the immediate challenges of the pandemic, but it is more important than ever that providers’ boards actively manage the risks they face, both financial and investment pressures, and the quality of the services they provide to tenants, whilst helping address the shortage of affordable housing in the country.
Further information
For press office contact details, see our Media enquiries page. For general queries, please email enquiries@rsh.gov.uk or call 0300 124 5225.
Notes to editors
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The annual global accounts report is based on an aggregation of the financial statements of private registered providers of social housing who own or manage at least 1,000 homes (together representing more than 95% of the sector’s stock).
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The global accounts cover the period from 1 April 2019 to 31 March 2020. The impact of coronavirus on the 2020 global accounts is limited. The first national lockdown was introduced in the last week of the financial reporting period.
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On 8 April 2020, we advised registered providers that, due to the impact of the coronavirus pandemic, they should take steps to submit their accounts to us as soon as reasonably practicable, but that we would not take any action where returns due up until 30 September 2020 were delayed by up to 3 months i.e. to 31 December 2020.
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This year, we have also included analysis of providers’ financial forecasts. These forecasts were submitted to RSH by a deadline of 30 September 2020 and will reflect providers’ business plan assumptions at that time.
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RSH promotes a viable, efficient and well-governed social housing sector able to deliver homes that meet a range of needs. It does this by undertaking robust economic regulation focusing on governance, financial viability and value for money that maintains lender confidence and protects the taxpayer. It also sets consumer standards and may take action if these standards are breached and there is a significant risk of serious detriment to tenants or potential tenants.