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Annual turnover up in Scotland as spending on existing homes tops £1.9bn
Social landlords’ spending on existing homes in Scotland is expected to top £1.9bn, an average of more than £5,700 per property, a new report by the Scottish Housing Regulator (SHR) has found.
According to the report, an overview of landlords’ financial plans and forecasts for the next five years, annual turnover is projected to increase by an average of 1.7%, up from the 1% increase forecast last year.
However, the SHR said landlords’ finances were “weakened” as they continue to “face significant pressures”.
Shaun Keenan, assistant director of financial regulation at the SHR, said landlords were operating in “the most challenging landscape we’ve seen”.
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“They continue to face significant pressures, including from market volatility, cost increases, higher borrowing costs, supply issues and labour shortages,” he said.
Mr Keenan said most landlords were “still managing the financial pressures”.
However, as a result of “tightening finances”, landlords had reduced capacity to respond to emerging costs, such as National Insurance increases, which were not included in these projections.
The SHR has calculated that the National Insurance changes could cost landlords around £15m in unplanned costs in 2025-26.
“This means that governing bodies will continue to face some difficult choices and trade-offs as they prioritise expenditure,” Mr Keenan said.
In the five years to 2028-29, the SHR forecasts that net assets will grow by an annual average of 3.7%, down from the 3.9% projected in 2023.
Net cash from operating activities is expected to increase significantly, to £911.1m.
The SHR has forecast significantly reduced cash reserves, “although still at a healthy level”, with an aggregate closing cash balance of £561.3m in March 2024, down from the £801m forecast last year, and dropping to £509m by March 2029.
Rent arrears are expected to be marginally up, but then reduce steadily, from 3.4% in 2024-25 to 3% by 2028-29.
The SHR said estimated decarbonisation costs up to 2030 could range from £4.8bn to £9.6bn, while landlords’ projections include just £154.6m.
A projected 22,600 new homes are expected to be built, funded primarily by £2.49bn of social housing grant and £1.91bn of private finance.
The regulator previously described 2024 as the most challenging year for social housing in over a decade.
