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Declining housing market threatens income from development sales, warns RSH
The Regulator of Social Housing (RSH) has warned that one of the significant pressures facing the sector is a declining housing market that threatens to dampen income from development sales.
In its 11th annual Sector Risk Profile, the RSH warned of this reduced sales income, alongside high inflation, higher borrowing costs and difficulties in accessing skilled labour.
These headwinds continue to weaken the sector’s financial capacity and put pressure on providers’ business plans.
Against this challenging backdrop, the English regulator pointed out that the sector was making record investments in existing homes to meet quality and building safety commitments, as well as building much-needed new homes.
At the same time, landlords are also working towards longer-term net-zero targets by improving the energy efficiency of their homes.
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However, the RSH believes that boards will need to make difficult trade-offs to manage these risks while ensuring their associations remain viable and continue to deliver strategic objectives.
Providers must remain viable and able to raise new finance to deliver new homes and invest in existing ones. The RSH said this meant they had to be ready to implement mitigations and maintain appropriate headroom to manage further potential shocks.
Some of the key challenges identified in the regulator’s latest report are also relevant to lead councillors at local authorities that own social homes.
This includes the need to get ready for the RSH’s stronger consumer regulation, and the introduction of the Social Housing (Regulation) Act, which received royal assent in July.
Under these reforms, the RSH will have new powers to hold landlords to account from next April, including a new programme of inspections.
Last week, the RSH asked landlords to respond to a consultation on how it will use some of these new powers, which include the ability to issue failing landlords with unlimited fines.
Jonathan Walters, deputy chief executive of the RSH, said: “Social housing providers are navigating difficult economic terrain. Boards must be clear-eyed and strategic about the risks they face, and deploy appropriate mitigations when needed.
“They must also make sure they are ready for our stronger programme of consumer regulation from next April. Providers have a core role of providing safe and decent homes for tenants, and building new homes for people who need them. It is vital that they continue to meet our regulatory standards as they do this.”
The RSH reiterated that providers must prioritise the safety of their tenants and ensure they hold accurate, up-to-date and robust stock data that assesses the presence of serious hazards in tenants’ homes, including damp and mould.
The latest risk profile builds on last year’s look at the sector, which found that social housing providers must have a clear understanding of their costs amid rising inflation to ensure the “continued delivery of essential services and safety”.
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