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Landlord will no longer accept credit ratings unless agency meets residents
A large Midlands-based housing association has revealed that it will no longer accept a credit rating update from an agency “unless they meet with our customers as part of the annual review process”.
Bromford confirmed its new approach as part of its response to Moody’s confirmation of its A2 credit rating this week.
Credit ratings are a key measure of the sector’s and individual landlords’ financial health and resilience at a time when operating margins are being impacted by inflation and building safety costs, increasing focus on existing cap and the rent cap.
The 46,000-home housing association revealed in November that it expects to meet its budgeted social housing operating margin of 36% by year-end.
On completions for the six months up to September 2023, Bromford said it was on course to complete more than 1,200 homes by the end of March next year.
According to its latest stock market update, Bromford recorded a turnover of £153m during this period.
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From fiscal years 2019 to 2023, Bromford’s margin increased from 30% to 31%, while the median operating margin for all rated housing associations declined substantially, from 29% to 22%, over the same period.
In its latest rating update, Moody’s attributed a number of factors to the landlord’s strong operating margin.
These included the effective control of its cost base through in-house repairs and maintenance services and disposals of uneconomic stock.
In addition to decent margins achieved on its market sales tenures, very limited fire safety works were required due to the make-up of its housing stock and cost efficiencies implemented since its merger with Merlin in 2018.
Imran Mubeen, director of treasury at Bromford, said: “Our credit ratings are a key measure of our financial resilience and our capacity for new investment and growth, but we believe they should always be provided in full view of how we are delivering for our customers.
“It is also incumbent upon us to explain our business plan and treasury strategy to our customers. Moving forwards, we will no longer accept a credit rating update from the agencies unless they meet with our customers as part of the annual review process.
“We are very pleased to have our strong A2 stable rating with Moody’s reaffirmed after what has been another challenging year for the housing sector in the face of high inflation, rising interest rates and the impact of the rent cap.
“Together with our A+ rating with S&P and our G1/V1 status with the Regulator of Social Housing, it demonstrates the financial and operational strength of our organisation as we pursue our 2023-2027 corporate strategy.”
This year also saw the introduction of a dedicated customer workshop as part of the annual review with Moody’s in order for the agency to learn more about the issues their customers are facing, as well as how they experience services provided by the housing association.
The decision by Moody’s to reaffirm Bromford’s A2 rating follows news in July 2023 from fellow ratings provider Standard & Poor’s to reverse its outlook from negative to stable.
More recently, Bromford announced that it had acquired its largest ever piece of land, with plans for more than 200 homes on a site in Gloucestershire.
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