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A third of total development spending came from just eight registered providers, as building activity among for-profits increased, according to the English regulator’s latest quarterly survey.
The Regulator of Social Housing (RSH) said today that development spending was concentrated among a small number of providers in its survey of private registered providers’ financial health.
The report, covering the period from 1 April to 30 June, said the eight providers represented a third of the £3.5bn spent on development in the quarter.
This figure was slightly above the three-year quarterly average of £3.4bn, but the RSH added that this had been driven by a new submitter of data.
The RSH revealed that while most registered providers had carried out development, 23 each reported expenditure in excess of £200m over the year, which made up 56% of the sector total.
There was also an overall increase in for-profit development activity, with five providers accounting for almost 10% of expenditure in the year.
Expenditure was 17% below the £4.2bn total forecast for the quarter, though, with 78% of providers reporting an underspend due to site delays, land acquisitions not progressing and contractor failures.
Spending on development over the next year is projected to increase to £16.2bn, up from £14.2bn in the previous year. Some providers are also reviewing uncommitted development projects to mitigate risk, the RSH said.
As in previous quarters, spending on repairs and maintenance increased, reaching £2.1bn in the period. There will also be a bumper outlay of £9.3bn during the next 12 months, compared with £8.2bn in the previous period.
The sector agreed £2.3bn in private financing during the quarter, but the cost of borrowing remained a challenge.
Providers’ interest cover for the quarter, excluding all sales, increased slightly compared with the same quarter in 2023, but remained low at 67%.
The aggregate 12-month interest cover, excluding all sales, increased slightly compared with the previous quarter, rising from 76% to 79%.
While this bucked a trend of ever-lower interest cover results, it was still “one of the lowest levels recorded”, as investment in building safety, repairs and decarbonisation continued.
Cash balances also dropped to the lowest level in over 10 years, falling by £500m to £3.9bn during the quarter. Balances are expected to reach £2.7bn by June 2025.
Will Perry, director of strategy at the RSH, said: “Interest cover remains low and providers have limited financial headroom. It is vital that they have strong governance arrangements in place to identify, stress test and mitigate financial risks.
“We will continue to review providers’ finances, including through our annual stability checks this autumn, as well as our inspection programme.”
The report is based on the financial regulatory returns from 200 private registered providers that own or manage more than 1,000 homes.
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