RSH reveals 19 housing associations hit by financial viability downgrades

The details were revealed after the regulator published the first substantial set of results of its annual stability checks for private registered providers owning more than 1,000 homes.

The checks, which are based on data submitted by providers in June 2022, focus on financial resilience and consider changes to risk profile, including external economic factors beyond their control.

According to the regulator, higher inflation and borrowing costs, as well as a weakening housing market, are putting greater pressure on providers’ finances.

Those pressures come at the same time social landlords are investing in new homes and carrying out building safety work, decarbonisation and repairs.

Jonathan Walters, deputy chief executive at the RSH, said the results reflect the “significant economic challenges” facing the sector.

It follows a warning from Mr Walters in October that there could be widespread viability regrades amid the current economic challenges.

Mr Walters said: “The results of our first round of stability checks reflect the significant economic challenges facing the sector. Against this backdrop, we have seen a substantial number of providers moving to V2 grades. 

“These providers continue to comply with our financial viability standard and the sector remains in a strong financial position overall.”

He added that it is “crucial” that all providers maintain a strategic approach to risk management and focus on their key objectives, such as investing in new and existing homes and providing quality services for their tenants. 

Gemma Bell, partner at Devonshires, said: “The regrading from V1 to V2 of 20 registered providers gives a stark message that RPs are facing turbulent times in light of the current economic climate. Providers have already been re-examining their strategic plans in light of challenging economic conditions, and the impending rent cap announcements look likely to worsen this position.

“We are already seeing unprecedented levels of RPs looking at joint ventures and mergers as a solution to enable them to continue to deliver their strategic objectives and we expect this to increase further as the economic picture worsens.”

Correction

At 2.15pm on 15.11.22: The piece was amended to remove Wandle from the list of housing associations downgraded from V1 to V2. This was a mistake as Wandle has retained its rating of V2.