Scottish social landlords spent record £945m on management and maintenance, SHR finds
Scottish social landlords spent a record £945m on the management and maintenance of homes last year, the country’s housing regulator has found.
The Scottish Housing Regulator (SHR)’s annual analysis of landlords’ financial statements for 2023-24 also found that turnover increased by nearly 6% to £2.11bn.
However, it found that landlords’ finances are “increasingly constrained” as they deal with “tough” economic conditions.
The report stated that liquidity remained strong and most social landlords have successfully raised the necessary funds to invest in both new and existing homes.
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But it also found that the weaker financial performance and record investment levels impacted cash and cash equivalents, which have decreased for a third year in a row to £685m.
According to the report, landlords’ finances have been impacted by labour and material shortages, increasing requirements to address the safety and quality of homes, including on energy efficiency and decarbonisation, and maintenance contractors experience financial difficulties.
The analysis revealed that in total, social landlords spent £945m on management and maintenance – the highest on record.
Total management and maintenance cost per unit increased by 6.46% to a record high of £2,965.
Overall, turnover increased by 5.98% to £2.11bn. Affordable lettings turnover rose by 5.89% to £1.86bn, contributing 88.29% of total turnover. This includes gross rent receivable and service charges of £1.66bn, a rise of 7.53%.
Operating costs continued to increase at a faster rate than turnover, up by 7.07% to £1.75bn.
Planned and reactive maintenance expenditure rose at different rates, with planned increasing by 3.88% to £176m and reactive increasing by 15.26% to £295.5m.
Operating surplus dropped by 0.87% to £364.5m, while affordable lettings surplus fell by 3.3% to £343.7m as rental income and deferred grants released grew at a slower rate than the associated expenditure.
Investment in new and existing homes continued with net housing assets up by 5.5% to £16.52bn.
Cash balances decreased by 11.78% to £685.2m.
Shaun Keenan, assistant director of financial regulation at the SHR, said that registered social landlords (RSLs) in Scotland have been “navigating one of the most challenging environments in recent history”.
He explained: “The difficult economic and operational conditions have constrained the finances of RSLs during 2023-24.
“RSLs faced higher debt costs due to rising interest rates, while simultaneously making record investments in existing homes.
“As a result, their operating costs have risen faster than turnover, resulting in a decline in the underlying surplus and reducing financial headroom for RSLs.”
Mr Keenan said the challenges facing landlords are “set to continue”.
“These include high interest rates, rising costs, market volatility and resource and labour challenges stemming from geo-political instability,” he added.
He said that landlords are also facing “increasing demands” around housing quality and decarbonisation, “all while working to continue to deliver homes and services for new and existing tenants and service users at a price they can afford”.
“RSLs will need to continue to adjust their business plans to respond to further potential uncertainty and changing circumstances, effectively manage their resources to maintain their financial stability, and ensure that rents stay affordable for tenants,” Mr Keenan added.
