Two more landlords downgraded amid difficult economic landscape

A Broadacres spokesperson said the regrading reflected its “significant investment programme to ensure all our existing homes are SAP [Standard Assessment Procedure] C or better by 2028 and our commitment to build 1,000 new homes by 2028, which exposes Broadacres to housing market risk in the short-term”. 

“As a strong and ambitious organisation, we remain committed to delivering our corporate strategy,” they said. 

In its last full year to March 2023, Broadacres reported a surplus of £8,000 on turnover of £45m. 

For 1,400-home English Rural, the RSH concluded that the landlord’s financial profile has “weakened”.

The judgement said: “Increased interest costs associated with continued debt-funded development and ongoing investment in its existing homes have reduced margins and financial headroom on funder interest cover covenants.

“These factors, set in the context of economic pressures including inflation and interest rates, impact on English Rural’s capacity to respond to adverse events.”

Martin Collett, chief executive of English Rural, said: “The shift to a V2 rating aligns with our continued strategic commitment of leveraging financial capacity to address the chronic need for affordable rural housing alongside achieving the investment requirements of existing homes and services.

“Inevitably, the deteriorating financial environment has meant that delivering homes and services to those that need them has come at a greater financial cost, creating a downward pressure on financial comfort.”

English Rural reported a surplus of nearly £1.3m in its last full year, off turnover of around £9m.

Despite the problems facing the sector, two landlords – Cambridge Housing Society (CHS) and Wakefield And District Housing (WDH) – were upgraded back to V1. Both landlords also retained their G1 rating for governance. 

CHS, which has around 3,100 properties, was restored to the top grade after cutting its reliance on non-social housing income. 

The association, whose board includes former Conservative and Liberal Democrat MP Heidi Allen, previously had a V2 rating due to its exposure to a wide range of community-based activities, ranging from support services to extra care.

However, the regulator said CHS had “de-risked” its business by disposing of its remaining care homes and nurseries, while removing market sale properties from its development programme. 

The changes meant that CHS now has the financial capacity to deal with a “wide range of adverse scenarios”, the regulator’s judgement said.  

WDH was upgraded due to its business plan being “strengthened” through an “updated capital programme to improve existing homes and reduced exposure to liquidity and interest rate pressures”, the RSH said. 

It added: “These changes have had a positive impact on financial forecasts and improved WDH’s capacity to deal with a wide range of adverse scenarios.”

In other updates from the regulator, 22,700-home Incommunities retained its G2/V1 rating following an in-depth assessment. The Yorkshire-based landlord was previously downgraded for governance in 2020 over concerns around its risk management.

“Incommunities has since streamlined its governance structures and improved the management and board oversight of its strategic risks and aspects of internal controls,” the regulator said. 

In 2022, Incommunities was also found to have breached the RSH’s Rent Standard over problems with its rent-setting which potentially affected thousands of tenants.

But the RSH said in its new judgment that Incommunities has made “material progress in rectifying miscalculations and is implementing a series of improvements”.

In strapline judgements, Thirteen, Ongo Homes, Livin Housing, Durham Aged Mineworkers’ Homes Association, and Rooftop Housing Group all retained their existing grades. 

Connexus and Coastline Housing kept their G1/V2 grades following their annual stability check.