The Regulator of Social Housing (RSH) has published its 2024 Global Accounts, revealing that social housing providers spent a record £8.8bn on repairs amid financial challenges.
The 2024 Global Accounts provide a financial overview of private registered providers of social housing for the year ending 31st March 2024.
The RSH said that investment in existing homes has weakened the sector’s financial position, evident in a number of recent regulatory judgments.
The record £8.8bn spent on repairs and maintenance was 13% (£1bn) more than the previous year and 55% (£3.1bn) above the pre-pandemic level of £5.7bn reported in 2020.
This increased spending focused on improving tenants’ homes through fire remediation, building safety, and energy efficiency measures.
Providers also reported spending £15bn on development for the year, a 10% increase from the £13.7bn spent in 2023 and greater than the previous pre-pandemic peak.
A total of 54,000 new social homes were delivered, which is a 3% increase on the previous year.
The sector’s overall liquidity allowed providers to raise necessary funds for investing in new and existing homes.
These providers agreed on new facilities, including refinancing, of £12.5bn in the year and reported undrawn facilities of £29.9bn in March 2024.
While operating margins (excluding fixed asset sales) remain at historically low levels, they stabilised slightly at 17% this year.
Despite this, the high levels of investment combined with weaker financial performance have reduced the cash and short-term investments held by the sector to £5.5bn for the third consecutive year.
The underlying surplus, excluding movements in fair value, decreased from £2.2bn to £1.6bn.
Providers faced difficult trade-offs between maintaining financial resilience and investing in new and existing homes, with many scaling back their development ambitions.
The forecast for homes expected to be completed in the next five years fell by 42,000 (12%) to 292,000.
Projected spending on repairs and maintenance has risen by 11% compared to last year’s plans, now reaching £10bn per year over the next five years.
Will Perry, director of strategy at RSH, said: “The sector as a whole has so far proven resilient as it grapples with competing financial pressures, managing to stabilise operating margins this year while investing record amounts on existing homes and building much-needed new homes.
“However, forecasts indicate this could become more challenging in the future as rising levels of debt and cost of capital, as well as sustained high levels of investment in existing stock, impact providers’ surpluses.
Perry added: “As these challenges intensify, providers must monitor and mitigate risks, including alerting us of any material issues.
“We will take action if we have concerns about a landlord’s viability.
“We know that this continued close scrutiny is key to maintaining investor confidence, as well as protecting tenants and providing new homes across the country.”
