Social housing sector financially strong despite COVID-19, survey finds

Registered social housing providers took a hit in the first quarter of 2020/21 due to the effects of COVID-19, but the sector looks set to recover well, the Regulator of Social Housing (RSH) has revealed.

The RSH’s latest quarterly survey found that investment in housing supply, homes developed and sold, and rent collection rates all went significantly down from April to June 2020, especially compared to pre-coronavirus predictions.

However, the data suggests that registered providers remain strong financially despite the numerous challenges caused by COVID-19, such as the short-term closure of the housing market and wider economic uncertainty.

Will Perry, director of strategy at RSH, said: “The results of the quarterly survey show that the social housing sector continues to maintain a good financial position in the face of considerable challenges.

“The next few months may mean further uncertainty due to the continued impacts of the pandemic and we expect providers to be ready to respond promptly to the changing environment, alongside maintaining services and investment, and planning for the long term.”

The survey covering the period from 1 April 2020 to 30 June 2020 was based on regulatory returns from 215 registered providers who own or manage over 1,000 homes.

The RSH found that total sales receipts during Q1 were around 10% lower than providers’ forecasts in March, and 56% down on predictions made last December before the coronavirus hit the UK.

Meanwhile, investment in housing supply was £1.8 billion last quarter, lower than the total March forecast but higher than the forecast on contractually committed schemes.

Overall, 1,663 affordable home units (AHOs) were developed during the quarter while 1,963 were sold. The number of unsold AHOs increased by 1% to 7,906, while there was a 13% increase in the number of AHOs unsold for more than six months to 3,460.

The number of market sale units completed dropped to just 347, the lowest figure reported since data started being collected in 2011, while 508 were sold.

Rent collection rates dropped to 97.2%, also the lowest figure ever recorded, but these income losses were offset by a record low in repairs and maintenance spending.

Providers spent just £243 million on repairs and maintenance last quarter, just half of the spending incurred during the same quarter last year, largely due to lockdown restrictions preventing repairs.

Despite the challenges providers faced during the quarter, the RSH said the sector remained in a strong financial position overall as £24.8 billion of £107.1 billion in debt facilities went undrawn.

Forecasts for the next 12 months show that providers now plan to ramp back up their development and sales activity, as well as their investment in existing stock, although not to the same level as pre-coronavirus forecasts.

Providers forecast they will complete 33,230 AHO units and 10,390 market sale properties over the next 18 months – a 2% drop on AHO units and 16% drop on sale units from December’s estimates.

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