The RSH Global Accounts were published on 9 January 2025 and they make for interesting reading. 

The accounts show a substantial investment of circa £8.8bn for repairs and maintenance of existing homes for the year up to 31 March 2024. This is a 13% increase on the previous year and a 55% increase on pre-pandemic levels. This level of investment helps the sector take tentative steps towards net zero/decarbonisation targets and lays the foundation for better quality, safer housing stock and a better customer experience. It does however give rise to an obvious question: how can this level of investment be sustained? 

The answer would seem that it can't - albeit not without some significant trade-offs. As the RSH identifies: ‘With investment in existing stock at record levels and interest rates remaining raised, the sector is evidently in a weaker financial position than it has been in the recent past'.

By focusing on maintenance and repair, housing associations have to jeopardise financial resilience and often scale back development ambitions. It was concerning to see whilst projected spend on repairs and maintenance has increased by 11% on last year’s plans, the total number of homes forecast to be completed in the next five years has fallen by 42,000. Furthermore, sector EBITDA-MRI interest cover deteriorated by 15 percentage points to 88% (cover below 100% indicates that the increased cost of servicing debt exceeds net earnings after all repairs spend is deducted). Housing associations are stuck ‘between a rock and a hard place’.

It is not all doom and gloom though. The sector continues to have robust liquidity in aggregate, allowing housing associations to raise funds to invest in new and existing housing - investment in new supply increased in the year to 31 March 2024! Yes, it is not at the levels that we (or the housing associations themselves) want to see but there is still money within the sector, and it appears (as we are seeing first-hand at AC) that lenders are still willing to lend. The accounts show that the sector agreed on new facilities, including refinancing of £12.5bn in the year and reported undrawn facilities of £29.9bn in March 2024.  These are not insignificant sums.

So where does this leave housing associations?

In the short-term, the RSH predicts that things are only going to get harder as the pressures facing housing associations will continue - if anything they are ramping up, with Awaab’s Law and Decent Homes 2 just around the corner, the Consumer Standards bedding in and the creep of industrial action in the sector to name just a few of the challenges.

However, if (and it’s a big ‘if’) we see interest rates decrease in the coming months and if we get some clarity from the Government on its rent settlement policy going forward, perhaps the ‘rock’ or the ‘hard place’ might start to soften a little. 

It is also worth noting that we expect to see some (which are at the time of writing) innovative products from funders in the coming months focused exclusively on things like decarbonisation works.  Innovation from funders is going to be key to helping housing associations navigate the competing interests of financial resilience and a growing, high quality, stock of social housing.

For more information, please contact me.