The Week in Housing: RSH warns of financial crisis, and first non-compliant consumer grade issued

Good afternoon.

“Depression, doom and gloom” – this was the English regulator’s description of its 25-page annual Sector Risk Profile this week.

It was reported that the cost of servicing debt exceeded net earnings across the sector for the first time since 2009.

The Regulator of Social Housing (RSH) said that so much attention recently has “quite rightly” been focused on the consumer side and the delivery of quality services to residents.

The sector’s financial health was compared to the financial crisis and recession of 2007-08. Although the RSH’s position is that “we’re not there yet” , there is “no doubt” of the significant financial pressures facing providers.

One issue highlighted in the report was how landlords are using asset sales to fund spending on existing stock. This sell-off now accounts for 21% of the money spent on repairs and maintenance, but is obviously not a sustainable approach in the long term.

Large housing association Sanctuary revealed that it is considering the sale of a portfolio of student accommodation, while another landlord has?sold its telecare business to the healthcare subsidiary of a giant insurance firm.

A move that will help take a little bit of pressure off landlords on their existing stock spend was the announcement that the?National Wealth Fund and two major UK banks will release ￡1bn of funding to accelerate social housing retrofit in the UK.

The RSH also looked at mergers and reminded landlords to think about the pros and cons, as well as the impact on residents. With that in mind, the boards of two landlords have given the go-ahead for the housing associations to merge into a new 55,000-home landlord.

The concern about the sector’s financial health comes as the government was told to increase supply-side grants for new homes to curb rising spending on housing benefit, a report from the Chartered Institute of Housing has recommended.

With the Consumer Price Index rising by 1.7% in the year to September 2024, social rents for 2025-26 can be increased by a maximum of 2.7%.?However, Andy Hulme, chief executive of Hyde Group, said the latest figures show that the current metric for determining rent rises is “not sufficient in today’s environment”.

On the consumer side, the RSH issued its first C4?grading to a London council after finding 9,000 overdue fire safety remedial actions and a failure to self-refer.?

C4 is the lowest possible grade under the new consumer standards and means there are “very serious failings and fundamental changes needed” at an organisation. This is the first time a landlord has been found non-compliant following a planned inspection.?

The same council requested exceptional financial support from the government to deal with a 936% increase in temporary accommodation costs.

Following the RSH grading, the Housing Ombudsman has shared more than 100 cases of severe damp and mould as it warned that the issue now dominates half of its casework.?Richard Blakeway said landlords “are still struggling with timescales” and inspections within damp and mould complaints, despite often having policies that set out clear actions and resolution times.

The sector has welcomed a delay to the Procurement Act 2023 coming into force until early 2025, as vital details are yet to be unveiled . The new legislation will overhaul procurement in the UK. One director called the law the “biggest change to public procurement regulations in a generation” and said that it therefore “needs to be right”.

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