Social housing sector remains financially strong, says HCA

// HA News

The latest Quarterly Survey by the Homes and Communities Agency covering July to September 2016 confirms that the social housing sector remains financially strong and in a robust position to respond to uncertainty and changes in the wider economic environment.

Published today (2 December 2016), the survey report covers the period 1 July to 30 September 2016 and is based on responses from 239 private registered providers (PRPs) of social housing and PRP groups who own or manage more than 1,000 homes.

Some of the main findings in this quarter include:

  • the sector has access to sufficient finance – it is continuing to raise new debt and has access to substantial undrawn facilities
  • the sector forecasts strong operating cash flows with reasonable cash interest cover over the next 12 months
  • income collection data continues to show a stable performance – this is consistent with the corresponding quarter end last year
  • providers making use of free-standing derivatives reported an increase in mark to market exposure as the swap rate fell – all of which was adequately collateralised
  • affordable home ownership (AHO) and market sale activity increased in the quarter – AHO performance was particularly strong with first tranche sales outstripping completion.
  • AHO continues to be the main source of market exposure for registered providers – with forecast AHO completions more than double market sale completions for the next 18 months.

Fiona MacGregor, HCA’s Executive Director of Regulation, said "Our September Quarterly Survey shows how registered providers are responding to changing operating conditions. In aggregate, the sector remains in a robust position with sufficient financing available and strong liquidity.

"As providers continue to increase the volume of market sale activity and deal with economic uncertainty, we expect their risk and cash flow management capability to keep pace."

The Quarterly Survey sets out information such as the amount of borrowing by registered providers and where they have borrowed from, the number of affordable home ownership homes and market sale homes they have built and sold. Alongside a programme of periodic In Depth Assessments and regular financial stability checks, it provides regulatory assurance on the sector’s financial strength and the continued viability of individual providers.

The Quarterly Survey for Q2 (July to September) 2016 to 2017 is available here.

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