Regulator also finds wide variation in interest cover across sector
Spending on new and existing homes reached record levels last year, according to the Regulator of Social Housing (RSH).
The watchdog’s latest ‘value for money’ report, published today, showed reinvestment into existing stock and acquisition or development of new homes in the year to 31 March 2024 increased 17% from £12.5bn to £14.6bn.
This figure is the highest recorded since the value for money metrics were introduced in 2018.
The median headline cost per property also rose by 12% to £5,136, another record. However, the sector predicts that cost increases will fall below the rate of inflation over the next five years, indicating that a real-terms decline in reinvestment per property is expected.
Despite high inflation and rising borrowing costs leading many providers to scale back their development ambitions, 49,287 new social homes were delivered in the period, the highest level since 2021.
Development is somewhat concentrated, with one in ten providers (exlcuding for-profits) developing 45% of new social homes.
Other key findings of the report included a link between tall buildings and high costs. Providers with more than 10% of their homes located in blocks more than seven storeys high reported an inflated headline cost of £9,343 per unit, while those with more than half their stock categorised as house or bungalow reported a headline cost of £4,812 per unit.
It also found that London had the highest capital reinvestment into existing homes, which increased by 13% to £1,680 per unit - almost 50% above the English average.
Consequently, capital reinvestment per unit into new development was 8% lower in London.
Interest cover continued to fall at a sector level, but the RSH noted a wide gap in the cover of providers in the upper quartile (153%) and those in the lower quartile (76%).
>>See also: Housing association financial statements 2023/24: key trends and library of reports
Will Perry, director of strategy at RSH, said the sector was “proving resilient at grappling with competing demands on their resources” and said the latest research had helped them “understand in greater detail some of the structural factors that can impact on value for money”.
“This supports our ongoing scrutiny and regulation of the sector, especially as pressures intensify, and provides important insight for landlords as they consider what drives their businesses,” he continued.
“It is crucial that landlords challenge themselves on their efficiency so they can continue to build more homes and deliver better services for people who need them.”
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