Registered providers underspend on development by 17%

Registered providers spent £3.5bn on developing and acquiring properties in the three months to June, according to the Regulator of Social Housing’s (RSH) latest quarterly survey.

The data, gathered from 200 landlords, shows RPs’ spend on development was 17% below the £4.2bn they initially forecast, with more than three quarters (78%) reporting an underspend.

It said: “The majority of providers have cited delays due to a number of factors including land acquisitions not progressing and general site delays, causing the deferral of schemes into future periods.

“Some providers have also reported re-profiling expenditure to be in line with their business plans, and contractor failures continue to impact schemes whilst new contractors are appointed.”

The £3.5bn figure however was, up from £3.1bn the previous quarter and is above the three-year quarterly average of £3.4bn, while RPs’ spend on development in the 12 months to June 2024 at £14.2bn was higher than the previous years.

RSH also said five for-profit providers accounted for almost 10% of total development spend in the year.

Providers spend on repairs and maintenance in the quarter was £2.1bn, slightly down on the £2.2bn recorded in the first quarter. However, repairs spend is expected to total £9.3bn over the next 12 months, which would be a 13% increase year-on-year.

The survey showed providers’ cash balances reduced to their lowest levels in 10 years, falling by £500m quarter-on-quarter to £3.9bn. Cash balances are expected to reduce further to £2.7 billion by June 2025.

Providers had £131.7 billion total facilities in place at the end of June, up from £129.1 billion at the end of March.

Providers agreed new finance totalling £2.3 in the quarter, up from £1.8bn last year. Total facilities in place increased from £129.1bn to £131.7bn over the same period.

>>See also :What does the collapse in section 106 demand mean for housing delivery?

>>See also: Housing associations’ interest cover falls to lowest level since the recession, warns RSH

Interest cover - which compares earnings to interest payments and is used as a measure of financial capacity – increased from 76% to 79% quarter-on-quarter. However the RSH said it is “still [at] one of the lowest levels recorded” and is expected to drop to 77% for the year to June 2025.

Will Perry, director of Strategy at RSH, said: “Providers continue to build new homes for the future, while improving existing homes and services for tenants. This includes important priorities like fire safety remediation, tackling damp and mould, and decarbonising tenants’ homes.

“As a result, interest cover remains low and providers have limited financial headroom. It is vital that they have strong governance arrangements in place to identify, stress test and mitigate financial risks. We will continue to review providers’ finances, including through our annual stability checks this autumn, as well as our inspection programme.”