Regulator downgrades 15 more housing associations’ viability ratings

RSH’s comments on the downgraded associaitons

Bromsgrove

Bromsgrove is ­­­continuing to develop new homes and is also increasing investment in its existing homes. This weakens its financial performance and, coupled with higher inflation and interest rate pressures in the current economic environment, reduces Bromsgrove’s capacity to respond to adverse events.

Coastline

Coastline needs to manage material exposures. It is forecasting increased stock investment and energy efficiency costs, delivery of its development programme, and is carrying a proportion of variable rate debt. These factors, together with higher inflation and interest rate pressures in the current economic environment, weaken Coastline’s interest cover position and its capacity to manage adverse events.

EMH Group

EMHG is making additional investment in its stock, including improvements in energy efficiency. In combination with the current economic uncertainty in relation to inflation and interest rates, this reduces its interest cover headroom and therefore its capacity to withstand downside risks.

Golden Lane

Golden Lane Housing has experienced a significant rise in the interest costs relating to its existing debt. Coupled with the current inflationary pressures, this has reduced the capacity within Golden Lane Housing’s business plan to deliver its development plans and to respond to further adverse events.

Habinteg

Habinteg is increasing investment in its existing homes. This investment has a material impact on the provider’s key financial metrics, weakening its interest cover position. When coupled with the current economic environment including inflationary and interest rate pressures, this reduces Habinteg’s capacity to manage a wide range of adverse events.

Halton Housing

Halton Housing is investing in its existing homes by increasing maintenance and major repairs expenditure, which weakens its financial performance. Delivering this investment, coupled with the current economic uncertainty in relation to inflation and interest rates, reduces Halton Housing’s capacity to respond to adverse events.

Housing Plus

Housing Plus has significantly increased the level of investment in its existing homes, primarily to address the government’s energy efficiency targets. The combination of rising interest costs and the additional economic uncertainty in relation to inflation, has reduced the forecast headroom on its interest cover loan covenant and the available capacity to manage adverse events.

Inquilab Housing Association

Inquilab is planning to increase investment in its existing homes, including works to improve energy efficiency. It is also continuing to develop to provide new homes. These factors, together with higher inflation and interest rate pressures in the current economic environment, reduce Inquilab’s interest cover covenant headroom and reduce its capacity to deal with downside risk.

Livin

Livin is increasing investment in its existing homes, while also continuing to develop new homes, and this weakens its financial performance. Delivering this investment, in combination with the current economic uncertainty in relation to inflation and interest rates, reduces Livin’s capacity to respond to adverse events.

Onward

Onward is investing in its stock and revising its pension arrangements and as a result, interest cover is reduced. Additional investment will also be required to achieve energy efficiency targets and delivery of these objectives, in conjunction with economic uncertainty in relation to inflation and interest rates, means that Onward’s capacity to respond to adverse events is reduced.

The regulator’s assessment of Onward’s compliance with the governance elements of the Governance and Financial Viability Standard remains unchanged. Based on the evidence gained from the Stability Check, the regulator has assurance that Onward’s governance arrangements enable it to adequately control the organisation and to continue meeting its objectives.

Plymouth Community Homes (PCH)

PCH needs to manage a range of exposures including increased costs due to ongoing investment in existing homes, a greater level of long-term debt to fund its programme of development activity and exposure to wider housing market risks from its future market sale activity. These factors, together with higher inflation and interest rate pressures in the current economic environment, weaken PCH’s financial performance and its capacity to manage adverse events.

Prima Housing Group

Prima is increasing investment in its existing homes, while continuing to develop new homes, weakening its financial performance. Delivering this investment in combination with the uncertain external operating environment reduces Prima’s capacity to respond to adverse events.

Rooftop Housing Group

Rooftop is increasing investment in its existing homes to improve energy efficiency, which puts pressure on its interest cover covenant, and it needs to secure new finance in the medium term. In the current economic environment, with uncertainty in relation to wider inflation and interest rate risks, these factors place pressure on financial performance, reducing Rooftop’s capacity to respond to adverse events.

Thrive Homes

Thrive needs to manage the material risks arising from its growth strategy including an expanded sales and development programme. It is also increasing investment in its existing homes which weakens its interest cover position and the additional investment spend means Thrive will be partially reliant on income from sales to meet interest costs. In the current economic environment, with uncertainty in relation to wider inflation and interest rate risks, these factors place pressure on financial performance, reducing Thrive’s capacity to respond to adverse events.

WDH

WDH is increasing investment in its existing homes, particularly in the areas of building safety, fire safety, and energy efficiency. WDH is also continuing to develop new homes. This activity, against a backdrop of the uncertain external operating environment, specifically high inflation and social housing rents increasing at a rate below the level of inflation, reduces WDH’s financial capacity to respond to adverse events.