Reactive maintenance spend increases 15% year-on-year
Registered social landlords (RSLs) in Scotland have seen their reactive maintenance costs increase by 15% year-on-year.
Analysis of landlords ’finances by the Scottish Housing Regulator (SHR) reveals combined planned and reactive maintenance spend in the Scottish sector increased 10.7% from £425.9m in 2022/23 to £471.53m in 2023/24.
Within this reactive mainteance spend rose to £295.51 million.
This helped push up operating costs on affordable lettings by 8.23% to £1.51bn.
The report shows management and maintenance administration costs increased by 6.22% to £473.6 million while the direct maintenance cost per unit has increased by 8.8% to £1,479. The sector’s total spend on management and mainteance in 2023/24 was £945m, which SHR confirmed is a ‘record’, although the report did not contain a comparative figure for the previous year.
The SHR said the increased spend illustrates challenges faced by social landlrods in “tough economic and operating conditions”.
The SHR found that although the aggregate financial position of RSLs weakened, “most are still managing the financial pressures but with increasingly constrained finances.”
The aggregated figure for the cash and cash equivalents of RSLs has decreased for the fifth year running to £685m, but investment in new and existing homes continued, with net housing assets up by 5.5% from the year before to £16.52bn.
The findings also identified that affordable lettings turnover rose by 5.89% to £1.86bn, making up 88.29% of total turnover, which was £2.1bn after a 5.89% increase from 2022/23.
However, Shaun Keenan, assistant director of financial regulation highlighted that “RSLs have been navigating one of the most challenging environments in recent history”, including rising operating costs, which increased 7.07% to £1.75bn as well as a £9.09m decrease in the value of housing properties since the last report.
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Keenan continued: “RSLs faced higher debt costs due to rising interest rates, while simultaneously making record investments in existing homes. As a result, their operating costs have risen faster than turnover, resulting in a decline in the underlying surplus and reducing financial headroom for RSLs.
“The challenges facing RSLs are set to continue. These include high interest rates, rising costs, market volatility and resource and labour challenges stemming from geo-political instability. RSLs are also facing increasing demands around housing quality and decarbonisation, all whilst working to continue to deliver homes and services for new and existing tenants and service users at a price they can afford.
“RSLs will need to continue to adjust their business plans to respond to further potential uncertainty and changing circumstances, effectively manage their resources to maintain their financial stability, and ensure that rents stay affordable for tenants.”
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