Social housing sector finances remain stable
The latest quarterly survey of the social housing sector published by the Homes and Communities Agency (HCA) reveals it is in sound financial health.According to the report, the sector continues to have adequate access to finance and over 90 per cent of providers have sufficient debt facilities to last 12 months or more. However, the HCA says financial and housing market risks could rise in the medium term.In the year to March, new facilities amounted to £5.6 billion, which is similar to last year's figure. Half of this funding was arranged on capital markets, while bank loans represent over three quarters of total facilities.The HCA says management of the existing portfolio has been solid, with a slight easing of market-to-market exposure on derivative instruments during the quarter. A degree of certainty over future interest costs is maintained by the fact that the sector fixes the interest rate payable on around two thirds of its debt. While immediate refinancing risk is low, with only 2.5 per cent of debt due to be repaid within the next two years, the sector has seen an increase in the level of debt repayable in the next two to five years, partly due to shorter term bank lending.An increase in completions and acquisitions in the quarter led to a 20 per cent increase in the number of affordable home ownership (AHO) properties. The number of unsold AHO properties remains below the March 2013 level but could increase, as the level of sales achieved is more than 30 per cent below the run rate of completions and acquisitions indicated by providers' pipeline forecasts.Jonathan Walters, deputy director of strategy and performance, said providers have increasingly been accessing capital markets for funding."Taking on private finance is one of the most important decisions that boards need to make," he added. "The regulator expects them to do this in a robust and considered manner and in a way that the whole board can understand the trade-offs and risks associated with a particular deal. "Appropriate independent, professional advice should be taken, and recommendations understood and critically appraised."
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