Strong strategic leadership key to overcoming risks, says RSH
The Regulator of Social Housing has published its latest Sector Risk Profile report
RSH has urged social housing boards and councillors to provide strong strategic leadership and ensure they have the information and insight needed to make difficult decisions about competing priorities.
RSH’s Sector Risk Profile report, published today, warned landlords must manage growing financial and operational risks to be able to balance major investment in existing homes with the need to build new social housing.
The report highlighted the increasingly complex operating environment facing landlords as they work to improve the quality, safety and energy efficiency of existing homes while helping to address significant demand for new affordable housing.
Landlords continue to invest heavily in tenants’ existing homes, but further substantial investment will be required to meet building safety requirements, improve stock condition and adapt to requirements of Awaab’s Law, the Decent Homes Standard and Minimum Energy Efficiency Standards (MEES).
At the same time, social landlords are expected to play a key role in increasing supply of affordable homes. For some organisations this presents new development challenges, while others face decisions about how to expand delivery sustainably and manage associate risks including innovative financing models.
The report warns that these pressures are being compounded by a difficult economic environment.
Although there are signs that financial performance may be stabilising, many landlords continue to operate with historically low levels of interest cover and face increased borrowing costs, refinancing pressures and ongoing inflationary risks.
The report also highlights the importance of managing cyber security, data protection and operation resilience risks as organisations becoming increasingly reliant on digital systems and technology.
RSH Chief Executive Jonathan Walters said: “Social landlords are operating in a challenging and fast-changing environment. They must continue investing in existing homes to ensure tenants have safe, decent and well-managed homes, while also helping to deliver the new social housing the country needs.
“There are no easy choices. Landlords must carefully balance competing priorities, manage risks effectively and ensure their organisations remain financially resilient.
“Strong governance, a clear strategic direction and the need to take a longer-term view are essential. Boards and councillors must be ready to make evidence-based decisions that support their fundamental purpose of delivering more and better social homes for current and future tenants.”
The report emphasises that landlords should focus on achieving value for money and operating as efficiently as possible to maximise their capacity to invest.
While some organisations are considering the disposal of existing properties to release resources, the report warns that this can reduce the availability of social homes and should not be relied upon as a long-term solution.
And while the sector faces significant challenges, organisations that remain focused on their purpose, maintain a clear strategic direction and adapt effectively to changing circumstances will be better placed to deliver safe homes and meet future housing need.