Social housing sector remains attractive to investors

Social housing sector remains attractive to investors

The social housing sector remains attractive to lenders, with significant amounts of cash available for building work, according to the latest quarterly survey published by the Homes and Communities Agency.

The regulator monitors and reports on the financial health of the sector as part of a robust approach to protecting social housing assets and helping ensure providers’ contribution to new housing supply.

The 2014 to 2015 Q3 survey reports that the sector’s borrowing facilities total £74.5 billion – of which 75% is bank loans – with £12.3 billion of undrawn facilities. The vast majority of providers anticipate that debt facilities are sufficient for more than 12 months.

Jonathan Walters, Deputy Director of Regulation at the HCA, said: “We continue to monitor the sector’s financial health, and that of individual providers, closely. Overall, the sector remains financially strong and the sector’s position on meeting mark-to-market exposures, for example, remains positive.

However, providers will be aware that economic conditions remain relatively favourable with low interest rates and increasing sales values, and should monitor their business plan assumptions accordingly. We have recently seen the swap curve fall below 2012 levels; a development that we will continue to monitor. Providers should do the same.

The regulator’s message remains that the sector is increasingly complex and providers must have a firm grip on the risks they face, with appropriate management strategies in place to mitigate those risks.”