24 February 2010
Housing associations have emerged from the credit crunch in better condition than the wider economy but remain exposed to further fluctuations in the property market, a report published today concludes.
Not only did associations avoid major long-term reductions in the value of assets, but they continue to offer more secure returns to investors than the property sector as a whole, says the Tenant Services Authority study.
The impact of the credit crunch on housing associations compared the performance of registered social landlords since 2005 with those of commercial property companies and private firms in other sectors.
While property companies made substantial write-downs to their assets, mainly due to falling land prices, RSL write-downs represented just 0.1% of balance sheet values. And while profits fell in the wider economy, RSLs were protected by rising demand for housing, the security of rent income and their ability to switch properties between tenures to maintain cash flow.
‘Compared with the wider economy and the property sector in particular, the RSL sector has experienced less instability and maintained steady growth,’ the report says.
Clare Miller, TSA executive director for risk and assurance, says RSLs have come through ‘the most testing times in living memory’. But she stresses there is no room for complacency – especially where RSLs operate outside social housing.
‘Associations are much more exposed to the vagaries of the property market than they were a few years ago,’ she adds. ‘Commercial development and building properties for outright sale will continue to present extra risk.’
A second TSA study, also published this week, suggested RSLs were overcoming the problems they faced 12 months ago in selling homes for low-cost ownership. During the three months to January, the number of unsold properties fell by 16% to 5,596.
Government figures published on February 23 showed the number of homeowners in England was falling, with more people renting from private landlords. According to the latest English Housing Survey, 14.6 million or 68% of households were owner occupiers in 2008/09 compared with 14.8 million (71%) in 2005. Just over 3 million rent privately compared with 2.1 million in 2001.
Housing minister John Healey this week announced grants worth almost £500m to RSLs and other developers for the construction of 5,000 social rented homes and 3,000 for low-cost sale through HomeBuy schemes.
