Viability risks have intensified over the past year for landlords, according to the Regulator of Social Housing (RSH), which found that some individuals have “very little margin for error.”
The regulator made the conclusion in its annual sector risk profile report.
In its findings, the RSH revealed that landlords are increasingly being squeezed between the requirement to provide better housing against a backdrop of higher borrowing costs.
The RSH expects these pressures to persist for the foreseeable future — many of the costs they face involve essential safety work, like cladding on high-rise buildings.
For the first time since 2009, the cost of servicing debt for private registered providers (PRPs) exceeded net earnings last year. In aggregate terms, forecast sector interest cover over the next five years is just 111%.
Now, the RSH expects more individual landlords to fail to meet outcomes and to consider their options as a result — the regulator noted that several have already accepted they are no longer financially viable and have merged with others as a result.
Commenting on the findings, Fiona MacGregor, CEO at the RSH, applauded the resilience of some but recognised the challenging situation of others.
“There is very little margin for error, and it is absolutely critical that landlords are well run, with robust systems for identifying and mitigating risks,” said Fiona.
“Boards must maintain a real clarity of purpose to successfully navigate these competing demands while remaining financially viable.”
