Garry Coutts: SHR’s latest meeting with systemically important landlords

Gary Coutts

We welcomed everyone to the second of two gatherings this year of the systemically important (SI) landlord group. This is one of the three standing groups of senior people from Registered Social Landlords (RSLs) we meet with regularly to discuss important issues in social housing to help us understand the challenges faced by those we regulate.

We refer to a small number of RSLs as Systemically Important (SI) because of their stock size, turnover, or level of debt, or because of their significance within their area of operation.

I opened the meeting with some introductions, given my role as newly appointed chair, attending my first SI Forum. I shared some insights into my background in housing and experience as a non-executive director and I stressed my commitment to constructive dialogue and close collaboration with the sector.

We then provided an overview of the Housing Bill currently progressing through Parliament noting key elements for RSLs and tenants, homeless people and, also for SHR. The Group noted that further detail will follow though, for example, the development of secondary legislation and regulations but that it was important for landlords to be aware of the implications over the next few months.

The group discussed the increasing responsibilities placed on landlords. Some members raising concerns that these changes could alter the relationship between RSLs and tenants. In particular, there were concerns that these new responsibilities for landlords could be construed as potentially intrusive. It was also recognised though that there would be an expansion of rights for tenants. There was a strong view that conversations are needed about social housing’s role in addressing the housing emergency. Members agreed that it would be helpful to invite representatives from the Scottish Government to a future forum.

The group then discussed the housing emergency action plan and the actions the Scottish Government were taking. The group also highlighted the importance of clear, actionable plans. Local authorities are under pressure, and the group agreed that a well-thought-out, strategic approach is needed.

Some of the issues raised by the group included the need to recognise that in some areas there were economic factors driving housing challenges and not just the response to homelessness. Members agreed that development costs and uncertainty around net zero standards as well as emerging issues such as RAAC and cladding are all challenging factors.

The group recognised the value of SHR’s thematic work on development. Some members called for more regenerative funding for existing stock rather than just for new builds, although re-iterated that new build funding was welcome.

Two of our assistant directors, John Jellema and Shaun Keenan, then outlined our approach to the next annual risk assessment. Focus areas for the risk assessment include service delivery performance, homelessness services, governance and financial health, development plans, tenant and resident safety and stock quality.

Discussion highlighted ongoing challenges with development costs, grant funding, and stock quality issues such as cladding and RAAC. Shaun noted the aggregate financial position of RSLs has stabilised; however, financial headroom remains significantly constrained.  Our engagement with individual RSLs on financial matters remains significant l, reflecting sustained pressures across the sector.

Shaun also noted two new lenders joined the sector in 2024/25, alongside increased commitments from several existing funders. This ongoing investment demonstrates confidence in RSLs and in Scotland’s regulatory framework, reinforcing RSLs as an attractive option for both traditional banks and capital market investors.

Some members expressed concerns that inconsistencies in financial projections could create an overly optimistic view of sector finances. Shaun clarified that any positive outlook reflects a slight improvement in aggregated results from the previous year’s AFS returns, which report actual figures rather than projections.

Some of the group commented about the sustainability of high homelessness allocations and the risk that it could have an impact on balanced communities.

The group also discussed some topics including rent affordability versus rising costs, maintenance costs for older properties, the need for stronger business planning guidance and the broader housing investment context and potential future role of for-profit social landlords. It was noted that this last issue would require a change in legislation.

The group discussed the importance of tenant and resident safety including the forthcoming introduction of Awaab’s Law in Scotland. We continue to engage with landlords on safety issues, including electrical and fire safety, and minimum standards at gypsy traveller sites.

As we closed the forum with the opportunity for any other questions, one landlord raised concerns about increasing aggression and violence toward staff. This experience was shared by other RSLs and it was agreed that while this is not yet a crisis, a sector-wide response is needed before it escalates.