Regulator identifies rising rents as potential risk to future financial stability
Rising rent levels are a potential risk to housing associations if tenants’ incomes fail to increase at the same pace, the Scottish Housing Regulator has warned.
In its annual analysis of the finances of registered social landlords (RSLs) the regulator found that most RSLs are continuing to manage their resources to ensure their financial wellbeing and that overall the sector continues to enjoy good financial health.
The annual turnover of the sector in 2014-15 had increased by 4.2 per cent compared to 2013-14, from £1.3 million to £1.4m, while the aggregate net surplus at almost £124m has increased by 23 per cent and RSLs generated more than £3 from operations for each £1 paid in interest for the fourth successive year.
But looking to the future the regulator has warned that most RSLs are continuing to plan above inflation increases in rents and this may present a risk to the financial health of some RSLs.
Ian Brennan, director of regulation (finance & risk), said: “Once again the aggregate accounts show a healthy surplus and a strong cash position. We also see that rents are rising in real terms and that most RSLs are planning to continue above inflation increases for the next five years. We are aware that many RSLs are making considerable efforts to ensure that rents remain affordable for tenants and all RSLs need to set rents in a way that places affordability for tenants at the centre of their planning.”