The Regulator of Social Housing (RSH) has published its Value for Money Metrics and Reporting 2021 report. The report is an annex to the RSH’s 2021 Global Accounts which were published in December 2021, and which aggregated the financial performance of 209 large provider groups which own or manage at least 1,000 social homes, for financial years ending in the year to 31 March 2021.
The Value for Money report says that “The impact of the COVID-19 pandemic posed a significant challenge to the sector over the past year. The disruption to business operations caused by the lockdown and subsequent restrictions resulted in delays to capital investment programmes as well as planned and responsive repairs to existing social housing stock”. Reinvestment in existing and new social housing stock fell from 7.6% in 2020 to 5.7% in 2021. Similarly new supply of social and non-social housing fell from 1.8% to 1.4% and from 0.31% to 0.22% respectively.
Gearing fell marginally from 47.7% in 2020 to 47.2% in 2021, as the impact of additional debt taken on was more than compensated for by the impact of higher property valuations.
Interest cover improved significantly from 138% in 2020 to 151% in 2021, as providers were once again permitted to increase social housing rents by CPI + 1%, and also spent less on maintenance and major repairs, causing headline social housing costs to fall from £4.25k per unit in 2020 to £4.15k per unit in 2021.
The impact of increased rents and reduced maintenance and major repair costs could also be seen in improved operating margins, up from 27.8% to 28.3% and from 22.1% to 22.3% respectively on social housing and overall operations. However the return on capital employed fell from 3.2% in 2020 to 3.1% in 2021, due to a 0.1% increase in operating surplus being more than offset by a 2.7% increase total asset values less liabilities.
The RSH emphasises that providers must “strengthen reporting on performance, particularly about stock quality and service delivery, to allow tenants, investors and other stakeholders to hold providers to account”.