There’s no hiding from the fact that 2015 has been a challenging year for the sector, with RPs across the country having been dealt a number of heavy blows over the course of the year. Rather than feeling sorry for themselves, the social housing sector has shown its resilience and ability to adapt through amending strategy and business plans. And it’s now more important than ever that the sector remains agile and ready to react for future challenges and opportunities.
The UK economy is steadily improving and for many, the recession is starting to feel like something of the past. The social housing sector doesn’t share this view though, with many RPs (58 per cent) still feeling like they are operating within a recessionary environment. The changes enforced on the sector over the last 12 months have certainly left their mark and three quarters of the sector think it will take at least two years for the situation to improve.
With nearly all RPs (89 per cent) having to make further cost savings and an increase in those making redundancies, the sector is certainly suffering the effects many would associate with a struggling economy. With salary increases starting to slow and many within the sector putting a freeze on recruitment, RPs are having to make some difficult decisions to protect and maintain their viability. Even tenant services, protected by most RPs in previous years, are now becoming more vulnerable, with 41 per cent of respondents in our latest survey having made or considering making reductions in this area, more than double that 12 months ago.
Welfare reform is yet to really have the negative impact on the sector that many have been expecting, but there is real concern that further changes to be implemented during 2016 will cause problems for the sector. 82 per cent of respondents expect to see a significant impact on their organisation and with further roll out of universal credit in 2016, many RPs are predicting a significant increase in rent arrears and bad debts.
62 per cent of English providers are expecting more than five per cent of their housing stock to be affected by the new voluntary Right to Buy (RTB) regime. The government will welcome an increase in home ownership, but are likely to be concerned that only 44 per cent of respondents are expecting a one-for-one replacement of future RTB sales which, if comes true, would leave the sector with a reduction in rented housing stock.
The relationship between RPs and the banks remain strong, but the sector continues to seek alternative sources to fund their work. Corporate bonds remain the most popular choice amongst providers. Many within the sector do continue to actively pursue commercial opportunities to help fund social housing projects, but 38 per cent of RPs are focusing their attention on core activity, which is of little surprise given all the changes within the sector.
With only a quarter of respondents in our latest survey seeing future grant as worthwhile, it’s unsurprising to see a slight increase this year in the number of RPs expecting to reduce their development plans after 2016 (33 per cent compared with 20 per cent in 2015). With many RPs’ development plans unaffected and a third of respondents expecting to increase development after 2016, there remains a real commitment from the sector to build new homes. The government will be happy with this outcome, and doubly pleased to see that almost half (49 per cent) of RPs are expecting to fund their development plans using internal resources.
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