RPs & Covid-19: What does this mean for the financial future?

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Article

28 May, 2020

The current pandemic has caused a lot of uncertainty for business and lenders alike, although now there has been some recent positive coverage regarding the finances of registered providers of social housing (RPs).

Fitch Ratings, who provide credit ratings, commentary and research, have reported that the London and Hertfordshire RP, Origin Housing and north-west based Great Places Housing Group, have both had their credit rating affirmed, in spite of the current pandemic. Origin Housing have retained their A rating and Great Places Housing Group, who have recently merged with Equity Housing Group, have maintained their A+ rating.

However, Fitch Ratings have issued the outlook as negative for both RPs, in which they believe the RPs financial profiles could weaken over the coming years; although they do not see any immediate rating impact on RPs, as they are less affected than other sectors, the negative impact could materialise due to an increase in arrears, in the short term, if many tenants lose their jobs.

Additionally, Inside Housing reports that L&Q, based in London and the south east, has seen its surplus stabilise at the end of the recent tax year, despite completions of new homes dropping by 15%.

L&Q are a large 95,000 home RP which also completed the acquisition of Trafford Housing Trust in October 2019, had their post-tax surplus confirmed at £202m, the same as the previous financial year of 2018/19.

It is further reported that Blend Funding (who are a financial bond aggregator providing competitively priced bond finance to RPs across the UK), recently achieved a benchmark 28 year bond and has raised £125m in much needed funds at a rate of 2.25% (which is 1.68% over the government cost of borrowing). The funds are going to Wakefield and District Housing and The Regenda Group, who are based in Liverpool.

Interest was seen by two new overseas investors, including a subsidiary of The Housing Finance Corporation (THFC). It is reported by THFC that RPs are seen by investors as low-risk and long-term investments.

Although there is still a lot of uncertainty, these headlines are encouraging and show that RPs nationally are in a robust position to help kick start the economy. It might be some time before we get back to normal (or the 'new' normal) but RPs can help us get there.

For more information contact Lyndsay Baxter in our Housing & Regeneration department via email or phone on 01772 220384. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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