UK social housing regulator warns landlords to manage rising risks

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UK social housing risks warning

Highlights

Regulator of Social Housing's Sector Risk Profile warns landlords to balance major investments in existing homes with building new social housing amid rising risks.
Landlords face intensified financial pressures due to higher borrowing costs, low interest cover, refinancing demands and inflation, despite early signs of stabilising financial performance.
Report urges sector focus on value for money, operational resilience and strong governance, noting property sales offer only short-term relief but decrease social housing supply.

Sector risk report sets out key pressures

As reported by GOV.UK, the Regulator of Social Housing's latest Sector Risk Profile says landlords must manage growing financial and operational risks if they are to balance major investment in existing homes with the need to build new social housing.

The report describes an increasingly complex operating environment for landlords as they work to improve the quality, safety and energy efficiency of existing homes while responding to significant demand for new affordable housing. It says further substantial investment is needed to meet building safety requirements, improve stock condition and adapt to Awaab's Law, the Decent Homes Standard and Minimum Energy Efficiency Standards, or MEES.

At the same time, social landlords are expected to play a key role in increasing the supply of affordable homes. For some organisations, that creates fresh development challenges, while others are weighing how to expand delivery on a sustainable basis and manage associated risks, including innovative financing models.

Financial resilience and governance in focus

The report says these pressures are being intensified by a difficult economic environment. Although there are signs that financial performance may be stabilising, many landlords still operate with historically low levels of interest cover and face higher borrowing costs, refinancing pressures and continuing inflation risks.

It also highlights cyber security, data protection and operational resilience as important areas of risk as organisations become more dependent on digital systems and technology. The regulator says providers should focus on value for money and efficient operations to maximise their ability to invest.

RSH Chief Executive Jonathan Walters says social landlords are operating in a challenging and fast-changing environment and must keep investing in existing homes while supporting delivery of the new social housing the country needs. He says strong governance, clear strategic direction and evidence-based decision-making are essential, while the report adds that selling existing properties may release resources in the short term but can reduce the availability of social homes and should not be treated as a long-term solution.

In our earlier article on the Bank of England’s call for banks to strengthen cyber resilience, we explained why lenders are being urged to plan for more severe technology failures as AI increases the scale and complexity of cyber attacks. We noted the push for “bare metal” recovery options and end-to-end recovery planning to keep critical services running even if primary systems are compromised.

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