Financial resilience of RSLs is diminishing						

					

											
25 March 2024

									

			

					

	




    



    
        


            

                


                    

                        
The latest report on the financial heath of the RSL sector from the Scottish Housing Regulator provides an overview of the aggregated, Audited Financial Statements (AFS) returns for the year to 31 March 2023 submitted to us by Registered Social Landlords (RSLs).


The level of economic volatility and uncertainty facing RSLs and their tenants over the reporting period remained high and several key factors continued to impact RSLs’ financial performance during 2022/23, including:


    

  • sustained high inflation and rising interest rates. Consumer Price Index (CPI) inflation peaked at 11.1% in October 2022 whilst the Bank of England increased its base rate from 0.75% in April 2022 to 4.25% at the end of March 2023;
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  • the impact of resource shortages on material and labour costs exacerbated by the war in the Ukraine and global shipping disruptions;
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  • maintenance contractors and house builders reporting financial viability issues which in some situations resulted in contractors going into administration;
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  • rent increases below the prevailing CPI inflation rate of 9%, with some RSLs not increasing rents in recognition of the financial hardship that was a reality for many of their tenants.
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Key stats include costs rising faster than revenues, voids losses falling but still above pre pandemic levels and bad debt rising. Arrears levels have, however fallen, so not all bad news but there is no avoiding the fact that the overall resilience of the sector has reduced. You can read the full report here.