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Housing associations outperform the wider property sector in credit crunch.

Housing associations in England have come through the worst credit crunch in living memory, outperforming commercial property companies and the wider economy, with their financial health secure and revenues continuing to grow.

The Tenant Services Authority’s (TSA) new study, The Impact of the Credit Crunch on Housing Associations, uses data from housing associations, property companies and commercial businesses from outside the housing sector to explore the effects of the economic downturn.

Key study findings include:

• the housing association sector, which is responsible for 2.4 million homes for social housing tenants, has maintained a stable performance amid significant fluctuations in the wider economy
• associations offer a more secure return to investors over a long time period than is available elsewhere
• associations responded quickly to the challenges of the economic downturn by taking prompt management action
• housing associations outperformed the wider economy and avoided substantial permanent reductions in asset values
• the greater certainty of income in the housing association sector means that it has been able to operate at much finer margins compared to both the property and non-property sectors.

Clare Miller, Executive Director Risk and Assurance said, “Housing associations have managed to maintain a stable performance through the most testing economic times in living memory. In a year in which there has been much debate about the new regulatory arrangements for social housing, we’ve played a full part in helping associations get through these challenges. We have maintained confidence in the regulated sector and we have seen an increase in lending to housing associations in a difficult market. Ensuring the continued financial stability of the sector remains a key objective.

“However, there is absolutely no room for complacency. Associations are much more exposed to the vagaries of the property market than they were a few years ago. This market continues to face considerable uncertainty; commercial development and building properties for outright sale will continue to present extra risk.

"While we have seen some weakening of the sector balance sheet in terms of gradually increasing leverage and decreasing margins, the sector has avoided the worst of the crash in property values. There continues to be substantial potential for further expansion.”

Meanwhile, in other figures out today, the TSA has indicated that housing providers continue to be resilient and attract investment to build new homes. The latest quarterly survey (October 2009-January 2010) shows that:

• the number of unsold low cost homeownership properties has continued to fall, dropping a further 16%, which suggests that the property market is improving. Over one third of these unsold homes are reserved for sale
• £455 million of sales receipts were generated, and sales worth £1.3 billion are forecast over the next 12 months
• associations have 92% of the forecast £5 billion debt needed over the next 12 months already in place
• loans worth £58 billion are in place, of which £45 billion is drawn
• the sector continues to be attractive to funders with new facilities of £2 billion arranged in 2009-10 so far, including £815 million raised in bonds.

For media enquiries, contact the press office on 020 7393 2094/2118/2115 or by email pressoffice@tsa.gsx.gov.uk.

Notes to editors:
1) The study published today, The Impact of the Credit Crunch on Housing Associations, looked at information over the last five years for a representative sample of housing associations and similar data available in the public domain for small samples of property-based companies and non-property companies.

2) The Tenant Services Authority (TSA) is the independent regulator for social housing in England. Its formal name is The Office for Tenants and Social Landlords. It was set up on 1 December 2008 and currently regulates almost 1,700 housing associations. Its new regulatory powers come into force on 1 April 2010, when it will regulate other providers of social housing, such as 250 co-operatives, 187 local authority landlords and 69 arm’s-length management organisations who manage homes on behalf of 65 local authorities in England.

3) The TSA works with social housing landlords and tenants to improve the standard of services for more than eight million people in over four million homes. New standards for landlords will come into effect from 1 April 2010.