Registered Social Landlords’ finances increasingly constrained in the face of tough economic conditions, says Regulator

Registered Social landlords’ (RSL) had to operate in tough economic and operating conditions in 2023/24. Most had to deal with a range of financial pressures, and as a result their finances are increasingly constrained. These are the main findings of a report published today by the Scottish Housing Regulator.

The report is the Regulator’s annual analysis of RSLs’ audited financial statements. The report for 2023/24 states that overall, liquidity remained strong and most RSLs have successfully raised the necessary funds to invest in both new and existing homes. But it also states that the weaker financial performance and record investment levels impacted RSLs’ cash and cash equivalents which have decreased for a third year in a row to £685 million.

Shaun Keenan, Assistant Director of financial regulation said:

“RSLs have been navigating one of the most challenging environments in recent history. The difficult economic and operational conditions have constrained the finances of RSLs during 2023/24. RSLs faced higher debt costs due to rising interest rates, while simultaneously making record investments in existing homes. As a result, their operating costs have risen faster than turnover, resulting in a decline in the underlying surplus and reducing financial headroom for RSLs.

“The challenges facing RSLs are set to continue. These include high interest rates, rising costs, market volatility and resource and labour challenges stemming from geo-political instability. RSLs are also facing increasing demands around housing quality and decarbonisation, all whilst working to continue to deliver homes and services for new and existing tenants and service users at a price they can afford.

“RSLs will need to continue to adjust their business plans to respond to further potential uncertainty and changing circumstances, effectively manage their resources to maintain their financial stability, and ensure that rents stay affordable for tenants.”

Read our analysis of registered social landlord audited financial statements 2023/24