A new survey by audit, tax and consulting firm RSM has revealed that almost one in five social housing providers are planning job cuts in the coming year, and only three in five are planning salary increases – a reduction of 36 per cent versus last year.
The findings from RSM’s annual health of the sector survey shed new light on how the sector is responding to financial pressures and the housing policy reforms announced in the 2015 Budget.
Despite the improving conditions in the wider UK economy, 58 per cent of social housing providers said they feel they are operating in a recessionary environment with 89 per cent stating that they will be required to make further cost savings.
Previously protected expenditure now appears to be at greater risk. Tenant services, protected by most providers in previous years, are now becoming more vulnerable, with 41 per cent of respondents saying they have reduced, or plan to reduce spending in this area, more than double 12 months ago.
In total, 62 per cent of housing providers in England said they expected more than five per cent of their housing stock to be affected by the new voluntary Right to Buy regime. However, fewer than half of respondents (44 per cent) expected each sold home to be replaced on a one for one basis, heightening fears that there will be an overall reduction in rented housing stock.
The survey also provides some evidence of a change in focus among providers away from developing homes for social rent in favour of low cost ownership and market rental homes. In total, 55 per cent of respondents said they have or were considering developing homes for market rent, while 43 per cent said they have or were considering reducing plans for social rental homes.
There was also a degree of pessimism among respondents about the future of the sector with more than three quarters (76 per cent) saying that they feared there were more provider failures to come. Faced with the current policy and financial pressures, more than a quarter indicated that they would consider mergers or strategic alliances.
Gary Moreton, RSM’s Head of Social Housing said
‘Last year, the sector received a series of shocks as the government announced further reforms to welfare and housing policy. Faced with these challenges, the social housing sector appears to have been remarkably agile and willing to take the difficult operational decisions required to ensure future sustainability. We have also seen a marked change in the willingness of providers to consider new strategic options that prior to now would have been discounted.’
The survey of traditional housing associations, LSVTs and ALMOs was conducted in February 2016 and represents the views and opinions of 131 respondents from across England, Wales and Scotland. More than three quarters of the sample own and manage more than 2,500 units.