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Finance in the Scottish housing sector



The 19th edition of Harper Macleod’s National Housing Conference played an important part in setting out the role of social housing in the country’s transition from the social and economic impacts of the pandemic.

Over 5 days, our legal specialists were joined by a selection of industry and academic speakers. If you missed any sessions or would like to revisit what happened on particular days all the content is now available on-demand.

Day 4 of our National Housing Conference 2021 featured discussion from our panel on the challenges of the past 12 months from a finance perspective. Key priorities over the next 12 months were also discussed by the panel.

The sector faced a number of challenges given the restrictions put in place by the national lockdowns. Despite this, the sector remained in a strong position and many of the initial fears were not realised. Funding options that were available pre-COVID are still available and confidence of funders in the sector still remains high.

Reflections from the past 12 months

Michael explained that the sector had faced operational challenges at the start of the pandemic. Despite this, sector funding was seen by lenders as a safe haven in comparison to other real estate funding. After the initial freeze in the market at the start of the lockdown, the sector was pleasantly surprised to see that funders did not view housing associations any differently from a credit perspective as they had pre-COVID.

Michael’s key reflections from the past year included:

  • The two main lessons were the importance of liquidity and flexibility over having long term debt. This became more apparent when Associations looked at the deferral of expenditure programmes. Much more detailed forecasts of spending will need to be carried out by boards of housing associations going forward.
  • On paper, many housing associations appeared to have outperformed when looking at their business plans. However, this is likely to have been artificial outperformance and regular reviewing of business plans and expenditure for the forthcoming years will be essential.
  • Timing of spending rather than the amount spent is critical to funders.
  • Fewer financial options may be available when the sector is looking to complete delayed property development projects.
  • Running business plans regularly is critical and will continue to be so over the next few years.

Nick commented that Link, being the second largest Scottish housing association landlord, had faced some real challenges over the past 12 months. He did, however, note that some initial fears had not materialised.

Nick’s key reflections from the last year included:

  • Rent arrears were less than the previous 12 months. This result was a surprising one but is likely due to the commitment and dedication of the housing teams supporting their tenants.
  • A decrease in rental income due to delays in finishing new housing developments.
  • A reduction in spending as a result of not being able to carry out normal repairing schedules.
  • The furlough scheme has been used by some housing associations to protect as many jobs as possible.

Despite some difficulties suffered by the sector, the panel agreed that it is in good shape moving into a new financial year.

Looking forward

The panel discussed the possible impact of future lockdowns and that these may be localised rather than national lockdowns. The sector will need to forward plan to ensure that areas such as repair schedules are not adversely impacted. Flexibility in these schedules to allow for changes at short notice will be important. A one size fits all approach will likely not work. 

Financial assistance such as the furlough scheme ending may lead to job losses for tenants and increased rent arrears for housing associations. However, the panel noted that it may be some months before the impact of this is felt and ensuring that support is available to tenants will be crucial.

Given the levels of financial assistance provided by the Government, the panel discussed the possible impact on increases in inflation, commodities, utility bills and interest rates. Future planning will be required by the sector in anticipation of any impact. In particular, with contracts that are not pre-agreed fixed term contracts, as costs will likely increase.

Watch the session and find out more

To find out more about the National Housing Conference, and watch this session visit our on-demand content.

You can also catch up on the other days which focused on:

Get in touch – we’re here to help

Please contact a member of the team if you have any questions about the issues touched upon in this article.


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Call us for free on 0330 159 5555 or complete our online form below to submit your enquiry or arrange a call back.