The Financial State of the Sector FY18/19 is presented by Vantage and the Performance Improvement Club for the third year running. The report was produced in response to a demand for a more timely and insightful analysis of the sectors financial performance and of the Global Accounts data. At a time of unprecedented change in the sector, with a strong focus on delivering Value for Money (VfM) as well as new homes, the report provides invaluable strategic intelligence at a glance.
Our look at the financial position of the leading Registered Providers (RPs) has shown a year of reduced margins, pressure to build more houses and an ever-increasing cost of repairs and maintenance.
Headline takeaways from the report include:
- Decreasing margins: in the third year of rent reductions, the sector has seen a drop in operating margins from an average social housing operating margin of 34.5% in FY17/18 down to 32.1% in FY18/19. Total turnover has increased by just over 1.8% to £17.10BN.
- Increased employment costs: the year saw a continued rise in staff costs, up by 1.5% but the number of staff employed has fallen by 1.9%. Some of this will be linked to agreed annual inflationary pay rises but this supports our view that RPs are having to pay a premium to attract the right staff.
- Room for improvement: overall spend on repairs and maintenance has increased by 6.8%, including capitalised costs. This reflects a number of factors including greater and accelerated spending on building and resident safety. A proposed building safety regulator will put more pressure on R&M budgets. However the sector as a whole can achieve much greater efficiencies and yield multi-million-pound savings per annum.
The top 123 RPs contained within this report accounts for 92% of the total turnover of the sector, equating to just over £17bn and covers a range of key areas including turnover, void losses, operating margins, lettings, operating costs and the Regulators RSH metrics.
Headline numbers from the report show:
- £17.10 billion total turnover
- Employment Costs rose to £3.55 billion, up 2.3% on last year,
- Number of Staff members decreased by 1.9% to 95,248
- Average debt throughout the period was £63.60 billion, up 2.4%
- Headline Social Housing Cost per Unit for was £3,870 compared to £3,727 last year.
Download the full report here.
For more information about Vantage contact info@yourvantage.co.uk or call 0151 342 5989
“We believe this report to be ground-breaking: interrogating the figures sooner, helping our clients to understand their relative performance, plan ahead and use the 2018/19 data to inform their planning. Whilst financial viability has weakened, the sector still remains in a good position to deliver on the governments key housing priorities. I am certain there are still further significant efficiencies and economies to be achieved, across all R&M capital and revenue investment categories, within management costs and especially in the cost of building new homes.
The impact of Brexit, and any further changes in government policy will have to be closely monitored and RPs will need to adapt to these changes going forward. Despite this, I am confident that RPs will rise to these challenges and continue to provide excellent services to their customers.”
“We use this report to gain timely insight into the sector’s financial direction of travel. We can compare the global metrics to our own financial results and plans to help our Board understand how our performance aligns with our strategic goals. This is an important element of our value for money narrative.”