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Housing associations report £174m impairment charges

Housing associations are thriving in the continuing difficult housing and credit market conditions, despite 92 associations reporting impairment charges totalling £174 million for 2008/09 because the value of their homes and land has dropped, according to the Tenant Services Authority (TSA).

However, the revised impairment figure, which is up by nearly 40% on the previous quarter’s estimate, represents less than 0.5% of the associations’ total assets, and none of the associations have reported financial difficulties or are in breach of covenants in their loan agreements with lenders because of the charges, the regulator said today.

The TSA’s latest quarterly survey (April-June 2009) also reports that the number of unsold homes has continued to fall, a drop of 7% to 8,173 homes, suggesting that the property market is stabilising. Housing associations also converted less unsold low-cost home ownership (LCHO) homes to rented social housing – down from 2200 to 344 – indicating that associations have been more successful in selling their empty LCHO homes.

In other findings:
• As well as the total number of unsold homes falling in the quarter, those unsold over six months have also fallen 3% to 3,640
• Just over a third (34%) of unsold LCHO homes are currently reserved for sale
• The sector is planning asset sales including shared ownership units and right-to-buy properties of £1.4 billion over the next 12 months, up from £1.1 billion last quarter
• Associations have £4.7 billion of the £5 billion debt needed over the next 12 months already in place
• £7.1 billion of new loan facilities were arranged between April 2008-March 2009.

Clare Miller, Executive Director Risk and Assurance, said:

“Although the sector continues to cope with the fall out from the housing market slowdown, the economic situation remains finely balanced. While we have figures showing impairment charges estimated at £174 million, housing associations are demonstrating that they have the financial capacity to survive the downturn without adversely impacting on delivering services to tenants. Their actions in managing their businesses have enabled them to withstand the turbulence in the financial markets.

“In comparison to some of the commercial builders who have written down losses by up to 35% of their value, housing associations continue to demonstrate resilience. They are still selling homes, securing new investment to deliver affordable housing and remaining financial stable.”

The latest quarterly survey of housing associations who own more than 1,000 homes is now available.

Ends.

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 Tenant Services Authority (TSA) is the independent regulator for affordable housing, set to raise the standard of services through a well-governed sector that puts tenants first. It launched on 1 December 2008 and currently regulates housing associations. From spring 2010, the TSA will also regulate other providers of social housing, such as local authorities and arm’s-length management organisations.

2) The TSA is consulting with social housing tenants across five million households and their landlords to develop new standards to improve services for tenants. The discussion paper, Building a new regulatory framework, which sets out proposed standards for landlords, is available on the TSA website at www.tenantservicesauthority.org

3) Initially the TSA will operate under the legal powers of the Housing Corporation while it consults on the powers set out in the 2008 Housing and Regeneration Act.

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