It has been a really interesting day at the Social Housing Finance Conference. Our key takeaways at the end of the day are:
1. Consumer regulation is likely to increase and an announcement may come out on this soon
2. Health and safety should still be the key investment priority for RPs
3. On VFM, the Regulator has stressed that it isn’t enough just to show performance against the 7 key metrics. Boards should also be developing their own metrics, based on what they have said they will do, and publish their performance against these.
4. Uncertainty in the residential market remains, particularly in London and the South East. Funders are becoming wary of big increases in development programmes, and in significant private sales, and the ratings agencies are viewing development activity much more negatively.
5. The equity investors, such as Civitas, are seeking to help lease-based providers rise to the Regulator’s challenge to adapt to ensure they are financially viable moving forwards
6. When stress-testing, make sure you test to breaking point so you know where that point may be. Funders are keen to see the results of your stress-testing in detail to increase their confidence.
7. As well as stress-testing, ensure you have a robust recovery strategy in place that your Board fully understands and can be implemented quickly if needed.
8. Limited resource funding is becoming more popular. Both funding into joint venture SPVs, but also into wholly owned development entities. Clarion is aiming for a fully self-financing development entity in Latimer, with oversight from the Group. This funding is more expensive, but providers greater protection for the core assets of the Group.
9. More and more funding is available from the USA, on very attractive terms, at times with the funders accepting the currency risk.
10. Investors are very focused on ESG (environmental, social and governance) ratings and the housing sector should be singing loudly about this
11. Funding covenants - try to keep these minimal and standardise across your funders where possible.
Some really good strategic and practical advice for delegates, which reflects what we are hearing from our RP clients. Please do get in touch with us if you would like to discuss any of these issues in more details - we are always happy to have a chat.