While not strictly technology-related, a recent report from Moody’s Investor Services has highlighted the ‘downside risks’ facing many housing providers during 2013 and beyond. The report, titled ‘English Housing Associations: Lingering Downside Risk Despite Positive 2012 Results’, primarily considers the impact of universal credit and the likely increased risk that it will add in terms of rent collections and arrears as part of housing providers total income.
Moody’s rated the risk of loss of income as “manageable” but added that “in a more adverse scenario, structural loss of income from weak rent collection could exert downward pressure on ratings”.
The report went on to highlight how many housing providers have increased “their sales and, more broadly, non-core commercial activities to accommodate a reduction in capital grants from the UK government”, and pointed out that these revenue streams are less stable than traditional rental incomes and fluctuate more with the wider economy.
The report also said housing providers’ exposure to [stock] market volatility from floating-rate debt and hedging positions may strain their cash flows in future, depending on the robustness of their business plans, and that sudden increases in interest rates beyond levels assumed in their business plans would exert pressure on ratings.