Our risk assessment of social landlords: summary outcomes - March 2025

For both local authorities and RSLs, we monitor, assess, report and intervene (as appropriate) on their performance of housing activities. This means how they deliver housing services to:

• tenants;
• people who are homeless;
• Gypsy/Travellers; and
• factored owners.   

For RSLs, we also monitor, assess, report and intervene (as appropriate) on their governance and financial wellbeing. We do not have this role with local authorities. 

We publish information on our assessment and planned engagement in an engagement plan for each social landlord, and we publish a regulatory status for every RSL. The regulatory status shows whether an RSL complies with regulatory requirements, is non-compliant and working towards compliance or where the landlord is non-compliant and we are taking statutory action. We also highlight where a regulatory status is under review. 

The engagement plan for each landlord is available in our Landlord Directory. You can find out more about our risk assessment process, how we regulate and regulatory status in our Regulatory Framework. 

Inflation is now much lower than when it peaked at 11.1% in October 2022.  Much of the inflation then was caused by accelerating food and energy prices.  The most recent figures show inflation rising from 2.5% in December 2024 to 3% in January 2025 – which was the fastest pace in 10 months – before falling back to 2.8% in February 2025.  Annual food price inflation is running higher at around 4.5%.  Energy prices are predicted to rise in April 2025 and council tax will also increase from April 2025 with the average Band D property rising by between 6% and over 15% depending on the local authority area.         

Cost of living challenges therefore remain for many households especially those on lower incomes. The Bank of England forecasts inflation to peak at 3.7% in the third quarter of this year though the path of inflation is unclear in the short to medium term because of:

• significant uncertainty in the scale of international trade tariffs which could raise the price of imported goods and services;
• the inflationary impact of rising costs on many employers because of increases in national insurance employer contributions and the national minimum wage; and
• continuing geopolitical instability and uncertainty in the Middle East and Ukraine which could further affect energy prices.

Despite rising inflation, the Bank of England cut interest rates in February to 4.5% from 4.75% in January.  They remained at 4.5% in March.  This is the lowest base rate since June 2023 but is still significantly higher than it was for much of the last decade.  The Bank’s monetary policy committee cut rates in February partly because of anticipated low or zero economic growth in the short to medium term, and because it judges that inflation will return to the 2% target in 2027.  The path of interest rates is uncertain though the Bank of England may be reluctant to cut the rate further given the inflation dynamic or is unlikely to do so aggressively.  

Lower interest rates are good news for social landlords that have variable rate borrowings and/or who undertake new borrowing.  However, as our recent report on RSL finances shows, RSLs operated in tough economic and operating conditions in 2023/24.  Liquidity remained strong and most RSLs have successfully raised the necessary funds to invest in both new and existing homes. But the report also shows weaker financial performance and that record investment levels impacted RSLs’ cash and cash equivalents which have decreased for a third year in a row to £685 million.  RSLs are also facing increasing demands around housing quality and decarbonisation, all whilst working to continue to deliver homes and services for new and existing tenants and service users at a price they can afford.   

Overall, RSLs are operating in a challenging environment that is unlikely to improve in the short term.  

Regulatory status  

We publish an engagement plan with a regulatory status for each RSL to provide a single view of the RSL’s governance, financial well-being and performance.  

This year:

• 132 RSLs are Compliant, meaning they meet regulatory requirements, including the Standards of Governance and Financial Management, with an additional one RSL under review (129 last year with an additional three under review); and 
• Five RSLs are Non-compliant – working towards compliance, meaning they do not meet regulatory requirements including the Standards of Governance and Financial Management, and are working to achieve compliance (seven last year were working towards compliance).  

We are not currently using statutory powers in any RSLs.  We did not use statutory powers last year. 

The main reasons for our engagement with RSLs 

We are engaging with:

• Four RSLs about tenant and resident safety (five last year);
• 18 RSLs about governance (18 last year) of which five are about planned organisational changes or transfers of engagements (eight last year);
• 29 RSLs about finance (32 last year);
• Nine RSLs about service quality (five last year);
• Eight RSLs about the quality of homes they provide (10 last year); 
• 25 RSLs about development (31 last year); and
• 25 RSLs because they are systemically important (24 last year).  

We are engaging with a number of RSLs for more than one reason.  

The main reasons for our engagement with local authorities  

Given that some local authorities are now at, or are approaching, systemic failure impacting the delivery of services to homeless people and households, during 2025/26, we will speak again to every local authority to gather further information and assurance about their homelessness services.  Our conversations with local authorities will continue to have a focus on how they are delivering appropriate temporary accommodation for people experiencing homelessness.   

We will engage with three local authorities who we regard as being impacted by systemic failure (two last year), and a further seven (eight last year) who are at heightened risk of being impacted by systemic failure.  

We will engage with 19 local authorities about specific aspects of their homelessness service (25 last year). We will engage with: 

• six local authorities about access (nine last year);
• two about assessment (five last year); 
• 14 about temporary accommodation (18 last year); and
• eight about outcomes (15 last year). 

We are engaging with some local authorities in more than one specific area of their services to people experiencing homelessness. 

We are also engaging with local authorities on the following basis: 

• two local authorities about progress with ensuring that Gypsy/Travellers sites meet the Scottish Government Minimum Site Standards and/or requirements in relation to fire safety (two last year). Four local authorities about residents’ satisfaction with the management of their sites (we are also engaging with one RSL about satisfaction at its site); 
• a further two local authorities about Serious Concerns at their Gypsy/Traveller sites;
• 14 local authorities about tenant and resident safety (17 last year);
• five local authorities about service quality (six last year); and 
• six local authorities about stock quality (10 last year).   

We are engaging with some local authorities in more than one of these areas. 

Governance 

We reviewed all social landlords’ Annual Assurance Statements and found that the vast majority of social landlords reported compliance with regulatory requirements and other obligations, and we agreed with those assessments on the basis of other information we consider in our risk assessment.     

In Annual Assurance Statements, social landlords should continue to:

• set out any areas of material non-compliance, and describe briefly how it is planning to improve in those areas and the timeframe for improvement;
• confirm it has seen and considered appropriate evidence to support the level of assurance it has;
• confirm the date of the governing body meeting at which it considered and agreed the statement; and
• notify us during the year if anything happens which materially changes the level of assurance in its statement. 

We also identified further instances where a small number of RSLs had not met our statutory guidance on Notifiable Events or had failed to adhere to constitutional requirements in managing their governing bodies. We took steps to engage with RSLs to seek assurance where we identified concerns.  For the first time we published an annual report on notifiable events in response to feedback from landlords.  It highlights the key issues that landlords notified us about during 2023/24 including governance and organisational issues, financial and funding issues and disposals of land and assets.  

Cyber security 

It is important that social landlords consider what security they need to put in place to protect their digital systems, including the personal data of tenants, other service users and staff.  The National Cyber Security Centre has a wealth of material and tools on its website to help organisations defend themselves against the increasing cyber threat.  Landlords should make proper provision for the costs associated with cyber security in business plans and financial forecasts. 

We use a range of information to inform our risk assessment.  You can read more on this information in parts five and six of The risks we will focus on.   

For all social landlords we gather information from past or current engagements, complaints, Serious Concerns and whistleblowing. We also ask all social landlords to tell us about any tenant and resident safety matter which has been reported to or is being investigated by the Health and Safety Executive or reports from regulatory or statutory authorities or insurance providers, relating to safety concerns. 

RSLs  

As our statutory remit is broader for RSLs than our remit for local authorities, we also consider a range of financial information including their Annual Financial Statements, financial forecasts and loan portfolio details, and information from their auditors.  

Each year governance is a key focus of our risk assessment. We consider a range of information in our assessment including:

• quantitative information from ARC submissions received by May each year; 
• notifiable events;
• any reports by auditors under S72 of the Housing (Scotland) Act 2010;
• Annual Financial Statements;
• a review of governing body minutes from RSL websites;
• a review of Annual Assurance Statements received by 31 October; and
• regulatory intelligence from current engagement. 

We also used the quantitative and qualitative information we gather from social landlords in relation to:

• group structures (number of subsidiaries, complexity of arrangements and nature of subsidiary activity); and
• qualitative information including complaints about social landlords, whistleblowing and Serious Concerns. 

  As in previous years, we also considered:

• staff turnover and absence rates;
• how frequently the RSL rotates the appointment of its external auditor; and
• the RSL’s internal audit arrangements. 

Systemically important RSLs 

The measures we use to determine systemic importance have been chosen as indicators of the level of difficulty for us to fulfil our statutory objective of protecting tenants and other service users if the relevant RSLs were to experience financial difficulty.  They are not an indication of the likelihood of that occurring. 

The measures used this year for measuring systemic importance are:

• number of units owned;
• total turnover;
• peak debt; and
• debt per unit. 

These measures are ranked and combined to give an overall score which is compared with the scores for other RSLs and a threshold we determine based upon the scores achieved.  We also include any RSL that ranks highly in the first three measures and RSLs which have a strong geographic dependency. 

We will engage with 25 RSLs on that basis in 2025/26 which is one more than last year.  See which social landlords are systemically important.  Eildon Housing Association became systemically important in 2025/26.   

Local authorities  

We use the Scottish Government’s official statistics on homelessness, and the outcomes of a programme of structured conversations that we undertake each year with all local authorities. We also work through the risk assessment process with our partner scrutiny bodies, participating in the Strategic Scrutiny Group (SSG) led by Audit Scotland, to consider the full range of scrutiny activity for each local authority.  

For 26 of the 32 local authorities, we assess both their landlord and homelessness services. We assess the homelessness service only for the six local authorities who have transferred their homes to RSLs. 

Our focus on homelessness has a strong emphasis on social landlords’ discharge of their statutory duties.  We seek assurance that people who are homeless, or who may become homeless, are able to access the statutory homelessness process, and that local authorities are complying with statutory duties. We monitor and assess the outcomes for people at the following key stages of the homelessness process:

• Access: whether local authorities are complying with statutory duties to make inquiries into a person’s homelessness;
• Assessment: how long it takes to complete homelessness assessments and the decisions made;
• Temporary accommodation: whether local authorities are complying with duties to offer suitable temporary or emergency accommodation to people when they need it, the quality of temporary accommodation, and how long people spend there waiting on a permanent home; and
• Outcomes: how quickly people get settled accommodation after a local authority has assessed that it has a duty to provide this, the number of lets social landlords provide to people who are homeless, and sustainment of those lets.  

How we review our engagement 

We will review the engagement we will have with all social landlords in our next annual risk assessment. We may review our engagement with a landlord during the year if circumstances change or new information becomes available. If we do, we may publish an updated engagement plan for that landlord, and an updated Regulatory status for RSLs. We will set out the reasons for reviewing an RSL’s Regulatory status in an updated engagement plan.