The risks we will focus on - November 2023

Each year, we assess risk in social landlords to determine what assurance we need from them and what they may need to improve. Here we describe which risks we will focus on.

Published

28 November 2023

Background

Our statutory objective is to safeguard and promote the interests of tenants and others who use the services of social landlords. We do this by monitoring, assessing and reporting on all landlords’ performance of housing activities and the financial well-being and standards of governance of Registered Social Landlords (RSLs). 

The annual risk assessment is one of the principal ways in which we carry out our statutory functions. Here we set out our approach for this year’s annual risk assessment. 

Our risk assessment last year took place against a backdrop of significant volatility and uncertainty for the social housing sector, tenants and other service users such as homeless people and Gypsy/Travellers.  

Some of the pressures landlords were having to manage have eased while others remain or have exacerbated.  For example, the Scottish Government’s intervention on rent increases in social housing ended in March 2023 but challenges remain for landlords in keeping rents as affordable as possible while at the same time funding services for tenants and others and investing in their homes.  Rent controls continue for Mid-Market Rent homes for those social landlords that deliver these as part of their group structure.  Energy costs have fallen from peak levels reached last year but remain high.  The headline rate of inflation has fallen significantly but remains above the Bank of England’s 2% target. Inflation in construction and maintenance is running well ahead of that headline rate. Interest rates have risen and are currently at their highest level for 15 years.  

The coming period looks like it will remain unpredictable, volatile and difficult for those who rely on social housing and for those who provide it.  Cost inflation, higher interest rates, and increasing requirements on the quality of homes mean that landlords face increasing and sometimes competing pressures on resources, whilst aiming to keep homes as affordable as possible. 

We recognise that the current context means that social landlords are likely to have to prioritise their attention and resources on the most critical and immediate issues, including tackling the acute problems in homelessness, decarbonising homes and alleviating fuel poverty, and maintaining tenant and resident safety.  We will take account of this context in our assessment of risk. 

We say more about current challenges and the broader risk landscape in Appendix A.