Smaller housing associations have been told to notify the regulator immediately if they think they cannot cope with the changes announced in the Budget.
Julian Ashby, chair of the Homes and Communities Agency (HCA) regulation committee today wrote to all landlords in England owning fewer than 1,000 homes.
The letter said the Conservative government’s 1% annual social housing rent cut, effective from next April, will “have a substantial impact” on most providers’ business plans. Mr Ashby also said welfare reforms, including the lowering of the overall household benefit cap, will have an impact.
The letter said: “If you believe that your association is not able to adapt to these changes, you must notify us straight away, in particular if you identify either viability or liquidity problems, or that you will be unable to comply with lender covenants or requirements.”
Mr Ashby said most landlords will look at their costs and consider where to re-prioritise spending, while some “may conclude that an independent future is no longer possible and seek a merger partner”.
Mr Ashby’s letter also said the regulator expects boards to understand the scale of the Budget changes and that they have considered all relevant issues.
Earlier this month, the HCA set larger associations a deadline of 30 October to submit fresh information about their finances in the wake of the Budget announcements.
Mr Ashby wrote to all 255 associations with 1,000 homes or more on 20 July to outline the information the HCA needs.