11 January 2002
A Public Accounts Committee report praised the work of the corporation in preventing serious failures in RSLs but added: '[It] should not be complacent about the recent deterioration in RSLs' finances. There are growing problems with rent arrears, late payment of housing benefit receipts and low or falling demand for RSLs' housing.'
The report, published on January 9, found that government policy had encouraged RSLs to take on more risk and fund more developments through borrowing from private lenders.
The report said that in 1999/2000 more than 15% of the 2,100 RSLs responsible for a third of the housing stock in England failed to meet six of the eight financial ratios employed by the corporation to monitor landlords' solvency and viability. Nearly 700 of the RSLs failed to submit accounts on time.
The MPs concluded that the corporation should address the 'decline in the percentage of large RSLs passing the financial ratios' by compiling 'a comprehensive appraisal of the financial risk in the sector, and developing a risk model to assist them in their regulation of the sector'. It also said the corporation should ensure that RSLs' forays into commercial ventures did not threaten the provision of social housing or taxpayers' funds.
Edward Leigh, the committee's chair, said: 'I am pleased that the corporation's work has contributed to keeping the sector financially sound in overall terms. However, there are clear signs that the position is starting to worsen.
'The Housing Corporation must make it a priority to monitor the weaker performers and take effective follow-up action as required.'
PFjan2002
