03 May 2002
At the end of 2000/01, associations owned properties worth £50.9bn – up £4.4bn on the previous year. Although part of this was due to stock transfers from councils, some registered social landlords borrowed heavily to build and refurbish homes.
Interest costs increased by £165m, while the total surplus held by RSLs dropped from £260m to £125m, according to accounts published by the Housing Corporation on May 1.
Most of the increase in debt and interest costs was because of borrowing by a few of the larger RSLs. 'Growing debt and interest costs will need to be monitored to ensure that they remain manageable as interest coverage approaches critical levels,' says the corporation.
While most associations are sound financially, says the report, a growing number show 'deteriorating financial health'. Banks are likely to charge higher interest rates if RSLs are perceived to be risky investments, it warns.
RSLs, meanwhile, have been told to tighten up the way they respond to allegations of misconduct. Consultant Hacas Chapman Hendy found 'a lax compliance culture' in some of the 16 associations studied for a report commissioned by the corporation.
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