Housing Associations Report £174m Impairment Charges

Housing associations are thriving in the continuing difficult housing and credit market conditions, despite 92 associations reporting impairment charges totalling £174 million for 2008/09 because the value of their homes and land has dropped, according to the Tenant Services Authority (TSA).

However, the revised impairment figure, which is up by nearly 40% on the previous quarter's estimate, represents less than 0.5% of the associations' total assets, and none of the associations have reported financial difficulties or are in breach of covenants in their loan agreements with lenders because of the charges, the regulator said today.


The TSA's latest quarterly survey (April-June 2009) also reports that the number of unsold homes has continued to fall, a drop of 7% to 8,173 homes, suggesting that the property market is stabilising. Housing associations also converted less unsold low-cost home ownership (LCHO) homes to rented social housing – down from 2200 to 344 – indicating that associations have been more successful in selling their empty LCHO homes.

Clare Miller, Executive Director Risk and Assurance, said: "Although the sector continues to cope with the fall out from the housing market slowdown, the economic situation remains finely balanced. While we have figures showing impairment charges estimated at £174 million, housing associations are demonstrating that they have the financial capacity to survive the downturn without adversely impacting on delivering services to tenants. Their actions in managing their businesses have enabled them to withstand the turbulence in the financial markets.

"In comparison to some of the commercial builders who have written down losses by up to 35% of their value, housing associations continue to demonstrate resilience. They are still selling homes, securing new investment to deliver affordable housing and remaining financial stable."

(CD/KMcA)