Mega-mergers come and go, rent reductions are forcing efficiencies and devolution deals present opportunities for social housing.
Even before the EU referendum vote, there have been huge shifts in the Social Housing market in recent months. Mega-mergers came and went, rent reductions are forcing efficiencies; while devolution deals present opportunities. Other recent global political events heighten uncertainty.
After the Brexit vote, the Homes and Communities Agency warned that cash calls as a result of falling borrowing costs are the ‘most immediate risk’ to housing associations. Following the vote on 23 June 2016, a number of housing associations have been required to provide millions in additional collateral to banks, following a drop in the gilt rates to below 1%. The subsequent base rate cut may cause associations to be subject to further cash calls by banks. Associations should assess, as part of wider stress testing in uncertain times, whether they have adequate cash and property to provide to the banks as additional security in the event of further mark-to-market calls being made.
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