HOUSING ASSOCIATIONS: RISING DEBT AND DECARBONISING OF THE UK ECONOMY

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Introduction

  • Housing Associations (HAs) are currently facing many challenges including cost pressures, such as increasing repair and maintenance, resulting in decreasing margins, and in increasing debt. ARC expects that debt levels will increase further due to the cash available being insufficient to fund new builds, implement new safety measures, accommodate increasing maintenance charges, and to meet the expected investment required to reduce carbon emissions.
  • The UK government’s current goal in respect of carbon emissions is to become net-zero by 2050 and HAs play an important role in this reduction considering the emissions from 2.7m[1] homes owned by HAs contributed c.2.0% of the total 2020 UK’s carbon emissions. According to the Regulator of Social Housing (RSH), achieving carbon neutrality for all housing association (HA) homes will be equivalent to the average annual use of 1.8m cars.
  • Sustainable financing for HAs will gain momentum in the coming years. The industry as a whole already has a small number of sustainability-linked loans which provide lower margins and access to additional funding for new builds and investment in decarbonisation of the economy. Sustainable financing is a ‘win-win’ situation for all, it will demonstrate ESG credentials to investors and could allow HAs to have access to cheaper funding and contributing to a sustainable economy.

[1]    National Housing Federation (NHF) Website https://www.housing.org.uk/about-us/

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HOUSING ASSOCIATIONS: RISING DEBT AND DECARBONISING OF THE UK ECONOMY

25 Oct 2021

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