Housing association land and property values drop £174m

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 were in breach of covenants in their loan agreements with lenders because of the charges, the regulator said.

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 8173 homes, suggesting that the property market is stabilising. Housing associations also converted fewer unsold low-cost home ownership (LCHO) homes to rented social housing – down from 2200 to 344 – indicating that associations were more successful in selling their empty LCHO homes.

In other findings:
* As well as the total number of unsold homes falling in the quarter, those unsold over six months have also fallen 3% to 3640;
* Just over a third (34%) of unsold LCHO homes are currently reserved for sale;
* The sector is planning asset sales including shared ownership units and right-to-buy properties of £1.4billion over the next 12 months, up from £1.1billion last quarter;
* Associations have £4.7billion of the £5billion debt needed over the next 12 months already in place;
* £7.1billion of new loan facilities were arranged between April 2008-March 2009.

Clare Miller, Executive Director Risk and Assurance, said: "Although the sector continues to cope with the fallout 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 financially stable."

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