Regulator downgrades viability for Sovereign and other large housing associations

The Regulator of Social Housing has today downgraded the viability ratings of several large housing associations, including Sovereign. Clarion, L&Q and Places for People have also been downgraded from V1 to V2 as the housing sector faces a very challenging economic environment.

A rating of V2 is compliant and the Regulator’s statement says that Sovereign’s “financial plans are consistent with, and support, its financial strategy” and that Sovereign “has an adequately funded business plan, sufficient security, and is forecast to continue to meet its financial covenants.”

The Regulatory Judgement confirms Sovereign’s existing compliant governance rating at G2 and acknowledges that Sovereign has developed a governance improvement plan that it continues to progress. The full judgement can be read here.

Speaking today Sovereign’s CEO Mark Washer said:

“Clearly the economic environment is affecting the entire housing sector. Any organisation with ambitious plans to improve business efficiencies and increase development of new housing must take into account the economic context. Higher inflation, higher interest rates, labour shortages and the prospect of a recession are the reality we must contend with.

“No CEO wants to see their financial viability downgraded, but the fact that the Regulator has today downgraded 20 housing associations, including some of the biggest in the sector, shows that this is not about us in particular but about our sector in general. Sovereign will continue to invest in our existing homes and will manage our development programme to ensure we maintain sound finances.”

He went on to say:

“While we must not downplay the very serious headwinds we face, we remain compliant and viable as a business. I am confident that our strong financial foundations and our business transformation programme mean we will be able to ride out this storm. Our primary focus must continue to be ensuring we deliver for our customers, who are as exposed as we all are to the short term and medium-term prospects for the economy. We will continue to do all we can to support our customers and our employees through this cost-of-living crisis.”