Every so often I post about housing association finance - which normally ensures even less readers than usual*. But, sod it, it's my blog and I'm going to take this opportunity to claim a 'I-told-you-so' moment.
Moody's, the Financial Ratings Agency, have released a report on the creditworthiness of the sector and especially on the five big associations they rate: Affinity Sutton Group, Circle Anglia, Sanctuary, Shaftsbury and Places for People. These are very big organisations - Places for People alone owns or manages around 60,000 homes.
The report helpfully explains how Moody's ratings work:
"..ratings are composed of two principal inputs: the association’s intrinsic credit profile (Baseline Credit Assessment or “BCA”); and the likelihood of extraordinary support from the central government in case of need."
& what do you find when you look at appendix 3? A list showing that their Baseline Credit Assessments are relatively low, but the likelihood of extraordinary support from government is 'high', thus making them very creditworthy indeed.
So the big guys are seen as very creditworthy because the government backs them. (Which does seem to rather undermine associations' fight not be considered as public bodies, but I digress...)
Nonetheless, one in five associations - not the ones mentioned above - are seen as having shaky finances. This is very largely because they have business models based on sales, not just rental income, and the sales have dried up. Moody's notes the recently introduced split of funding and regulatory functions and says the two new bodies - the Homes and Community Agency and the Tenants Services Authority - need to get their act together because,
" ...the institutional capacities to assist weaker associations now require more ‘joined-up’ policy and actions, which may be tested under what may be the worst recession in decades."
18% of the country live in housing association owned properties. Just thought you'd like to know that.
*Did you see what I did there? I used the word 'readers' in the plural without apparent irony...