Analysis of Registered Social Landlord Audited Financial Statements - 2022/23

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12 March 2024

About this report

This report provides an overview of the aggregated, Audited Financial Statements (AFS) returns for the year to 31 March 2023 submitted to us by Registered Social Landlords (RSLs).

The level of economic volatility and uncertainty facing RSLs and their tenants over the reporting period remained high and several key factors continued to impact RSLs’ financial performance during 2022/23, including:

  • sustained high inflation and rising interest rates. Consumer Price Index (CPI) inflation peaked at 11.1% in October 2022 whilst the Bank of England increased its base rate from 0.75% in April 2022 to 4.25% at the end of March 2023;
  • the impact of resource shortages on material and labour costs exacerbated by the war in the Ukraine and global shipping disruptions;
  • maintenance contractors and house builders reporting financial viability issues which in some situations resulted in contractors going into administration;
  • rent increases below the prevailing CPI inflation rate of 9%, with some RSLs not increasing rents in recognition of the financial hardship that was a reality for many of their tenants.


Overall, the aggregate financial position of RSLs is weaker than it has been for some time.  While RSLs withstood the difficult economic and operating conditions in 2022/23 and overall liquidity remains strong, individual RSLs have reduced financial headroom and their financial capacity to respond to further challenges is diminished.  The scale of the financial challenges faced by RSLs since March 2023 remained significant, reflecting the continuing difficulties and volatility in their operating environment. The increasing financial pressures of building safety, decarbonisation and investment in current homes also reduces the financial capacity of RSLs to respond to any further unforeseen events.

At an aggregate level in 2022/23, RSLs’:

  • turnover increased by 4.28% to £1.99 billion;
  • affordable lettings turnover rose by 6.81% to £1.76 billion, contributing 88.36% of total turnover. This includes gross rent receivable & service charges of £1.54 billion, a rise of 4.89%; 
  • operating costs increased by 5.67% to £1.64 billion, well below inflation during the period but at a faster rate than turnover;
  • planned and reactive maintenance expenditure rose at very different rates to £169.45 million and £256.39 million respectively;
  • operating surplus after exceptional items dropped marginally by 3.40% to £367.64 million;
  • affordable lettings surplus rose by 4.44% to £355.62 million as rental income and deferred grants released grew at a faster rate than the associated expenditure.
  • investment in new and existing homes continued with net housing assets up by 4.98% to £15.66 billion;
  • cash balances decreased by 12.94% to £776.72 million;
  • cash generation from operating activities rose marginally by 2.19% to £616.57 million;
  • EBITDA MRI interest cover reduced to 246.22%, reflecting the tightening financial headroom;
  • voids reduced to 1.57% but remained well above pre-pandemic level of 1.22%;
  • bad debts rose to 0.80% whilst net arrears reduced to 2.45%, which is the lowest rate recorded since 2018/19;
  • the average rent increase was below both CPI and RPI for the second year in succession. More detailed information can be found in our March 2023 report Rent Increases by Scottish social landlords in 2023/24;
  • continued to reduce the number of employees in defined benefit schemes.

Looking ahead

Since 31 March 2023 the complex and uncertain economic environment that RSLs operate in has remained very challenging. Social Landlords aimed for an average rent increase of no more than 6.1% for one year from March 2023, whilst the Scottish Government’s cap on private rented properties impacted the mid-market rents RSLs can charge. Interest rates continued to rise, and the Bank of England base rate reached 5.25% by August 2023.

Inflation rose to more than 11% in October 2022 and while it has fallen, it remains high with increasing prices continuing to put pressure on household incomes. Supply chain disruption and labour scarcity continues to add to the volatility. One result of these combined challenges is a reduction in the development plans of some RSLs.

It is in that context, that RSLs are looking to maintain service levels and deliver investment in their existing homes to improve and maintain tenant and resident safety, meet net zero standards and stock quality commitments – as well as continuing to invest in building new homes.  Information on RSL projections can be found in our Summary of Registered Social Landlord Financial Projections: 2023/24 - 2027/28 | Scottish Housing Regulator published in December 2023.   It remains important that RSLs continue to adjust their business plans in response to changing circumstances to manage their resources effectively to ensure their financial well-being, while maintaining rents at a level that tenants can afford to pay.

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