Annual Review of RSLs’ Loan Portfolios – 2026

Overview and Key Insights

Each year, all Registered Social Landlords (RSLs) provide us with loan portfolio returns which set out details of RSLs’ private borrowing, debt facilities and lender commitments. This report sets out our analysis for the returns covering 2025/26.

We found at the 31 March 2026:

• RSLs had £7.46 billion in debt facilities available, with £6.37 billion of this debt drawn. 
• 31 RSLs arranged new loans during 2025/26, totalling £304.0 million, down 46% on the previous year.
• RSLs had total cash and undrawn facilities of £1.74 billion, an increase of £140.0 million on the previous year.
• RSLs’ reduced lending activity should be viewed alongside the increase in cash balances and undrawn facilities, which indicates that many RSLs continue to have strong liquidity.

Context

It remains important that RSLs continue to have access to finance for the delivery of effective services in what continues to be a challenging operating environment.

It is critical that RSLs maintain strong governance, financial resilience, effective risk management and adequate liquidity. These help sustain lender and investor confidence and support continued access to private finance.

RSLs’ established borrowing track record, together with Scotland's regulatory framework, has enabled them to secure funding on favourable terms. Lower financing costs mean that a smaller proportion of rental income is required to meet interest payments, allowing more resources to be directed towards investment in existing homes, tenant and resident safety, energy efficiency improvements and the continued delivery of services for tenants. Access to private finance also remains particularly important for the delivery of new homes, with 87.5% of all new borrowing secured during 2025/26 used to support building new homes.

During 2025/26 significant pressures remained across the housing sector and the wider economy. Construction cost inflation remained above historic norms, labour shortages continued to affect parts of the construction and maintenance sectors. While reductions in the Bank of England base rate eased borrowing pressures for some RSLs, competing demands on resources remained. The scale, timing and cost of investment required to meet net zero ambitions remain uncertain and will place additional pressure on RSLs’ business plans and future borrowing requirements. Although inflation has moderated, affordability pressures remain evident for many tenants and continue to present challenges for some landlords in maintaining sustainable rental income streams.

The Scottish Government has continued to provide funding support to social landlords. This includes increased Affordable Housing Supply Programme funding, continued support for stock decarbonisation through the Social Housing Net Zero Heat Fund, and multi-year affordable housing funding commitments, which provide greater certainty for future planning and investment.

Despite the challenges they face, at an aggregate level, RSLs continue to maintain strong liquidity through a combination of cash balances and undrawn borrowing facilities. Access to funding remains a key component of RSLs' capacity to invest in homes and services for tenants. This highlights the importance of RSLs ensuring their treasury management is consistent with their approved policies and strategies and are supported by effective governance, monitoring and oversight arrangements. The guidance in the CIPFA Treasury Management Code is helpful when demonstrating compliance with Regulatory Standard 3.

RSLs plan to increase borrowing by a further £1.7 billion over the next five years. The extent to which these plans are realised will depend on factors including future funding conditions, lender appetite and RSLs' capacity to support additional debt within their business plans. While these factors may influence the extent to which planned borrowing is realised, RSLs’ continue to benefit from a strong borrowing track record and established lender confidence.

Our analysis

• In 2025/26 RSLs had a net drawdown from available facilities after repayments of £280.0 million. This was £55.0 million less than the movement in 2024/25 (£335.0 million).
• RSLs plan to increase their borrowing by an additional £1.7 billion over the next five years, reflecting continuing investment requirements across both new housing supply and existing housing assets.
• RSLs paid £236.9 million in interest charges in 2025/26 which represents approximately 12.8% of their income from gross rent and service charges.
• As 69% of the debt outstanding is on a fixed rate basis and 31% on a variable interest rate, a reducing interest rate environment is less impactful for historic debt.    
• At the start of financial year 2025/26 the base rate was 4.5% falling to 4.25% by the start of May 2025, then 4.0% in August 2025 and 3.75% at the start of December 2025 with no further changes for the period to the end of March 2026.
• Every 1% increase or decrease in interest rates from the 1 April 2026 could add or reduce the interest charges paid by RSLs by around £17.1 million.
• 78% of the total value of borrowing by RSLs is from traditional sources, with 22% from capital market funding, which is broadly the same as the previous year.
• Undrawn facilities available to RSLs at 31 March 2026 increased to £1,092.0 million supporting liquidity and providing flexibility to respond to future investment and refinancing requirements. This is an increase of £136.0 million from the previous year and in conjunction with £651.0 million cash balances being held, means RSLs’ liquidity in aggregate remained strong. 
• Of the total loan debt outstanding at the 31 March 2026, 49% is repaid on an amortised or partially deferred basis. This helps RSLs to manage their refinancing risks.
• In terms of debt cash repayments falling due, £172.0 million (3.1%) is due to be repaid in 2026/27, £177.0 million (3.2%) in 2027/28, £930.0 million (16.9%) falling due between 2028/29 and 2030/31, with the remaining balance of £4,215.0 million (76.7%) not due to be repaid until 2031/32 onwards.
• During 2025/26 31 RSLs had drawn down 43 new loans compared to the 29 RSLs and 48 new loans in 2024/25.
• These new loans ranged from £0.01 million to £40.0 million, totalling £304.0 million across 16 lenders. This is a decrease of 46% compared to the £563.0 million arranged in 2024/25. Whilst there were no individual new lenders to the sector the new loans included £0.6 million raised via the issue of a community bond by an RSL.
• There was an even split of £152.0 million per category for new loans agreed on both fixed and variable interest rate terms with £58.1 million (19%) of the new variable interest rate loans being revolving credit facilities.
• The weighted average interest rate on new fixed interest rate loans secured by RSLs in 2025/26 was 4.7%, down 0.6% on the equivalent weighted average interest rate of 5.3% in 2024/25.
• 87.5% of the new loans raised by RSLs were to fund affordable housing developments, with 3.4% for capital investment, 3.3% for refinancing, 3.0% for energy efficiency projects, 1.8% for working capital and 1.0% commercial activities.

How much debt do RSLs have?

• The total value of facilities available to RSLs increased by 3.92% over the year to £7.46 billion.
• The net amount drawn down from total facilities increased by 2.33% to £6.37 billion.
• The total loan balances outstanding at the end of the year increased by 2.11% to £5.49 billion.
• The average amount owed per home increased by £304 from £16,832 to £17,136 per unit.
• The total debt drawn down is forecast to exceed £8.0 billion by the end of 2031.

The total facilities and balances outstanding across recent years were:

This debt growth reflects the increasing scale of investment requirements facing RSLs, to support not only housing supply ambitions but also ongoing investment in existing homes, ensuring that housing assets remain safe, sustainable and fit for the future.

How has debt changed this year?

In 2025/26 RSLs sourced new lending of £304.0 million from both traditional bank lending and capital market facilities. The lower level of new borrowing activity compared to the £563.0 million raised in 2024/25 should be viewed in the context of strong aggregate liquidity, with some RSLs able to utilise existing facilities and cash resources before seeking additional external finance.

Traditional bank lending in 2025/26 included £126.0 million from the Royal Bank of Scotland, £54.0 million from Allia, £20.0 million from Handelsbanken, £19.0 million from Santander, £17.0 million from the Lloyds Group, and £16.0 million from Charities Aid Foundation Bank - together accounting for 77% of all new lending in the sector.

For capital market facilities, the Pensions Insurance Corporation was the only provider of a new loan in this category during 2025/26 with £25.0 million drawn, accounting for 8% of the new lending in 2025/26.

For the £304.0 million of new loans sourced, there was a 50% split at £152.0 million for both fixed interest rate and variable interest rate loans with £58.0 million (19%) of these new variable rate loans being revolving credit facilities.

The total amount of outstanding borrowing increased in the last 12 months by £0.11 billion and since 2021/22 has risen cumulatively by £0.59 billion, from £4.90 billion to £5.49 billion. Reflecting the value of new facilities added in 2025/26, the total amount borrowed by the sector continues to increase.

The continued growth in borrowing reflects ongoing demand for investment across the sector. RSLs continue to balance the delivery of new affordable housing with increasing requirements to invest in existing homes, maintain asset quality and meet evolving regulatory expectations.

• At the 31 March 2025 RSLs outstanding borrowing was £5.38 billion.
• In 2025/26, £0.194 billion was repaid with further borrowing of £0.304 billion, with 87.5% of this used for affordable housing developments.
• At the 31 March 2026 RSLs outstanding borrowing was £5.49 billion.

Who lends to RSLs?

Thirty-seven different lenders and investors help fund the sector providing 1,025 loans, to which more than 1,979 lending covenants are attached. The three largest lenders Royal Bank of Scotland, Lloyds Group and the Nationwide Building Society manage 55% of the value of all facilities available between them. The aggregate total facilities for all three, increased by a net £168.0 million to £4.1 billion with new facilities of £680.0 million partially offset by debt repaid including restructuring of £512.0 million in 2025/26. For the Lloyds Group, there was a net increase in lending facilities of £168.0 million and a net increase of £1.0 million in the Nationwide Building Society facilities with RBS facilities decreasing by a net amount of £1.0 million. The proportion of RSL total debt facilities these three lenders manage is as follows:

• Royal Bank of Scotland (RBS) – 37% (24/25: 38%)
• Lloyds Group – 12% (24/25: 10%)
• Nationwide Building Society – 6% (24/25: 7%)

We know that some of this debt is provided across a syndicate of lenders, but the majority is on a sole lender basis as follows:

• RBS lend £2.25 billion (81.8%) on a sole lender basis, and a further £0.5 billion (18.2%) as syndicate lead, for a total of £2.75 billion.
• Lloyds Group lend £0.788 billion (90.1%) on a sole lender basis, and a further £0.08 billion (9.9%) as syndicate lead, for a total of £0.868 billion.
• Nationwide Building Society lend £0.47 billion (100%), all on a sole lender basis.

There were no new lenders to the RSL sector in 2025/26 although within the table below, the category “Community Bond” has been added with one RSL raising finance in this manner, with its local circumstances supporting this approach for financing during 25/26.

Of the total value of available facilities of £7,458.0 million in 2025/26, ten capital market investors provide a total of £1,569.0 million. This comprises 26 individual bond agreements across 13 RSLs, with no increase or reduction in the total of facilities compared to 2024/25 levels.  The combined bond and capital markets investment is the sector's second largest source of funds, representing 21% of total facilities available to RSLs, while accounting for 27% of debt currently outstanding.

During 2025/26 there were no new bond or capital market investors with the table below summarising facility values by capital market investors and no change shown year-on-year.

Overall, for all lending including both traditional bank lenders and capital market investors, reflecting both new loan facilities and facilities fully repaid in year and falling off the list, there was a net increase of £281.0 million.

The continued availability of funding from a diverse range of lenders provides evidence of ongoing confidence in both the sector and its long-term business model. This confidence remains important given the significant investment requirements facing many RSLs over the coming years.

Environmental, Social and Governance (ESG) linked lending remains relatively small in scale but may continue to develop over time. Given the sector's continuing focus on sustainability, energy efficiency and the transition towards net zero objectives, ESG-linked funding may become an increasingly important component of future funding strategies.

However, these arrangements require effective governance and performance monitoring to demonstrate achievement of agreed sustainability targets.

In 2025/26, RSLs’ obtained £9.5 million of lending which included beneficial lending terms linked to the RSLs sustainability performance targets with the funds supporting the delivery of new affordable housing and refinancing. 

What type of private finance do RSLs have?

73.0% of RSLs outstanding debt remains from traditional bank lending, with 27.0% provided by bond and capital market investors.

• The total amount of traditional bank lending facilities available increased by 5.01% to £5,890.0 million, with the outstanding debt increasing by 2.25% to £4,025.0 million.
• The total amount of investment from the capital market investors remained steady at £1,569.0 million, with the outstanding debt increasing by 1.73% to £1,469.0 million.

The increase in outstanding debt reflects the net effect of new and existing loan drawdowns during the year, offset by scheduled repayments under RSLs’ loan agreements, covering both traditional bank lending and capital market investment.

Although the share of debt from bond and capital markets has grown in recent years, the tables above show that most borrowing still comes from traditional bank lenders.

Of the total loan debt outstanding at the end of 2025/26, 26.7% reference the Sterling Overnight Interbank Average Rate (SONIA) and 4.3% reference the “Base” rate.

At the end of 2025/26, there was a net increase of £36.0 million (8.8%) in revolving credit facilities, with £442.0 million now available, with RSLs using such facilities, likely to need to re-tender, or at least re-negotiate, on a more frequent basis.

The table below shows the debt balances outstanding on the loan types held by RSLs.

Every investment and financial product carries some degree of risk dependent on several factors such as the amount required, market conditions and lender appetite. Mark-to-market exposure on derivatives remains low. However, some RSLs still have loans incorporating a derivative arrangement, the most common allowing them to ‘swap’ a variable interest rate for a fixed interest rate. Many are ‘embedded’ within the loan agreement, with 16 ‘stand-alone’ contracts in place between the RSL and the lender at the 31 March 2026.

What new borrowing has been undertaken by RSLs?

In 2025/26, £304.0 million of new loans were arranged by RSLs. This is a 46% decrease compared to the £563.0 million raised by RSLs in the previous year, which may reflect changes to the timing of development and asset investment programmes, the completion of major refinancing exercises in previous years, and the use of existing liquidity resources. With 43 new loan agreements, this is 5 less than the 48 new loan agreements set up in 2024/25.

Prudent treasury management, organisational resilience and risk management ensures that RSLs can best manage their resource requirements and financial viability using available existing liquidity resources resulting in the need to draw down lower levels of borrowing.

The new loans by value being used for

• affordable housing development (87.5%)
• capital investment (3.4%)
• refinancing (3.3%)
• energy efficiency projects (3.0%)
• working capital (1.8%).
• commercial activities (1.0%).

Whilst development activity remains the dominant driver of borrowing, investment in existing assets remains an increasingly important consideration for many RSLs as they seek to maintain and improve the quality, sustainability and resilience of their housing stock.

RSLs may classify their new loans as refinancing, however due to the nature of the treasury management structure in place for cashflow, where all funds are held centrally, a proportion of this may indirectly relate to affordable housing development or capital investment in existing properties.  

RSLs continue to make effective use of their properties as support for their borrowing with secured property valued at approximately £9.3 billion, which represents 125% of the facilities available to RSLs.

How much does borrowing cost RSLs?

Expenditure on interest costs was £236.8 million in 2025/26. This represented approximately 12.8% of RSLs income from gross rent and service charges.

Managing the affordability of borrowing remains an important aspect of financial planning, helping to ensure that sufficient resources remain available to support operational activities and future investment commitments.

The new deals secured in 2025/26 had the usual broad range of interest rates, being either traditional fixed interest rate loans or variable interest rate loans referenced to SONIA or the Base rate. The table below summarises the interest rate margins secured on new loans in 2025/26.

For the 25 new variable rate loans, as expected the interest rates on offer fell during 2025/26 due to the decrease in the underlying reference rate (Base rate & SONIA) although the margin applied to the reference rate by lenders will impact the overall benefit. The above table shows the margin which is applied to the underlying rates. During 2025/26 the margins applied to underlying rates for 14 new loans referencing SONIA ranged between 1.0% to 1.47% (2024/25: 1.0% to 1.75%) whilst for the 13 new loans referencing the Base rate loans it was between 1.25% and 1.40% (2024/25: 1.0% and 1.80%).   

The interest rates secured by RSLs, including the margins on reference rates on new borrowing can be influenced by several factors. These include the size of the loan, the repayment profile, the term to maturity, the risk profile of the RSL and the sector as assessed by individual lenders as well as the availability of funds from potential lenders.

For the 18 new fixed interest rate loans sourced during 2025/26, 5 were secured at an interest rate of less than 4.7%, 8 RSLs secured interest rates of between 4.7% and 5.23%, with the 5 remaining loans securing an interest rate of above 5.23%. Overall, the weighted average interest rate on new fixed interest rate loans sourced was 4.7%. This is a 0.6% reduction on the equivalent weighted average interest rate for new fixed rate loans in 2024/25 which was 5.3%.

This may reflect the base rate reductions during 2025/26, as fixed rate loans are priced on future expectations including funding costs, inflation forecasts and central bank policy. Lender expectations may have been current base rates would remain stable at the current lower rates compared to previous years so may have built this in when offering their fixed rate products and thus the lower average rate on new fixed rate borrowing in 2025/26.

Fixed interest rates offer RSLs certainty over future debt repayments, helping them plan their spending more confidently—especially since rental income tends to be stable. However, fixed-rate loans often come with higher costs compared to variable rates. In contrast, variable interest rate loans can be cheaper but carry more uncertainty about future payments. RSLs have traditionally used a mix of both fixed and variable rate borrowing.

In 2025/26 RSLs arranged £152 million of fixed-rate borrowing and £152 million of variable-rate borrowing during 2025/26. To balance these risks, when seeking new loans, RSLs should carefully consider their existing debt structure—particularly the balance between fixed and variable interest rate borrowing—given ongoing uncertainty in interest rates. Their approach should reflect their appetite for interest rate risk and ensure the overall debt profile remains within the limits set by the Governing Body’s approved treasury policy. Including variable rate options, such as revolving credit facilities, can offer greater flexibility for future refinancing.

As of 31 March 2026, 69% of total outstanding loan debt in the sector was on fixed interest rates or bond equity, while 31% was on variable interest rates—a split that remains broadly consistent with previous years. Since interest charges on variable-rate debt can fluctuate with changes in market rates, it is essential that Governing Bodies understand how such movements could affect their overall borrowing costs.

Adopting high level assumptions and based on the variable interest rate debt outstanding and the prevailing reference interest rate at the 31 March 2026 (i.e. primarily Base rate or SONIA), a 1% uplift in interest rates would result in an increase in the estimated annual interest charges of £17.1 million. 

When will RSLs repay their debt?

10% of loans held by RSLs are fully amortising i.e. repaid in instalments across the full term of the loan.

39% of loans have a form of partial deferral e.g. an interest only arrangement for a period before they start making regular capital repayments, or bullet repayments at set points throughout the loan term.

51% of loan debt outstanding is fully deferred, with no scheduled capital repayments until the end of the loan term, when the debt may be repaid, or alternatively refinanced with another loan.

The above debt repayment profile is based on when the loan is fully repaid. The table below provides analysis based on the actual debt repayments profile in cash terms, per the loan agreements. The table below provides an indicator of the refinancing risks for RSLs in aggregate in the short to medium term.    

The RSLs debt repayment profile remains relatively long-term in nature, with more than three-quarters of outstanding debt not due for repayment until beyond 2030/31. This helps reduce short-term refinancing pressures and supports longer-term business planning, financial resilience and investment decision making.

Glossary of terms

Summary for tenants

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