Summary of the findings of our analysis of RSL loan portfolio returns at 31 March 2019

Our annual analysis of RSLs’ annual loan portfolio returns, which set out their borrowing and funding arrangements shows lenders and investors continue to invest in social housing sector. Read our summary report to get the highlights of our analysis.


18 December 2020

Highlights from the 2019 returns

  • Lender and investor confidence in Scottish social housing continues to grow as the sector remains financially strong with access to sufficient funding.
  • The increase in the funds available to RSLs during 2018/19 was double that in any of the last 10 years.
  • The total amount of investment reached £6 billion, with the total amount owed by RSLs rising to more than £4 billion for the first time.
  • Undrawn funds available to RSLs have increased by more than 60% to £1.2 billion.
  • 40% of all new finance was from the capital markets.
  • There were two new entrants to the field of investors: MetLife and Handelsbanken
  • RSLs are making more efficient use of their existing assets to support further borrowing.

How much debt do RSLs have?

  • The total value of facilities available to RSL has increased by 13.9% over the last year to £5.97Bn.
  • Of this total the amount RSLs have drawn down has increased by £300m to £4.8Bn.
  • The total outstanding balance owed by RSLs has increased by 6.1% to £4.15Bn.
  • The amount owed per home has increased by 4.5% to £14,100 per home.

The total amount owed by RSLs has increased from £3.56Bn in 2015 to £4.15Bn in 2019, and the rate at which borrowing is growing is also accelerating, with the increase in facilities available to RSLs growing by more in the last year than at any point in the last 10 years.

  • At 31 March 2018 RSLs owed a total of £3.92Bn
  • During the year they repaid £1.06Bn of this,
  • And borrowed a further £1.29Bn, most of which related to the refinancing of existing debt.
  • The total amount owing at 31 March 2019 was £4.15Bn

The total facilities and balances outstanding as at 31 March, were:

  • In 2015, Facilities £4.64Bn, balance outstanding £3.56Bn
  • In 2016, Facilities £4.82Bn, balance outstanding £3.61Bn
  • In 2017, Facilities £4.91Bn, balance outstanding £3.73Bn
  • In 2018, Facilities £5.24Bn, balance outstanding £3.92Bn
  • In 2019, Facilities £5.97Bn, balance outstanding £4.15Bn

The total amount borrowed is forecast to reach £5.96Bn by 2024.

Servicing this debt is a significant cost to landlords, with interest payments around £172m pa, representing around 13% of landlords income from rent and service charges.

Who lends to RSLs?

37 separate lenders and investors provide money to RSLs, across a total of more than 1,300 individual loans.

The three largest lenders manage 58% of all loans, and the amount they have made available has increased by 72% from £83m in 2017-18 to £143m this year.

The three largest lenders, and the proportion of RSL debt they manage are:

  • Royal Bank of Scotland – 34.4%
  • Lloyds Group / Bank of Scotland – 12.5%
  • Nationwide Building Society – 10.8%

Some of this debt is provided by syndicates of lenders, and some by these lenders individually.

  • RBS lend £1,346m, and manage a further £709m as the lead lender in a syndicate.
  • Lloyds / BoS lend £630m, and a further £115m as a syndicate lead.
  • Nationwide lend £645m, all as a sole lender

When compared with investment by the capital market, the capital market is now the second largest source of funds for RSLs. So far five investors from the capital markets have made £870m available to ten different RSLs, although only £758m has been drawn so far.

What type of private finance do RSLs have?

85.4% of RSL debt is traditional borrowing, with 14.6% now provided by investors from the capital market. This is a swing of 2.3 percentage points from traditional borrowing to capital investment since 31 March 2018. As at 31 March 2019:

  • The total amount of traditional lending available to RSLs had increased by 9% to £5.10Bn, although the balance outstanding had fallen 0.5% to £3.39Bn.
  • The total investment from the capital markets had increased by 60% to £0.87Bn, with £0.76Bn already drawn down, an increase of 50% on the previous year.

Most debt relates to traditional borrowing from banks and other organisations. The proportion being sourced from bonds and private placements has increased from nothing four years ago to nearly 15% of the total available to RSLs.

What new borrowing have RSLs undertaken this year?

This year has seen a high value of new loans being arranged by RSLs, with a larger proportion than usual relating to re-financing, rather than new borrowing. A total of 86 new loans with a value of £912m have been raised this year. This is an increase of 17 in the number, and 260% in the value of new loans from last year.

Of this, 63% by value has been for new development or investment in existing properties, 33% for refinancing, and 5% for other purposes. Nearly all loans for “Other” purposes were for a combination of investment in new and existing properties.

72% of housing owned by RSLs is used as security for their borrowing. Despite the much larger increase in borrowing, this is an increase of only one percentage point from last year, demonstrating that RSLs are making better use of their properties to support borrowing. This security totals £6.7Bn, amounting to 113% of the total amount of funds available to RSLs.

Technical appendix

Read a more detailed analysis in our technical appendix.  

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