Our risk assessment of social landlords: summary outcomes - April 2026

Very recent economic uncertainty and volatility risk further complexity and a more challenging operating context for social landlords, and hardship for some tenants and service users.  This includes: 

• significant geopolitical instability and conflict in the Middle East creating further volatility in global energy markets;  

• supply chain delays and increased costs as a consequence of conflict could significantly impact inflation as was seen during the Covid pandemic and the early stages of the Ukraine conflict; 

• significant uncertainty in the scale and consistency of international trade tariffs which could raise the price of imported goods and services; and 

• an increasing expectation that RSLs should deliver some wider role services. 

Despite earlier expectations of further monetary easing, the Bank of England held the base rate at 3.75% in March 2026. The Bank expected inflation to fall back to around 2% from April 2026, however the recent escalation of military action in the Middle East has seen them revise this forecast and they now consider that inflation could rise to around 3.5%. As a result, the likelihood of any near‑term rate reductions has significantly reduced.  

Cost of living challenges remain for many households especially those on lower incomes, and the risk of this exacerbating in the months ahead or beyond have therefore heightened.  Ensuring the affordability of rents remains as important as ever.    

Our recent report notes that the financial position of RSLs strengthened overall in 2024/25, with income growth outpacing rising costs and sector‑wide liquidity benefiting from new lending and increased commitments from existing funders. However, a number of RSLs continue to face significant financial pressure. Sustained investment requirements, rising maintenance spend and ongoing reductions in cash reserves are creating tighter short‑term liquidity positions for some RSLs.  

Lower interest rates, compared to the 2023 peak of 5.25%, had provided some relief for landlords with variable‑rate borrowing or new financing requirements. However, renewed global financial market volatility linked to the conflict in the Middle East has led lenders to increase private borrowing rates, which is expected to result in higher costs for some landlords. 

Systemic failure continues to impact on the provision of services to people who are homeless  

In our homelessness thematic review, published in February 2023 and updated in December 2023, we reported that systemic failure is now affecting homelessness services in some local authorities. 

Demand for homelessness support — both the number of people needing help and the complexity of their needs — continues to exceed some local authorities’ capacity to respond. Some are already at, or close to, the limits of what they can deliver. This is what we mean by systemic failure. 

The latest Scottish Government data shows that the number of homelessness applications fell slightly.  The average time spent in temporary accommodation remained at 237 days which is slightly lower than the same period last year. 

This ensures their business plans, financial forecasts, asset management strategies and investment programmes are all based on reliable, up‑to‑date information. Our business planning advisory guidance also states that financial projections should normally be supported by an independent stock condition survey no more than five years old. 

Stock condition surveys also help landlords meet the outcomes and standards in the Scottish Social Housing Charter, particularly: 

• Quality of housing – tenants’ homes must be clean, tidy, in good repair, meet SHQS and any other applicable standards throughout the tenancy, and meet the Energy Efficiency and Zero Emission Heat Standard. 

• Repairs, maintenance and improvements – tenants’ homes must be well maintained, with repairs and improvements carried out when required. 

Under Element 35 of the SHQS, landlords must ensure electrical systems are safe. To demonstrate this, they must carry out an Electrical Installation Condition Report (EICR) every five years. A property passes SHQS if the EICR confirms the electrical system is safe; if not, it fails until remedial work is completed. The five‑year requirement was introduced to SHQS in 2020, with the Scottish Government allowing landlords until March 2022 to complete any outstanding EICRs because of the pandemic.  Element 11A requires landlords to install interlinked smoke and heat detectors in all homes by February 2022.   

Some local authorities continue to fall short of these obligations.    

At the end of last year’s risk assessment, we engaged with 14 landlords about EICR compliance, or about both EICRs and smoke detectors. 13 of these were local authorities.  

This year, we will engage with 10 landlords on these issues. All of these are local authorities. All non‑compliant local authorities must have urgent and credible plans to achieve full compliance.  They must do better. We will monitor progress through ongoing engagement and reflect this in their engagement plans.  

Identifying issues relating to RAAC and cladding  

In October 2023, we wrote to all social landlords to request information on RAAC. We collected this information to support a clear national assessment of RAAC in social housing in Scotland and to assist the Scottish Government in developing an appropriate policy response. We published updates in December 2023 and March 2024. 

Following the Grenfell Tower Fire in 2017, the Scottish Parliament passed legislation in April 2022 banning combustible cladding on high‑risk buildings and prohibiting the highest‑risk metal composite cladding materials on all buildings. The Grenfell Inquiry’s final report was published in September 2024. In June 2024, the Scottish Government published the Single Building Assessment (SBA) specification, including the methodology for assessing cladding risk, and in January this year published the associated SBA standards. 

Some RSLs may have undertaken detailed assessments before the publication of the SBA or the British Industry Standard PAS 9980. The Scottish Government encourages landlords to understand what assessments have been carried out for buildings over 11 metres in height. Where no assessment has taken place, or where the landlord is not satisfied with its quality, they should consider undertaking a robust assessment using the SBA specification and standards. 

The Scottish Government has also announced that it will consider funding SBAs for social housing buildings that meet eligibility criteria, including building height and age. 

Regulatory status  

We publish an engagement plan with a regulatory status for each RSL to provide a single view of the RSL’s governance, financial well-being and performance.  

This year: 

• 134 RSLs are Compliant, meaning they meet regulatory requirements, including the Standards of Governance and Financial Management, with no RSLs under review (132 last year with an additional one under review); and  

• two RSLs are Non-compliant – working towards compliance, meaning they do not meet regulatory requirements including the Standards of Governance and Financial Management, and are working to achieve compliance (five last year were working towards compliance).  The two RSLs are Blochairn and Knowes.   

We are not currently using statutory powers in any RSLs.  We did not use statutory powers last year. 

The main reasons for our engagement with RSLs 

In total we are engaging with 55 RSLs (of 136) on the following basis:  

• five RSLs about tenant and resident safety (four last year); 

• 12 RSLs about governance (18 last year) of which five are about planned organisational changes or transfers of engagements (five last year); 

• 23 RSLs about finance (29 last year); 

• 11 RSLs about service quality (nine last year); 

• eight RSLs about the quality of homes they provide (eight last year);  

• 28 RSLs about development (25 last year); and 

• 24 RSLs because they are systemically important (25 last year).  

We are engaging with a number of RSLs for more than one reason.   When we do have planned engagement it does not necessarily mean that we have identified the RSL as having a problem and can be because we require further assurance from the RSL.   

Where we are engaging with an RSL about finance and considering its business plan, we will also discuss with the RSL how it has satisfied itself that its rents are affordable for its tenants. 

We will engage with 17 local authorities about specific aspects of their homelessness service (19 last year). We will engage with:  

• three local authorities about applications (six last year); 

• eight about assessment (two last year);  

• eight about temporary accommodation (14 last year); and   

• six about outcomes (eight last year). 

We are engaging with some local authorities in more than one specific area of their services to people experiencing homelessness. 

We are also engaging with local authorities on the following basis:  

• three local authorities about progress with ensuring that Gypsy/Travellers sites meet the Scottish Government Minimum Site Standards and/or requirements in relation to fire safety (two last year). One local authority about residents’ satisfaction with the management of their site(s) (four last year). We are also engaging with one RSL about both the Site Standards and satisfaction at its site;  

• last year we engaged with two local authorities about Serious Concerns at their Gypsy/Traveller sites. This has now concluded though we will continue less intense engagement at one of those local authorities as it continues to work through remaining improvements; 

• 12 local authorities about tenant and resident safety (14 last year); 

• six local authorities about service quality (five last year); and  

• four local authorities about the quality of homes they provide (six last year).   

We are engaging with some local authorities in more than one of these areas. 

We use a range of information to inform our risk assessment.  You can read more on this information in parts five and six of The risks we will focus on.   

For all social landlords we gather information from past or current engagements, complaints, Serious Concerns and whistleblowing. We also ask all social landlords to tell us about any tenant and resident safety matter which has been reported to or is being investigated by the Health and Safety Executive or reports from regulatory or statutory authorities or insurance providers, relating to safety concerns. 

RSLs  

As our statutory remit is broader for RSLs than our remit for local authorities, we also consider a range of financial information including their Annual Financial Statements, financial forecasts and loan portfolio details, and information from their auditors.  

Each year governance is a key focus of our risk assessment. We consider a range of information in our assessment including: 

• quantitative information from ARC submissions received by May each year;  

• notifiable events;  

• any reports by auditors under S72 of the Housing (Scotland) Act 2010;  

• Annual Financial Statements;   

• a review of governing body minutes from RSL websites; 

• a review of Annual Assurance Statements received by 31 October; and  

• regulatory intelligence from current engagement. 

We also used the quantitative and qualitative information we gather from social landlords in relation to:  

• group structures (number of subsidiaries, complexity of arrangements and nature of subsidiary activity); and  

• qualitative information including complaints about social landlords, whistleblowing and Serious Concerns. 

And as in previous years, we considered:   

• staff turnover and absence rates;    

• how frequently the RSL rotates the appointment of its external auditor; and   

• the RSL’s internal audit arrangements. 

Key methodological changes we made this year 

The key changes were as follows, we: 

• focussed on a smaller basket of key indicators for our risk assessment of the quality of services provided by social landlords; 

• considered a smaller sample of governing bodies’ meeting minutes for review; 

• streamlined the amount of information we considered for our development risk assessment; 

• will target our homelessness structured conversations at those local authorities impacted by systemic failure or who are at heightened risk rather than all local authorities; 

• will have structured conversations with Gypsy/Traveller site providers when we require specific assurance;  

• routinely review SI landlords’ business plans every three years; and 

• will focus on RSLs with more significant financial risks.  

We made these changes to refine and improve our approach, and to ensure we are able to deliver with the resources we will have in the year ahead.   

Systemically important RSLs 

The measures we use to determine systemic importance have been chosen as indicators of the level of difficulty for us to fulfil our statutory objective of protecting tenants and other service users if the relevant RSLs were to experience financial difficulty.  They are not an indication of the likelihood of that occurring. 

The measures used this year for measuring systemic importance are:  

• number of units owned; 

• total turnover; 

• peak debt; and   

• debt per unit. 

These measures are ranked and combined to give an overall score which is compared with the scores for other RSLs and a threshold we determine based upon the scores achieved.  We also include any RSL that ranks highly in the first three measures and RSLs which have a strong geographic dependency. 

We will engage with 24 RSLs on that basis in 2026/27 which is one less than last year.  See which social landlords are systemically important.  

Local authorities  

We use the Scottish Government’s official statistics on homelessness, and the outcomes of the structured conversations that we undertake with some local authorities. We also work through the risk assessment process with our partner scrutiny bodies, participating in the Strategic Scrutiny Group (SSG) led by Audit Scotland, to consider the full range of scrutiny activity for each local authority.  

For 26 of the 32 local authorities, we assess both their landlord and homelessness services. We assess the homelessness service only for the six local authorities who have transferred their homes to RSLs. 

Our focus on homelessness has a strong emphasis on social landlords’ discharge of their statutory duties.  We seek assurance that people who are homeless, or who may become homeless, are able to access the statutory homelessness process, and that local authorities are complying with statutory duties. We monitor and assess the outcomes for people at the following key stages of the homelessness process:  

• Applications: whether local authorities are making inquiries into a person’s homelessness when they have a duty to do so (referred to as ‘taking a homeless application’);   

• Assessment: how long it takes from application to the completion of assessments and the decisions made in relation to a person’s homelessness;  

• Temporary accommodation: whether local authorities are complying with statutory duties to offer temporary/emergency accommodation to people when they need it, the quality of temporary accommodation, and how long people spend there waiting on a home; and 

• Outcomes: for people assessed as homeless, the time taken from assessment to outcome, and the number of lets social landlords provide to people who are homeless.  

How we review our engagement 

We will review the engagement we will have with all social landlords in our next annual risk assessment. We may review our engagement with a landlord during the year if circumstances change or new information becomes available. If we do, we may publish an updated engagement plan for that landlord, and an updated Regulatory status for RSLs. We will set out the reasons for reviewing an RSL’s Regulatory status in an updated engagement plan.