Most social landlords remain financially sound and are coping with current economic challenges according to the Scottish Housing Regulator.
Housing associations in Scotland have a surplus £100m and should not impose high rent increases, according to the Scottish Housing Regulator.
The independent regulator, which oversees around 180 registered social landlords (RSLs), highlighted the strong financial health of the sector in its Analysis of the Finances of Registered Social Landlords 2013 report.
It said the surplus highlights that above inflation rent increases are not justified and should be scrapped.
However, the Scottish Federation of Housing Associations (SFHA) said the figures paint a deceptive picture of the state of housing associations' incomes.
Welfare reforms are making the operating environment for tenants and housing associations increasingly challenging
The SFHA warned the bedroom tax alone will cost housing associations and co-operatives in Scotland almost £80m over three years. The costs come partly from rent arrears and partly from taking on extra staff and paying overtime to try to combat the problem.
Maureen Watson, SFHA’s head of policy, said she hoped the housing regulator would take those additional costs into account when discussing rent increases with landlords. She said that whilst the UK government remained determined to enforce an incompetent and unfair policy in the bedroom tax, very real damage was being done to the sector’s finances over the longer term.
“Scotland’s housing associations and co-operatives are committed to ensuring that rents remain genuinely affordable to low income households,” she said.
“However, welfare reforms such as the bedroom tax and the upsurge in benefit sanctions are cumulatively making the operating environment for tenants and housing associations increasingly challenging.
“It is not simply about the lost revenue arising from rent arrears but also about all of the associated costs incurred by social landlords whilst seeking to help their tenants as best they can.
“This will, ultimately, drive up rents and, ironically, increase the cost of the housing benefit bill for the UK government.”
The Scottish Housing Regulator conceded its analysis did find increased financial stress within the sector but added it was important rents remained affordable for tenants, whose incomes are being hit by welfare payments cuts.
“The aggregate accounts show a healthy surplus and an increase in cash generated from operations,” said Ian Brennan, director of regulation (finance and risk) at the regulator.
“This indicates that most RSLs are coping with the current economic environment, although this result was achieved in a year when the increase in average rent was substantially above the rate of inflation.
“We are asking RSLs with business plans which rely upon above inflation increases in rent to consider whether this is sustainable given the financial challenges that tenants are facing.”
The value of landlord’s assets grew overall according to the report, but there was a small reduction in the number of houses owned and managed by RSLs.