Trend report: value for money

Analysis of the value for money scorecard also reveals a gentle increase in reinvestment since 2021, reaching 6.6 per cent in 2023.

EBITDA MRI interest cover is an indicator of the sector’s ability to cover finance costs from its operating activities.

Median EBITDA MRI interest cover among English social housing providers has fallen every year from 2019 to 2023 except for 2021, when the figure spiked to just one per cent below the 2019 figure.

The 2021 rise was down to an increase in income from social housing lettings as the rent cap was lifted from April 2020, as well as a drop in capitalised major repairs spending due to COVID-19 lockdowns.

The sharp fall in 2023 to 128.8 per cent, the lowest since 2010, was down to rises in interest rates and costs.

Gearing – the ratio of debt to asset values – rose by a much smaller amount from 44 to 46 per cent as the sector’s dependence on debt remained steady.

Another important value for money metric is reinvestment, which fell from 7.2 per cent in 2020 to 5.8 per cent in 2021, but has since seen a steady increase to 6.6 per cent in 2023.

There are several cost factors that affect reinvestment performance:

• Registered providers of supported housing, defined as registered providers with 30 per cent of their owned social units that are classified as supported housing, tend to have lower levels of reinvestment due to the higher costs and lower margins on supported housing leaving less money for reinvestment
• Registered providers of housing for older people, defined as registered providers with 30 per cent of their owned social units that are classified as housing for older people, tend to have higher levels of reinvestment
• Large-scale voluntary transfers (LSVTs) that are less than 12 years old also tend to have higher reinvestment costs because they are obliged to undertake major improvement programmes as part of the transfer agreement, usually within five to 10 years of the transfer

LSVTs that are less than 12 years old had a median reinvestment score of 12.3 per cent in 2023, compared to a 6.6 per cent median for all organisations.

Reinvestment for RPs specialising in housing for older people increased sharply from 4.5 per cent to 7.7 per cent in the year due to a large specialist provider acquiring several new care homes.

Reinvestment by supported housing specialists stood at six per cent, slightly up on 2022’s score and a little lower than the median for all providers in 2023.