London landlord sees credit rating downgraded amid decarbonisation push

Many landlords have been forced to up their spending on existing homes to make them more energy efficient, to meet wider net zero targets.

S&P said it also expected to see lower earnings from RHP’s non-sales over the next three years. 

“Combined with our expectation that the group will raise debt to fund an increase in housing stock, this will result in weaker debt metrics than previously forecast,” the agency said. 

But it added: “Nevertheless, the group’s solid liquidity management and strong market position still support the rating.” 

Last year RHP appointed Peabody’s chief operating officer Sarah Thomas as its new boss to replace the long-serving David Done.

S&P said it viewed RHP’s liquidity position as “extremely strong”.

The group also benefits from a focus on “low-risk social housing activities and from operating in an area where demand for its properties is strong”, S&P said. 

RHP’s exposure to open market sales is less than 10 per cent of total revenue, the agency added. 

S&P kept its outlook on RHP at ‘stable’. “We expect RHP’s management team to commit to its financial targets and that its program of high investment in existing properties will adequately address its spending needs,” the agency said. 

A spokesperson for RHP said: “We have made considered choices to increase investment to improve the energy efficiency and safety of our homes and our services to our customers, alongside our steady and cautious continued development of new homes.

“We recognise this was likely to lead to a reassessment in our credit rating. We are pleased to confirm our revised credit rating to A stable reflects these strategic choices.”

In its last reported full year to the end of March 2023, RHP reported an increased post-tax surplus of £11.6m on turnover of £66.9m. 

The association currently has a G1/V1 rating with the Regulator of Social Housing.