(The following statement was released by the rating agency)
July 05 - In a report publ
ished today, Standard & Poor's Ratings Services discusses how social housing providers are responding to the changes caused by the U.K. government's efforts to rein in public finances (see 'U.K. Social Housing Sector: Credit Ratings Stable Despite Fundamental Changes In Funding Regime'). We also consider how these changes will shape the sector in the future.
The U.K. government's substantial changes to public policy started affecting registered providers (RPs) of social housing from 2012 onward. Despite the changes, we view the sector's credit quality as stable. Some RPs with large development programs and dependence on the housing market, high debt burden, or weak management may struggle to adapt to the new financial regime while the economic climate--and the housing market in particular--remains subdued. That said, we believe that the entities we rate are well-positioned to withstand the changes by adapting their business models to accommodate much lower levels of government grant and new development.
Furthermore, we consider that the government may be willing to support the sector as it has done in the past and we therefore maintain our view that the likelihood of extraordinary support is 'moderately high.' We expect this analytical element to continue to enhance the ratings on each individual RP. That said, the policy changes indicate to us that the government's commitment to support the sector might be constrained in the short-to-medium term by its aim of restoring the state of the public finances.
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