The Regulator’s report states RSLs’ forecast operating and net surpluses, increases in average annual turnover and growth of net assets by an annual average of 3.9%, with modest but steady growth of 3.8% in 2023/24 dropping to 3.0% in 2027/28.

It also states that RSLs project significant, but reducing cash reserves over the next five years with an aggregate closing balance of £801 million at March 2023 which is down from £892m in 2022. This is forecasted to drop to £565.9m by March 2028.

The report also highlights that whilst interest cover is lower than forecast in the 2022 returns, it remains healthy, rent arrears are steadily reducing from 3.3% in 2023/24 to 2.8% by 2027/28, and RSLs project significant capital expenditure with £1.68 billion on existing homes, an average of more than £5,000 per property, and the construction of 26,000 new homes.

Shaun Keenan, assistant director of financial regulation, said: “RSLs have faced, and continue to face, uncertainty in the national and global economy which has contributed to the cost-of-living crisis, alongside significant and sustained cost increases, higher energy costs, higher borrowing costs, continuing supply chain disruption and labour scarcity. And, they are continuing to work to deliver on tenant and resident safety, decarbonisation, and stock quality commitments, as well as continuing to invest in new homes.

“RSLs have coped well with the financial challenges; however, financial projections show that finances are tightening which means RSLs’ will have reduced financial flexibility to respond to further challenges due to restraint on rent increases, and cost increases. And, Governing Bodies are likely to face difficult trade-offs as they prioritise expenditure.

“RSLs are seeing financial risks previously highlighted crystalise and impact their financial position. As uncertainty remains, it is essential that RSLs maintain sufficient liquidity and are managing the risks to their business whilst still delivering for their tenants.”