This is the main finding of a new report published today by the Scottish Housing Regulator, which provides annual analysis of RSL loan portfolio returns for the period April 2022 to March 2023. However, the report also highlights significant challenges ahead for the sector.

It reveals that 25 RSLs arranged new finance during 2022/23, totalling £578m, bringing total agreed borrowing facilities in Scottish RSLs to £6.71 billion. RSLs also plan to increase their borrowing by £1.47bn over the next five years.

Shaun Keenan, assistant director of financial regulation, said: “It is essential that RSLs maintain sufficient liquidity and access to new funding to ensure their continued capacity to deliver new homes and invest in existing homes, including to meet the Scottish Government’s plans for net zero carbon.

“RSLs’ increased reliance on debt in their business plans has for a number of years been underpinned by assumed continued low interest rates in forecasts.”

Mr Keenan continued: “In the current context of increasing interest rates and where interest rates are now at their highest level in 15 years, RSLs are continually having to revise their business plans and reconsider the assumptions which underpin the forecasts these plans are based on.

“Governing bodies therefore need to continue to ensure they understand how a movement in interest rates could impact on their costs and covenants.

“It is important that RSLs’ ensure they have contingency plans and robust mitigations, and engage early with their lenders where they identify potential covenant breaches.

“We will continue to engage with RSLs that have low liquidity indicators or potential covenant breaches.”