Accounting demands on social landlords may open the door for private investment
With the advent of new international accounting standards being extended to cover Housing Associations (HA) in the UK, the demand on private landlords to go out and purchase residential property insurance on even more units may become even more pressing.
Major cost concerns in change over
Housing association chiefs are concerned that the decision by the UK Accounting Standards Board (ASB) to demand social landlords file their accounts in compliance with the new international accounting standards could cripple many associations. One major housing organisation, the National Housing Federation (NHF) believe that compliance with the international standards will cost the not for profit organisations millions of pounds just to alter their internal accounting and IT systems.
The NHF say that the bigger HAs of the 1200 that exist in the UK will incur costs of over half a million pounds just to comply, while smaller associations, those with less than 3,000 homes under their control will still be saddled with fees well in excess of £100,000.
Change in valuation system could block new builds
The new accounting standards will also see a difference in how the properties belonging to the HAs are valued and the NHF predict that as much as £1 billion could be wiped off the balance sheets of the HAs in total, and put future loans from mortgage providers in jeopardy. The ASB strongly refute the claims and say the new system will make it easier for both the HAs and their subsidiaries to produce their accounts in the future.
Time to consider options
The HAs are not required to make the change over in accounting systems until 2015 which gives landlords plenty of time to consider whether to add to their portfolios. It will also give them time to cost the project. A good understanding of how much a loan will cost, where to get cheap property insurance and how to source a builder for any renovations the project may require are all important factors to consider. The current market suggests that the time is ripe for landlords to invest in more properties, what appears bad news for social landlords may well turn out to be the icing on the cake for private ones.