New analysis of the financial health of registered social landlords (RSLs) in Scotland has revealed that most RSLs are continuing to manage their resources to ensure their financial well-being and economic effectiveness.

The Scottish Housing Regulator has published its latest analysis of financial health in the sector for the year to March 2016 and called on all RSLs to carry out robust analysis to manage and mitigate risk.

According to the report, RSLs’ cash generation and interest cover remains strong. RSLs generated almost £3 from operations for each £1 they paid in interest. Rent arrears, revenue lost as a result of empty houses and bad debts all fell and RSLs continued to attract investment to build new homes.

The Regulator welcomed these findings but also warned that the business environment in which RSLs operate is more complex.

Ian Brennan, director of regulation (finance & risk), said: “Most RSLs are effectively managing their financial well-being and the risks that they currently face. But they are also facing new risks. In June 2016 the inflationary outlook changed markedly following the EU referendum. Inflation assumptions are a critical element of most RSLs’ business plans and therefore anything that affects inflation is likely to affect RSLs’ financial planning.

“We expect RSLs to test their business plans against a range of scenarios and carry out robust sensitivity analysis. This should include consideration of ‘worst case’ options. All RSLs should take this approach as they consider how best to manage and mitigate risk.”