A new report found that HAs continued to perform well in 2018, as strong turnover offset rising costs, the ongoing rent cut and a slowing housing market.

The policy environment also remains supportive, with the announcement of further grant funding and a return to growth in social housing rents from FY2021.

However, Moody’s said the accelerated pace of development expected next year will put interest coverage under increasing pressure.

The ratings agency also viewed the growing exposure to market sales as credit negative because its revenue and cash flow are more volatile and its margins are lower than for social letting activities.

“English housing associations continued to perform well in 2018, as strong turnover offset rising costs, the ongoing rent cut and a slowing housing market,” said Joe Griffin, a Moody’s associate analyst and the report’s co-author. “The policy environment also remains supportive, with the announcement of further grant funding and a return to growth in social housing rents from FY2021. However, the accelerated pace of development will put interest coverage under increasing pressure.”

HAs recorded impressive turnover growth of 11% in 2018, despite another 1% cut in social rents, supported by building and acquisition of new units for social rent as well as nonsocial housing activities.

Continued political pressure on HAs to build has led to a 10% rise in total debt for the year, in line with the compound annual growth rate (CAGR) of 8% over the past five years. However, HAs are set to receive additional grant funding over the next few years.