Poplar Harca told Inside Housing it has applied to be exempt from the new law forcing all social landlords to reduce tenants’ rent by 1% each year from next April.
According to Inside Housing:
“The waivers are approved by the secretary of state and are only available to landlords which would face viability issues as a result of the plan and only if they have exhausted all other options including seeking a merger.
Housing regulator the Homes and Communities Agency (HCA) downgraded Poplar Harca’s financial viability rating to a compliant ‘V2’ in April, saying it was close to breaching limits in existing loan agreements.
The judgement said there was “minimal headroom in Poplar’s business plan in relation to funders’ covenants” and warned it was “sensitive to reductions in income”.
Steve Stride, chief executive of the 9,000-home landlord, confirmed to Inside Housing his organisation is seeking a waiver but did not comment on the reasons why.
It has yet to publish its financial statements for 2014/15, which have been prepared and are with the HCA. Its accounts for the year before show it produced a surplus of £7.3m on turnover of £47.6m with gearing – the ratio of its debt to assets – of 67%.
No other landlords have yet gone public in requesting a waiver. Bolton at Home, which was considering doing so, said it has now decided not to apply.
The landlord had already struggled with the financial implications of the government’s decision to scrap rent convergence – the policy which allowed rent to increase to meet target rent levels.
Stock transfer landlords were expected to be hardest hit by the rent cut, as they typically take on high levels of debt in their early years.”