Significant progress on impairment risk

On 14 February 2014, the consultation exercise on the exposure draft of the housing SORP 2014 closed. It was clear from responses and the Federation’s impact assessment that the sector was deeply concerned about proposals on impairment of social housing assets. Members indicated that this could have a very damaging effect on development appetite, reducing delivery by 50,000 affordable homes to 2018, and impacting on investors’ perceived strength of the sector as assets could be written down by over £4bn.

Following strong representations from the Federation, alongside the SORP Working Party, the guidance relating to impairment has been significantly revised. The key changes proposed are:

  • that assessment should reflect that social housing assets are held for their (public) service potential, not only their income-generating capacity
  • clarity that impairment should not be routine, i.e. as soon as a development is delivered this will not trigger a write-down in value
  • more flexibility in the definition of what constitutes a cash generating unit e.g. allowing consideration of whole development programmes.

Download the draft guidance on impairment.

The SORP Working Party is of the opinion that such has been the extent of the change, it is necessary to consult on this updated section to provide all stakeholders with an opportunity to comment on the changes. Having now secured the agreement of the Financial Reporting Council, the guidance has been cleared for an eight-week consultation exercise ending on Wednesday 4 June 2014. Financial directors within member organisations will receive the consultation survey by email soon and should be completed online, but you can download a copy of the survey.

This additional consultation exercise means that publication of the final SORP will be delayed until September 2014. The SORP Working Party recognises that the resulting delay in the publication of the SORP, when compared to its earlier intention, is disappointing. Nevertheless, it considers that ensuring that the sector has the opportunity to feedback on important revisions to the impairment section was of greater importance.

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In this issue
Significant progress on impairment risk
Yes to Homes: local elections 2014
Universal Credit
Making welfare work locally
Health partnership briefings
New map tool to help you engage locally
Lobbying success with the Liberal Democrats
Deloitte appointed as Federation tax advisor
Board member pay guide
Our digital journey
Housing and Employment Conference
Care and Support Conference and Exhibition 2014
HR in Housing Conference
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