S&P upgrades credit rating of 12,500-home landlord

S&P said CKH’s credit quality is also boosted by its “non-risky social housing activities and strong demand for properties”.

The agency said it expected the landlord’s exposure to sales “risk”, including related to joint ventures, will be contained at “less than 20 per cent” of its operating revenue.

“We further expect that the group will not undertake open market sales and will limit its sales activity to shared ownership,” the agency said. 

CKH has also identified several cost-saving measures that could be taken should its financial indicators weaken, according to S&P. The landlord has already implemented cost-savings measures due to “sector and inflationary pressures”, the agency said. 

S&P also flagged that “almost all” of CKH’s properties already have an Energy Performance Certificate rating of C or above, which is ahead of other landlords. 

The stable outlook is based on S&P’s view that the landlord’s “prudent financial policies” will allow it to sustain “sound credit metrics” despite upping investment in stock.

Claire Higgins, chief executive of CKH, said she was “delighted” that S&P had recognised the association’s “hard work”. 

She added: “Despite the extensive economic pressures facing the country and the housing sector, we have remained flexible and able to respond to the constantly changing economic and political landscape.

“While we remain determined to build new, desperately needed affordable homes, our primary commitment remains with our existing residents and communities.”

CKH currently has a G1/V2 rating with the English regulator after it was downgraded for financial viability in November 2022.  

At the time, the regulator said CKH’s exposure to the housing market through shared ownership and wider economic uncertainty meant it had “less financial headroom and reduced capacity to respond to adverse events”. It retained this rating in December 2023. 

In its last reported full year to the end of March 2023, CKH recorded a slight drop in post-tax surplus to £8.6m off turnover of £81m.