Landlords warn switching accounting standards 'hugely expensive'
Affordable homes providers have warned switching to IFRS could wipe £1bn off the value of assets and cost £150m in red tape
HOUSING ASSOCIATIONS have claimed switching to international financial reporting standards could wipe millions off balance sheets and jeopardise lending agreements.
As much as £1bn could be knocked off the value of estates, while the cost of switching to the new system may be as high as £150m, according to the National Housing Federation.
The Financial Times reports 1,200 housing associations could be affected, and the largest – those managing around 30,000 homes – may have to dredge up £530,000 to cover the cost of IFRS adoption.
The ‘loss’ of £1bn in asset value stems from IFRS requirements to purge balance sheets of the cost of developing new properties, while simultaneously writing off similar sums from proprietors’ reserves.
Housing associations are worried the switch will prompt lenders to change their terms and conditions, which could force landlords to break existing banking covenants and make it even harder to secure future funding.