The ratings agency said the switch from A2 to A3 “reflects the continued diversification of Places for People’s activities into non-core-social-housing businesses” which have introduced “varied risks that are atypical of other housing associations, requiring oversight of an expanding portfolio of activities and depressing margins”.

A proposed £300 million bond issue from PfP has also been given a negative outlook, though this downgrade appears to be in line with Moody’s view of the sector as a whole following the EU referendum.

The Places for People Group is one of the largest property and leisure management, development and regeneration companies in the UK, owning or managing over 150,000 homes and having assets in excess of £3 billion.

Castle Rock Edinvar, a housing provider and neighbourhood management company in Scotland which is responsible for more than 6,200 homes, is a subsidiary of the group which also owns Places for People Scotland Care & Support.

More recently PfP has expanded its activities by acquiring companies providing: residential property management; leisure facilities management; retirement property management; construction services; development of premium, sustainable homes; green energy solutions; financial services; and energy services.

According to Moody’s, it is such diversification that has troubled investors.

In its ratings rationale, the agency said: “The proportion of low-risk social housing lettings in PfP’s turnover has been significantly below the average of Moody’s rated English housing associations over the last five years and continues to decline as PfP seeks opportunities to diversify its activities.”

As a result, PfP’s non-social-housing-letting activities accounted for 56 per cent of turnover in this financial year and is projected to increase to 64 per cent in 2018, compared to a sector average of 27 per cent.

“While this diversification provides some insulation from government policy changes, it requires greater management and oversight of the widened portfolio of activities,” Moody’s added.

Places for People received authorisation from the Financial Conduct Authority (FCA) for its financial service offering in December last year.