Industry News
HAs’ operating surplus falls for the first time in years
The combined operating surpluses of housing associations has fallen for the first time since the regulator started publishing financial data, as spending on day to day running costs and major repairs rose. Although this was the second year of
the enforced one per cent annual rent cut, the joint income of all 1,500 HAs with more than 1,000 homes increased by £500m to £20.5bn. Rents and service charges accounted for £14.7bn, as the number of homes owned or managed by HAs rose to 2,712,000. In the 2018 Global Accounts, the
Regulator of Social Housing reported that the sector’s operating surplus on social housing fell by two per cent from £5.2bn to £5bn. At the same time management costs
(on staffing, running offices, utilities etc) went up by six per cent (up by £152m) while spending on major repairs rose by four per cent (up £20m). These combined resulted in a fall in the overall operating margin to 28 per cent.
STRONG PERFORMANCE Despite this, the regulator reported that the sector’s financial performance was “strong”, with the sector’s underlying surplus continuing to increase, going up by five per cent to £3.7bn. Social landlords raised £10bn in new
loans and borrowing facilities from banks and the capital markets, up 32 per cent from the previous year. The sector had £17bn in undrawn loan facilities and £6bn in cash, meaning HAs have plenty of access to funding – usually to fund the development of new homes. Some 41,556 new homes for rent were
completed last year, a nine per cent increase on the previous year, as spending on development rose £1bn to £7.3bn. Around 15,000 homes were sold and approximately 1,000 were demolished. Almost 10,000 homes were converted from social rent to the higher, affordable rent. In 2018 void losses and current tenant
arrears were consistent with 2017 at 1.5 and 4.4 per cent of gross rent respectively, but bad debts increased slightly from 0.7 per cent of gross rent in 2017 to 0.8 in 2018. Total reserves increased from £45.2bn in 2017, to £49.5bn in 2018.
Housing association mergers continue apace
building of more affordable homes persists. In the west midlands Bromford has completed a
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merger with Severn Vale Housing to create a new 44,000 home landlord. This follows an earlier merger with Merlin completed in July last year. The new organisation, which will retain the
Bromford name, has an annual turnover of £270m. Its chief executive Robert Nettleton, said: “The combined financial strength of our new organisation gives us a great foundation, enabling us to build more new homes and invest more in people.” “By pooling our resources we can make a real
difference by building even more new homes than we would have built individually. This year we’ll build more than 1,200 homes and we plan to increase that in the years ahead.” Elsewhere in the Midlands, Longhurst is collapsing
its group structure in a bid to save half a million pounds a year in running costs and to help it make quicker decisions. It owns more than 22,500 homes and consists of the group parent plus four subsidiary HAs: Friendship Care and Housing, Longhurst and Havelok Homes, Spire Housing and Axiom.
FLAGSHIP Over in East Anglia two HAs have joined to form the region’s largest landlord with a stock of around 28,000 homes. The larger of the two organisations, Flagship Group has acquired 5,000 home landlord, Victory Housing Trust as a subsidiary. The new organisation plans to build 10,000 homes
over the next ten years, while also investing £534m in maintaining and upgrading its existing housing stock over the same period. The merger is expected to save more than £38m in costs. Peter Hawes, chair of Flagship, said: “We are both
14 | HMM February/March 2019 |
www.housingmmonline.co.uk
he trend for social landlords to grow through mergers has continued as the pressures to reduce operating costs and to increase the
strong and successful housing associations, but together we can be even stronger and more successful. Collectively we have enhanced financial strength, greater effectiveness and efficiency, the ability to invest more in our existing homes, and support our customers.”
ANCHOR Meanwhile the largest provider of care and supported housing to older people in England has been formed through the merger of the Anchor Trust and Hanover. The new 54,000 home landlord will employ 9,000
staff and has a combined annual turnover of £530.7m. It provides services across the whole of the country and works in nearly every local authority area. Jane Ashcroft, former chief executive of Anchor,
retains her role while Dr Stuart Burgess, former chair of Hanover, will lead the new board. A spokesman for the organisations said the merger would increase efficiencies, allowing them to negotiate better contracts with suppliers and pool resources.
NORTH WEST In the North West, Torus has merged with Liverpool Mutual Homes to form a 38,000 home landlord, with 1,500 staff and had a combined annual turnover of more than £180m. It is aiming to deliver 5,300 new homes by 2024. Steve Coffey, chief executive for the new group and
former chief executive of Liverpool Mutual Homes, said, “The vision for new Torus is driven by a shared commitment to the communities we serve and by a determination to build positive futures across our heartland areas. “This is more than a joining together of landlords.
As a larger, more diverse organisation – simultaneously landlord, property developer, commercial contractor and social entrepreneur – we’ll deliver our vision on a larger scale.”
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