HA surpluses – winners and losers

A busy season of reporting financial results saw many large housing associations disclose varying fortunes due to investment in building new homes, refinancing of loans, operational efficiencies and spending more money on safety work to existing homes.

Among the big winners with increased surpluses were giant social landlords like L&Q, Places for People, A2 Dominion and Sovereign. But the news was not all positive as other big HAs reported falls in their surpluses, including Clarion, Metropolitan, Notting Hill, Genesis, Southern and Optivo. A record surplus of £348m for the year 2017/18 was posted by L&Q, up from £220m in the previous year when results were adversley affected by refinancing loan costs and their merger with East Thames. Annual turnover was over £1bn for the first time, a huge increase of 25 per cent from the previous year’s figure of £756m. L&Q spent £35m on fire safety works in the year including the replacement of ACM cladding, similar to the type used on Grenfell Tower. It expects to finish all planned work on cladding by the end of this year and has started a five-year programme to provide smoke alarms to tenants’ homes.


Meanwhile Places for People saw its annual surplus rise from £119.7m to £130.2m in the same year in which the 60,000-home association acquired Luminus, after an eventful period for the east Midlands based landlord. The higher surplus in 2017 was achieved despite its turnover falling from £795.1m to £754.4m although its income from social housing activities rose from £314.4m to £335.8m, while income from non-social housing development and construction work fell from £234.2m to £157.5m. Newbury based Sovereign increased its surplus from £89.1m to £103.9m in the year despite operating costs rising from £193.5m to £197.8m. This was attributed to £4.1m it spent on replacing cladding and upgrading fire prevention services on one block of flats. The 57,000-home association’s biggest growth area was in open market sales. It also sold 413 homes to other HAs as part of its stock rationalisation programme, to make it more efficient. In the capital, A2 Dominion posted a 10 per cent rises in its surplus to £92.5m on turnover that fell from £371.9m to £300.7m, with operating costs down to £158.2m from £166.4m. The 37,000-home landlord built 954 homes in the year, although only 332 were for affordable rent or shared ownership, down from 393 in the year before.


The country’s largest housing association with 125,000-homes, Clarion saw its surplus fall for the second year running, down to £157.5m from £176m on turnover that rose from £796m to £829m operating costs fell from £495.2m to £478.9m. The association said the decrease in its surplus was “in line with expectations”, although its development work also slowed with both starts (on 1,428 homes) and completions (1,263 homes) down on the previous year. Despite this, investment in new housing by the organisation increased 46 per cent to £426m in 2017. Their development pipeline of new homes more than doubled in the year and stands at over 14,000 new properties. Several one off investments in the condition and safety of its stock were identified by Metropolitan (with 38,000 homes) as the reason for its operating surplus falling from £117m to £103m. Over the year, the association spent £84m on property maintenance, up from £73m, as it boosted annual turnover by over eight per cent to £288m. It built 623 new homes and has a development pipeline of 5,870 homes.

Increased costs

Southern Housing Group with 27,000 homes in London and the south east saw its surplus drop by a quarter from £62m to £44.9m with both increased pension costs and extra investment in safety works cited as the reasons. Group turnover was down to £199.7m while income from social housing lettings was up at £155.5m and property sales grew to £27.8m. It invested £119m in its homes, including £104m on new build work, with 197 properties completed and a further 700 new homes on site. The recently merged landlord Notting Hill Genesis reported a reduced combined surplus of £119.3m in 2017, in their last year as two separate entities, down from £160.6m in the previous year. Genesis saw its surplus increase from £18.2m to £19.8m, while Notting Hill’s fell from £142.2m to £96.9m. Optivo which was formed by the merger of Amicus Horizon and Viridian Housing also saw a drop in its turnover from £347m to £317m as it took less money from the sale of shared ownership properties compared with the previous year. Its operating costs fell by £5m but accountancy rules over how its loans should be treated saw a basic surplus of £90m reclassified as a pre-tax loss of £51m. The organisation also completed the development of 470 homes in the year, with 433 of them for affordable tenures. It began the construction of 912 – above its target of 880.

By Patrick Mooney, editor