The Week in Housing: new year, new underspend

While the government fails to distribute the money it said it will, housing associations’ operating margins have fallen 30% in the past five years and will remain tight until the mid to late 2020s.

Data company Housemark analysed public data from 181 English landlords that have more than 1,000 homes to calculate the squeeze on cash flow experienced by social housing providers.

Researchers said median operating margins stood at 18.5% in 2022-23, down from 26.8% in 2018-19. They attributed the cash flow challenge to rising interest rates, price inflation and investment in existing stock.

The need to invest in existing stock had forced landlords to allocate record amounts last year due to numerous shocking examples of disrepair.

The trade-off between building more homes and maintaining existing ones saw a whole host of associations take the decision to cut back on their development pipelines in 2023. Not ideal during a housing crisis.

One way to offset that might be more partnership working. A number of experts from across the sector told Inside Housing that strategic partnerships between house builders and associations are going to be “critical” for the sector to obtain land and meet delivery targets in the current economic climate.

However, it remains tough out there. The Guinness Partnership posted a reduced surplus of more than £10m for the six months to 30 September 2023, owing to rising interest costs and lower homes sales.

In a similar vein, a London firm recently bought up by a United Arab Emirates-based developer has reported a £22m pre-tax loss.

House builders in Scotland are not faring any better. Dunfermline-based Campion Homes slumped to a post-tax loss of £729,000 last year due to “extremely difficult trading conditions” post-coronavirus pandemic.

Solid business planning and the ability to manage risk are going to be key to weathering the headwinds facing the sector. But the English regulator revealed at the turn of the year that it lacks assurance one G15 member is managing these effectively.

The Regulator of Social Housing (RSH) downgraded A2Dominion to a non-compliant grade for governance. It lacks assurance that the association has a robust risk management, internal control and assurance framework that enables it to manage and mitigate risks.

A2Dominion has made a number of changes to its executive team as part of a new corporate strategy under chief executive Ian Wardle designed to tackle the problem.

A number of organisations kicked off the new year with senior appointments. House builder Willmott Dixon and the under-fire Southwark Council both announced new people stepping into the top job at each.

In Yorkshire, the boss of one association retired after a 35-year career with the landlord.

At the same time, a number of people working in homelessness services and local and national government have been recognised in the 2024 New Year’s Honours list. Four people providing homelessness services will receive an OBE, as will the boss of a major city council, as part of the annual award process.

Happy New Year!

Stephen Delahunty, news editor, Inside Housing

Say hello: stephen.delahunty@insidehousing.co.uk

@StephenD

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