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Clarion sees surplus drop 10% after year of ‘unprecedented challenge’
Clarion has reported a 10% drop in annual surplus, as the landlord spent £418m on improving and maintaining its current stock.
The UK’s biggest housing association recorded a post-tax surplus of £87.1m in the year to the end of March 2024, compared with £96.8m the previous year.
Clare Miller, chief executive of Clarion, said it had been a year of “significant and unprecedented challenge”.
Writing in the 125,000-home landlord’s annual report, she said: “With supply chain costs increasing far above inflation, the introduction of significant regulatory changes and the growing need for investment in our existing homes, we have weathered these challenges to the best of our ability.”
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Clarion has been investing heavily in improving the condition of its homes amid increased scrutiny of the social housing sector.
Former housing secretary Michael Gove wrote to Ms Miller on several occasions warning the association about its failures, which has included a string of severe maladministration findings by the Housing Ombudsman.
In 2022, Mr Gove said Clarion had “failed its tenants and refused to treat people with respect”. In his most recent letter sent in February, he said he remained “deeply concerned”.
Of the £418m Clarion spent on its existing homes, £129m was capital investment in the 2023-24 financial year. The overall spend on homes was up from £397m the previous year.
Costs from maintenance and major works increased by £42m in the landlord’s last financial year, mainly due to higher demand for routine maintenance and inflation. The use of subcontractors also pushed up costs, it reported.
Like many of its peers, Clarion is dialling down its development plans due to the tough economic environment and pressures on the sector.
In the 2023-24 financial year, the association reported 1,538 completions, which was a 24% drop year-on-year. Of the homes handed over, around two-thirds were classified as “affordable”.
Despite the lower competitions, Clarion spent £412m on developing new homes, which was up from £375m the prior year.
The landlord also booked £3m of “abortive costs” on schemes that are “no longer being progressed”, the annual report said.
However, Clarion said it still has “over” 20,000 homes in the pipeline.
On overall turnover, Clarion reported a slight drop to £992.5m. Income from its core social housing lettings rose by 8% to £784m.
The revenue figure was dragged down as shared ownership first-tranche sales fell by 30% to £84.3m. A total of 696 shared ownership homes were sold compared with 913 the year before, the association reported.
Turnover from open market sales slid by 36% to £63m as the number of homes Clarion sold fell to 194 over the year.
Private market homes were sold at a negative gross margin of -2%, meaning the cost of building homes outweighed income.
Clarion’s overall operating margin was 24%, compared with 26% the year before.
As of March 2024, the association had total debt of around £5.57bn, compared with £5.4bn at the same point last year. Of the current debt, £4.57bn has been drawn down.
Clarion currently has a G1/V2 rating from the Regulator of Social Housing.
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