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Clarion spends £20m on fixing issues at two problematic estates
Clarion has incurred £20m of costs over action taken to deal with major building issues at two high-profile London housing estates, its annual report has revealed.
The 125,000-home landlord said that it booked the “exceptional” costs partly as a result of having to decant residents from Clare House in Bow and the Eastfields Estate in Mitcham.
At Clare House, the UK’s largest housing association spent £7.1m on leaseholder buybacks after permanently moving residents out of the 22-storey former council block, the annual report said.
The buybacks have involved the group offering to purchase properties from affected residents after it was found that the building could not be kept safe without major work or demolition.
A total of 120 households were told a year ago that they had to move out of the block. In an update on the situation, the annual report said: “We are exploring options for the future of the building and working closely with households to provide permanent new homes.”
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At Eastfields, Clarion was put under the spotlight last year after ITV News broadcast images of widespread disrepair, pervasive black mould and a severe vermin problem on the 466-home estate.
Clare Miller, the group’s chief executive, told MPs she was “ashamed” by the conditions, and the Regulator of Social Housing said the episode was “disappointing”. Clarion also faced criticism from former housing secretary Michael Gove.
The case has been one of the most high-profile among a series of damning revelations about the poor state of some homes within the social housing sector.
Writing in the annual report, Ms Miller said: “I am acutely aware that the spotlight remains on our sector with respect to the maintenance and quality of our homes.”
Clarion did not detail how much of the rest of the £20m it had spent on dealing with the problems at Eastfields.
Across the two estates, the group disclosed that it spent £8m on leaseholder buybacks, £7m on “management costs” predominantly for decants and decommissioning, and £2m on repairs, plus a £3m impairment.
Elsewhere, the annual report revealed that Clarion spent £364m on maintaining and improving its existing homes, up from £290m the year before.
It also put a “record” £40m towards fire safety issues across its affected stock, compared with £27m the year before. However the group secured £7.2m from the government’s building safety fund from seven separate applications to help it replace cladding on buildings.
To date, Clarion said it has spent £117m on fire safety remedial work.
Despite the costs, the G15 landlord revealed that its post-tax surplus to the end of March 2022 jumped 52% to £185.8m. The surplus was boosted by the group selling 2,034 homes to other registered providers after it restarted its stock rationalisation programme.
Revenue rose 12% to £1.06bn, the first time Clarion has seen its turnover pass the billion-pound mark. This was partly driven by a 30% increase in shared ownership homes sold to 1,502, producing an operating surplus of £15.9m on revenue of £150.1m.
Staircasing transactions totalled 352, leading to a surplus of £19m, compared to 241 owners increasing their share last year and a £14m surplus.
Turnover from open market sales jumped 79% to £157.3m, producing an operating surplus of £15m.
As Clarion previously revealed in unaudited figures in April, its completions rose to 2,276 homes in the year, compared to 2,126 the year before, which it said was a “record” figure. It said that of the 2,276 new homes, 86% are classified as “affordable”.
Clarion’s overall operating margin rose to 29%, compared with 27% the year before.
Rent arrears were 5.7% at year-end, which the group said is within its target.
Group net debt was broadly flat at £4.58bn, compared to the same point last year, the annual report showed.
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