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Clarion surplus falls as it ploughs money into building new homes
Clarion’s surplus for the past six months dropped more than 20% on the previous year as the landlord blamed wider economic uncertainty, increasing investment and the government’s rent reductions for the fall.
According to the housing association’s latest results, for the half-year period to 30 September, its surplus was £69m, compared with £87m for the same period last year.
“Continued investment in our services at a time of economic uncertainty does come at a cost, and as a result our surplus for the year has seen a reduction but remains healthy at £69m, providing a solid foundation from which we can continue to deliver on our mission,” Clarion’s report said.
During the six-month period, Clarion invested £284m in new homes, 18% more than the previous year.
It also accelerated its development, constructing 691 new homes, compared with 420 in the same period in the previous year. Of the 691 units, 665 were affordable homes and 26 were for private sale.
The housing association’s turnover in the period was lower, at £402m for the first half of 2019/20 compared with £410m in the first half of 2018/19. Its operating margin fell from 38% to 34%.
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The company said its core rental income had reduced by £4m, mostly because of the government’s 1% rent reduction policy.
Clarion’s strategic asset sales programme also had some effect, with 460 homes being transferred to other social landlords with a larger local operational presence during March and April 2019.
Completions of shared ownership and open market sales generated income of £43m, compared with £47m the previous year.
Shared ownership sales income increased by £4m to £32m, but open market sales dropped by £7m as the number of homes Clarion sold dropped from 53 this time last year to just 29.
“The trend is in line with our expectations given current market conditions,” Clarion said.
A £5m reduction in other social housing activities was mostly offset by a £3m increase in service charge income and a £1m increase in other non-social housing activities.
Clarion owns and manages more than 126,000 homes across 170 local authorities, making it the UK’s largest social landlord.
Last month, it became the first housing association in the UK to be approved for a newly created sustainable housing label, which aims to help affordable housing providers attract capital from impact investors.
It has also recently strengthened its board after admitting it was facing “challenging conditions”.
