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For-profit provider earmarks £3.9m for remediation work
A for-profit housing provider has set aside £3.93m to pay for remediation work to fix a leaking roof and fit replacement cladding to meet new safety standards, its annual report has said.
The leak and associated issues at a building in Aldershot, Hampshire in 2023 meant that Funding Affordable Homes (FAH) had to house some residents in temporary accommodation while work was carried out.
FAH allocated £480,000 as a provision for the works in its financial report for 2022-23.
The extra costs have been included in its 2023-24 report because “there is greater assurance regarding the necessity of the work and the related costs”, it said.
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FAH’s 2024 impact report also noted that housing management partners raised issues over design faults at Ryde and Freshwater, two sites on the Isle of Wight, “where the diagnosis of the underlying issues took a long time to identify”. It said works were now underway to resolve them.
The landlord posted a total comprehensive loss of £2.9m for 2023-24, compared with a loss of £400,471 in 2022-23.
It reported a deficit of £2.68m, which does not include the revaluation of tangible fixed assets, in 2023-24, compared with a surplus of £519,469 the previous year.
The landlord said it had settled its bank loans during the financial year and agreed new facilities with Deutsche Bank totalling £30.3m.
DJ Dhananjai, chief investment officer at Edmond de Rothschild Real Estate Investment Management, which advises the FAH fund, told Inside Housing the overall loss was due to the revaluation of assets and debt financing.
“Going forward, we expect to start distributing enhanced income to investors, and the fund is now set up as a stabilised portfolio of assets for the long term,” he said.
As at 30 June 2024, FAH said it had missed its target of having seven operational housing schemes by one scheme due to “a lack of available equity”.
FAH also missed its development target for 2023-24, acquiring 119 homes against a target of 220.
The landlord reported a gearing result – a metric that measures net loans as a percentage of the total value of properties – of 102%, an uptick from 79% the previous year. It said this year’s percentage would be reduced to 27% if inter-company debts were excluded.
FAH’s EBITDA MRI (earnings before interest, tax, depreciation and amortisation, major repairs included) figure rose from 72% in 2022-23 to 159% in 2023-24 as a result of its refinancing, which led to lower finance costs and a healthier buffer for interest costs.
The landlord’s operating margin also grew from 26% to 58% in 2023-24. Its target for 2024-25 is 69%, which FAH said was due to fixed costs being spread over a wider asset base.
In October 2024, FAH sold its final independent living property after starting the process of leaving the sector in 2019. It acquired 32 properties in 2017 from First Priority Housing Association as a short-term measure due to poor management.
Established in 2015, FAH owns 851 homes across 10 schemes, with 562 operational homes. It outsources property management to local registered providers via 20 to 30-year leases.
In July 2024, the landlord appointed Richard McCarthy, a former Department for Levelling Up, Housing and Communities director and Peabody boss, as its new chair.
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