G15 landlord sees deficit balloon to £25m as pandemic and fire safety costs take toll

Fire safety impacted the group’s finances as it reported that its overall spend more than doubled in the year to £27.3m. “We took the policy decision to deal with urgent works on cladding and other fire safety irrespective of tenure or funding, knowing that we would have to expense costs relating to leaseholders and shared owners,” the association said in its annual report. It also said that it took the decision to pay for waking watches, which cost £4.7m.

Other G15 landlords are facing similar significant costs. In the next five years, One Housing said it expects to spend “in excess” of £200m on fixing its buildings with defective cladding or fire-related issues.

In the last financial year, the group also took an impairment of £13m on a proposed development in north London, known as Victoria Quarter. The group, along with its joint venture partner Fairview New Homes, has been forced to cut the number of planned homes on the former gasworks site after the initial application was refused by Barnet Council.

At its private care homes business, Baycroft, losses widened to £9.6m from £5.8m the year before. “They were particularly badly impacted in terms of occupancy by the COVID-19 pandemic,” the group said.

"We took the decision early not to accept anyone being discharged from hospital which meant, compared to many operators in the care sector, we had a good record of keeping customers and staff safe.”

It also said that families were “reluctant to entrust their loved ones to care homes while uncertainties remained about COVID-19”.

In its core social housing business, One Housing said that it was “disproportionately affected” by COVID-19 as extra staffing, cleaning and other costs were incurred.

Its income from general needs and shared ownership housing edged up to £105.9m, producing an operating surplus in the division – excluding fire-related costs – of £25.7m. The margin for the division was 33.1%, down from 38.9% the year before.

One Housing said it delivered 184 new homes in the year – a drop of 46% on the previous year’s figure of 338. Of the 184 built, 142 were classed as “affordable” by the group.

Total debt facilities fell to £1.08bn, from £1.3bn the prior year. Gearing was 57%, down from 62% the year before.

Mr Gray said: “We knew the 2020-21 financial year, a year like no other, would be challenging, and planned accordingly – although we’ve made losses, we’ve kept to our budget, and remain financially robust, with assets of over £2bn, the confidence of our lenders and reserves of over £300m.”

One Housing announced in June that it was exploring a merger with 58,000-home landlord Riverside.

Mr Gray added: “As London and the UK recovers from COVID-19, we anticipate future growth and the further development of our partnership proposals with the Riverside Group.”