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Great Places on course to miss operating margin ‘golden rule’ as market sales come in below budget
Northern landlord Great Places Housing Group expects to miss its full-year operating margin “golden rule”, after reporting lower-than-expected market sales and booking an extra £2m in costs for maintenance and fire risk work.
It said in a Q2 update that it was projected to miss its financial rule for the 2024-25 operating margin by £1.2m.
Great Places’ latest forecast surplus is £27m, which includes the additional £2m to cover an “acceleration” of its fire risk assessments survey programme and further maintenance work.
This also takes into account a lower-than-expected surplus from market sale schemes, which is set to be £0.7m below budget because some schemes will now complete next year.
However, all other golden rules including bank covenants are forecast to be met this year.
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The landlord added that the demand for reactive repairs had stabilised and the cost was forecast to budget.
If the forecast is accurate, Great Places said the figure “would remain higher than the sector median operating margin of 18.2%”, set out in the English regulator’s 2023 Global Accounts.
But the forecast “will remain under review and challenge”, Great Places said.
The quarterly update also revealed that the landlord had failed to meet its starts target due to a 132-home site being delayed “by a few weeks into October”.
Great Places made 208 development starts on site, after aiming for 316 during the period. Its surplus before tax in the six-month period to September 2024 was £15.7m, slightly ahead of budget.
The Manchester-based landlord said it had achieved an EBITDA MRI of 172% at the end of September 2024, far above its target of 120%.
It said it was also in line with its target of having 2,500 properties below Energy Performance Certificate Band C by the end of the year, with 3,101 homes at that level.
Great Places also highlighted how 85% of its properties have had a stock condition survey in the past five years and it is on track to reach 100% in 2025.
Its August update for the first quarter of the 2024-25 financial year revealed that it was on track to meet its full-year development target as it recorded a rise in pre-tax surplus.
In July, the housing association appointed a new chief executive. Alison Dean took over from Matthew Harrison, who stepped down after 10 years in the role.
Last year, it was picked to design, build and manage the first purpose-built LGBTQ+ majority older people’s housing scheme in Manchester.
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