Karbon posts reduced operating margin due to extra repairs spend

“We have also seen higher subcontractor expenditure, use of agency staff (due to high demand for trade operatives) and higher costs from dealing with repairs linked to damp and mould,” Karbon said.

In its report, Karbon said one of its biggest challenges was bringing down the customer waiting time for repairs and maintenance. It currently has a backlog of around 15,000 jobs.

Paul Fiddaman, chief executive of Karbon, said the landlord’s operating surpluses – adjusted for the negative goodwill from its mergers with York Housing Association and Leeds and Yorkshire Housing Association – had remained “healthy over the last two years at [about] £46m”.

The figure did decline slightly, from £46.9m to £46.1m, due to an increase in routine and planned maintenance of £11.8m, an uptick of 31% compared with the previous year.

The landlord built 644 homes in 2023-24, the highest annual total it has delivered to date, compared with 529 in the previous period.

Mr Fiddaman said: “We have pushed forward with our ambitious plans to deliver more affordable homes across the region and have invested heavily in the maintenance of our existing homes.”

Turnover was up in 2023-24, increasing by 15% to £191.4m, as a result of the annual 7% rent increase, rent from new properties and the acquisition of South Tyneside Housing Ventures Trust.

Last year, Leazes Homes also joined Karbon as a subsidiary, with Karbon providing management services for Leazes’ 759 homes.

Karbon’s reinvestment rate was 11%, an improvement on last year’s 10.7%, but still below its 2024 target of 17%. This was down to “the development of 81 fewer properties” than the landlord had targeted, largely as a result of “construction delays due to poor weather and third-party issues”.

The housing association said its target for 2025 was 15.1%, which would see £173.4m invested in the development of new properties and £40.7m spent on existing properties.

It invested £78.6m in existing stock during 2023-24 and plans to invest £83.3m in its homes next year.

Mr Fiddaman spoke to Inside Housing earlier this year about the potential impact of the new Competence and Conduct Standard, noting that the new mandates for professionalisation are estimated to cost Karbon around £1m a year.

He is also the chair of the North East Housing Partnership, a collective of 17 landlords tasked with overseeing the delivery of affordable homes across the region.

The partnership aims to build on the arrival of the combined authority and the election of Kim McGuinness as the first mayor of the North East.