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Midland Heart boosts surplus and turnover but shared ownership sales fall
Midland Heart has posted an increased surplus and turnover but falling income from shared ownership sales in its 2023-24 annual results.
The Birmingham-based social landlord recorded a surplus of £41.8m for the financial year, up 2.7% from £40.7m in 2022-23.
Turnover was also up at £231.9m, an increase of 4.8% compared to 2022-23 (£221.1m).
Operating margin remained relatively consistent at 28.6%, down from 28.8% in 2022-23, due to “management of costs” offsetting inflationary pressures and salary increases.
Midland Heart said that the rising surplus was largely due to increased income, insourcing more housing operatives and placing less reliance on sub-contractors to reduce costs.
A total of 90% of the housing association’s turnover came from core social housing lettings, up from 87% the previous year. Rent income rose to £208.8m as a result of annual rent increases and new homes.
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Midland Heart sold 143 shared ownership homes in 2023-24, generating turnover of £13.8m. This was 20% lower than 2022-23, when it posted turnover of £17.3m from shared ownership sales alongside £3m from homes for outright sale.
The landlord said that the level of first tranche sales decreased because homes were sold less quickly during 2023-24, primarily due to “the affordability of mortgages” following high interest rates.
Total housing stock stood at 35,459 in 2023-24, compared to 34,906 in 2022-23.
Midland Heart built 670 new homes in 2023-24. Of these, 83 were for social rent, 378 were for affordable rent and 209 were for shared ownership.
As part of a six-year development programme, it said it had now completed 2,941, or 78%, of the 3,750 homes it aims to build by March 2025.
Reporting on the new tenant satisfaction measures for the first time, Midland Heart said that overall satisfaction among renting tenants was 76.6% across 27,500 homes. Meanwhile, overall satisfaction among 2,200 owners of low-cost homeownership homes was lower, at 52.4%.
EBITDA MRI interest cover fell to 1.96, compared to 2.37 in 2022-23, due to rising investment costs and increased interest rates.
A Social Housing Decarbonisation Fund Wave 1 project was completed in 2023-24, insulating 161 homes using £2.2m of government grant matched by Midland Heart.
The housing association, which marks its centenary this year, retained its G1 and V1 governance and viability ratings from the Regulator of Social Housing and an A1 (stable) credit rating from Moody’s.
Joe Reeves, executive director of finance and growth at Midland Heart, said: “Our agile approach to our funding strategy, our robust liquidity and the strong relationships we have made with our lenders and investors provide us with a strong foundation to achieve our key deliverables and continue to invest in new and existing properties and the communities in which we serve.
“This continued financial strength has allowed us to make record levels of investment in our digital services, our frontline operations, our building safety and energy performance and in the quality of our new and existing homes in the last 12 months.”
Glenn Harris, chief executive of Midland Heart, said: “We approach our centenary in a strong position, having made significant and lasting improvements on our three main objectives: becoming a first-class landlord whose services are responsive and accessible, building as many new affordable homes as we can, and becoming a leading employer across the Midlands.”
In February, Midland Heart suspended its chair Lord Ian Austin following a post on social media in which he described “Islamist rapists and murderers”.
Lord Austin, a former housing minister, later said the comments referred to the terrorist group Hamas. He stepped down in March and was replaced by Llewellyn Graham.
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