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Fewer sales and disposals drive £73m surplus reduction at Clarion
The UK’s largest housing association has recorded a £73m reduction in surplus in its latest quarterly financial update.
The 125,000-home landlord’s accounts showed an operating surplus of £160.5m for the third trading quarter of 2023-24, down sharply from £233.9m in the same period from the previous year.
Clarion attributed £69m of the reduction in surplus to reduced disposals of housing stock. It said it has taken a “more cautious approach” to disposals in the current economic climate, and that the previous year’s surplus was boosted by “large stock transfers”.
Clarion has been in the midst of a property rationalisation programme, having sold 1,162 homes to other registered providers in its last full year.
Development sales also fell, Clarion said, while operating costs rose. However, most operating cost rises were offset by higher rental income following a 7% rent increase in 2023.
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Turnover fell slightly during the period to £720.3m, down from £758.3m in 2022-23.
Clarion said it had invested £96.7m in existing homes by the end of September 2023, up from £91.7m over the comparable periods.
It also invested £380.1m in its new homes programme, lower than the previous year, in line with “challenging market conditions”.
Housing fixed assets stood at £8.55bn, while drawn debt rose to £4.63bn.
Rent arrears improved to 7.9%, from 8.1% at the end of the last quarter. Clarion said the level remains “higher than usual” due to the continued impact of a “cyber security incident” in June 2022, where “a proportion of our direct debits were affected”.
The group had completed 811 new homes by the end of December 2023, 71% of which were for affordable tenures. Market and shared ownership sales generated income of £91.6m.
Clare Miller, chief executive of Clarion, told the Levelling Up, Housing and Communities Committee’s inquiry into shared ownership in December that providers of shared ownership “need to be clear about what they’re selling”.
The landlord’s current pipeline stands at 20,000 homes. At the same time, it said it was continuing to deliver targeted support to help residents manage their finances.
At the end of last year, Clarion also announced a strategic partnership with a major energy firm and house builder to develop what they believe will offer the first “zero bills” affordable homes.
