Midlands landlord sees surplus slip a quarter as costs bite

In its most recent year, Midland’s Heart turnover rose 7% to £221.1m, helped by an increase in shared ownership sales and new homes handed over, and rent increases.

The landlord sold 174 shared ownership homes last year, generating an income of £17.3m and an operating surplus of £2.7m. It added that “first tranche sales increased as homes were sold more quickly during 2022-23 due to a strong property market coupled with an improved marketing effort”.

The group spent £97.5m on new homes and £20.7m in improving its current stock. 

John Edwards, outgoing chair of Midland Heart, said the landlord was still on track to hit its goal to build and acquire 4,000 homes by 2025, despite a fall in yearly completions.

Midland Heart built 651 new homes in 2022-23, down from 700 in 2021-22, and acquired 173 homes.

The group’s operating margin fell to 28.8%, compared to 36.3% the previous year.

Gearing was 44%, down from 45% in the 2021-22 financial year. Rent arrears at year end were 4.39%, up slightly from last year’s figure of 4.30%.

The group’s interest cover percentage was 296%, compared to 386% the year before. As of March 2023 it holds £247m of cash and facilities immediately available. Net debt at year end was £526m, up from £499.6m the year before. 

Mr Edwards, who will be replaced as chair by former Labour housing minister Ian Austin next month, added: “Eight years ago, we decided to simplify our organisation and focus on our core purpose to provide quality affordable homes across the Midlands.

“Our focus has resulted in a steady improvement in tenant satisfaction, increased investment in the comfort and safety of our homes, and being on target to build and acquire 4,000 affordable homes by 2025.”

“We enter the final years of our current corporate plan, ‘Making What Matters Brilliant’, with tenant satisfaction around 90%, having retained our G1/V1 status from the Regulator of Social Housing and maintaining our Moody’s A1 rating.”