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North West landlord warns surplus target will be missed due to damp and mould spend
Great Places Housing Group has warned it will miss its targeted annual surplus figure due to extra spending to deal with damp and mould issues in its homes.
In a market update, the 25,000-home association said it is on track for a pre-tax surplus of £28m in the year to the end of March 2024, which is short of its £31.7m target.
The Manchester-based landlord blamed “increased repairs and maintenance expenditure, which is largely due to the costs of surveying and remediating cases of damp, mould and condensation”.
It comes despite Great Places being named this month among 17 housing associations getting a share of a £15m government pot to tackle damp and mould. Great Places has been awarded £570,990 to work on 130 homes.
Landlords across the sector have been upping their spending on fixing damp and mould issues following the tragic case of Awaab Ishak, who died of exposure to mould in a housing association home.
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Great Places also said that higher than budgeted insurance costs will be a factor in missing its surplus target.
The association’s half-year pre-tax surplus in the six months to 30 September was £13m.
The update has come two months after a proposed merger between Great Places and its Manchester neighbour MSV Housing was abandoned. The landlords blamed the current operating environment challenges for the tie-up not going ahead.
In its latest update, Great Places warned that its target for completions of affordable homes is “at risk” due to delays. However, it said this was “almost entirely” due to a single scheme in Manchester with 80 flats.
Sixteen sites are nearing completion with a high volume of handovers expected before year-end, the association added.
In its annual results for its last full-year, published in September, the landlord revealed it had revised down its housing delivery target with Homes England due to “challenging markets” and increased cost pressures.
In its half-year update, Great Places did not disclose a turnover figure. However, it said that along with its operating costs and net interest costs, it was “broadly in line with budget”.
The landlord is forecasting its operating margin would be 27% at year-end, up from 24% in its last full-year.
In its update, Great Places said its internal financial ‘golden rules’ around interest cover, gearing and operating margin were all met at the end of the period, but did not disclose figures.
Rent arrears are at 4.6%, which is below the association’s target of 4.7%.
In the past six weeks, Great Places has appointed a new finance boss and a new chair, with both due to start in the new year.
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