Orbit surplus falls 52% as sales income slips

By contrast, Orbit brought in £218m in turnover from core social housing lettings, a slight increase on the previous year’s figure of £210m.

Orbit’s operating margin went from 32.5% to 36.8%, the highest margin for the 43,000-home social landlord from any of the past five years.

Over the year, Orbit spent £287m on new homes, an increase on the amount it spent in the previous year, which was £271m, but less than the year before that, when it spent £331m.

Baroness Tessa Blackstone, chair of Orbit, wrote in her statement: “The last few years have been challenging for the housing sector. It has faced a number of market headwinds including political and economic uncertainty following the outcome of the vote to leave the European Union.

“Orbit has responded to tougher market conditions by the adoption of a medium-term delivery plan for new homes with a tenure mix that reduces our financial risk, whilst increasing our proportion of affordable social housing.”

Orbit had its credit rating downgraded by ratings agency Moody’s in May because of its large development programme and exposure to market risk.

Of all the housing associations rated by Moody’s, Orbit is the most exposed to market sale, according to a report issued by the agency in March.

Baroness Blackstone’s statement about Orbit’s changed development programme puts it alongside a number of other housing associations in London and the South East that have changed their plans in response to difficult market conditions.

The ongoing uncertainty around the UK’s departure from the EU has caused house prices in those regions to fall, with London prices falling at their fastest rate since the aftermath of the global financial crisis.

Mark Hoyland, chief executive of Orbit, said: “Against a backdrop of uncertain times for the UK economy and the housing industry as a whole, we have maintained an operating surplus of £116m and continue to invest in our homes and communities.

“Our mission remains the same. We are clear that we have a significant role to play in tackling housing affordability. In the previous 12 months we have issued a £450m bond and alongside our £129m partnership with Homes England we now aim to build 20,000 homes over the next 10 years, with 70% of these being affordable.”

Joy Baggaley, group finance director, added: “These financial statements demonstrate a sound balance sheet which gives us the financial resilience to weather the UK’s economic uncertainty as we maintain a clear and driven focus on our strategy.”

Update: at 13.57pm on 12.9.19 This story was updated to include comments from Mr Hoyland and Ms Baggaley and to make clear that the fall in Orbit’s income from sales was not the primary driver of its reduced surplus.