Paradigm holds surplus steady despite slump in shared ownership sales

The housing association sold a total of 77 first tranche shared ownership homes in the six-month period, down from 112 the previous year. This generated turnover of £12.4m, down 26% compared to £16.8m in 2023.

Paradigm said the fall in shared ownership sales was due to lower shared ownership completions during the six-month period compared to the previous year. The landlord completed 160 new homes for rent or shared ownership, down 30% from 229 in September 2023.

However, sales of existing homes and staircasing increased over the period, resulting in a £2.1m surplus on sale of fixed assets, up 10% from £1.9m in 2023.

Interest costs rose 11.4% to £17.6m, due to an increase in debt to fund development following the issuance of a new bond in April 2024. 

That month, Paradigm issued a £250m 20-year bond, which it said was used to repay a revolving credit facility and reduce its exposure to interest rate risk.

The group spent £24.5m in the first six months of the year investing in and maintaining existing homes, compared to £20.5m the year before.

Rent arrears stood at 2.99% over the six-month period, down from 3.09% in 2023, while interest cover was down from 162% to 155%. Gearing rose slightly from 55.4% to 56.4%.

Nicola Ewen, chief financial officer at Paradigm, said: “We continue to deliver our corporate plan objectives despite the challenging economic backdrop. Our operating margin of 41.4% reflects our financial strength. 

“Our rental income remains stable, and we continue to invest in our existing homes and new homes in our area of operation.”

Over the summer, Paradigm published its annual results for 2023-24. Its surplus rose 15.7% as its operating margin was dented by one-off legal and impairment costs.

Paradigm’s overall operating margin for 2023-24 was 33.8%, based on the Regulator of Social Housing’s value for money metric. Although this was a slight improvement on last year’s result of 33.3%, it failed to reach the landlord’s target of 40%.

This was down to an “increase in non-recoverable service charge costs, one-off legal costs and impairment”, as well as lower outright sales than forecast from its joint venture with Countryside.