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Quarterly completions halved at L&Q and approvals hit zero as turnover and operating surplus increase
Large London landlord L&Q has reported a significant downturn in completions and approvals in the first quarter of this year at the same time as multimillion-pound increases in turnover and operating surplus.
In its unaudited trading update for the three months to the end of June, the 110,000-home association said it had completed 353 homes, including joint ventures. This is down from 701 in the same period last year.
Of these 353 homes, 238 were social homes and the rest for market tenures. Starts jumped from 10 to 228 in the same period, with the majority of these being later phases of existing developments.
The landlord did not approve any new homes in the first quarter of this year, down from 92 in the same period the year before.
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This brings the total number of homes in L&Q’s approved development pipeline to 10,506, of which 70% are currently on site.
Waqar Ahmed, group director of finance at L&Q, said: “L&Q’s Q1 trading results demonstrate that progress is being made against our strategic objectives to divert a greater level of expenditure towards our residents’ existing homes through our £3bn major works investment programme and to lower our risk profile.
“In the year to date, we have invested £76m in our maintenance programme to improve the safety, comfort and quality of our homes and services. Given the strategic prioritisation of our existing homes, our development programme continues to retract, as demonstrated by declining approvals, housing starts and completions.”
L&Q’s turnover increased to £273m from £242m, and its surplus rose from £68m to £112m.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) interest cover was up to 179%, and 148% on social housing lettings.
Mr Ahmed added: “Alongside reducing investment in our development pipeline, we are delivering on other opportunities to create capacity to invest in our existing homes and to provide responsive and reliable services that offer the best value for residents.
“This is reflected by EBITDA from fixed asset sales at £26m and by the unconditional sale of L&Q Estates, L&Q’s strategic land business, to Urban & Civic as announced on 23 July 2024.”
Mr Ahmed confirmed that the sale of L&Q Estates completed on 6 August. The sale of its strategic land business was believed to be for a figure in the region of £200m.
L&Q described the major development and investment firm as “a logical purchaser to keep faith with the intention of boosting housing output across South East England and into the Midlands”.
The acquisition will see Urban & Civic expand its portfolio into Milton Keynes, a key target geography, while also widening its commitment to strategic interventions in high-growth locations.
In its last trading update in May, L&Q reported a rise in post-tax surplus of 268% on last year, but new home starts fell by 70%.
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