SNG boss vows to push on with development despite 12% drop in surplus

“Despite an economic future that is far from certain, we see the social impact of our homes and we are determined to be a developing landlord, to acquire new sites and to build the homes our future customers need,” he wrote in the group’s annual report.

Mr Washer has previously told Inside Housing that SNG will “buck the trend” on development cutbacks seen elsewhere across the sector.

SNG handed over 2,015 homes in its most recent full year, up from 1,879 the year before. 

Mr Washer said the growth was “despite rising costs in labour and materials, the long shadow of Covid, and ongoing wars in Europe and the Middle East”. 

SNG – which operates homes across the South of England, including London – spent £488m on development, an increase of £7m against the prior year. 

On maintenance and repairs, the landlord spent £138.6m, a 10% rise on the previous year, amid the sector’s heightened focus on standards. 

Management costs also rose a fifth to £141.9m, SNG revealed in its annual report.

Interest and financing costs rose to £128m, up from £104m, primarily due to SNG raising £400m through a sustainable bond in January and wider interest rate rises in the year.

The group also recorded an £11m reduction in the fair value of its investment properties. 

The fall in surplus came despite SNG’s turnover edging up by 2% to £707.8m. The increase was driven by a £51.6m rise in income from social housing rent to £566.2m, due to more homes and SNG raising rents by 7% under the current settlement with government.

However, SNG saw a sharp fall in income from open market sales, down 76% to £10.2m, which it blamed on timing of sales receipts in London the previous year. Net margins from sales jumped to 22.4%, compared to 2.4% the previous year. 

Turnover from shared ownership first tranche sales was £87.6m, a slight fall on the previous year’s income of £89.4m.

The group’s overall margin was 21.1%, up from 19.5% last year.

At the year end, SNG’s net debt stood at £3.6bn with cash and undrawn facilities of £983m. Gearing was broadly stable at 46.9%. 

SNG was formed last October, but the results include the full 12-month combined performance of Sovereign and Network Homes, the group said. 

The new entity was officially established when Sovereign Network Homes, formerly Network Homes, became a subsidiary of Sovereign Housing Association.