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Third-quarter turnover up at L&Q but hundreds of shared ownership homes remain unsold
L&Q has increased its turnover in the third quarter of the financial year but reported that more than 500 of its shared ownership homes remain unsold.
The 109,000-home housing association posted turnover of £803m in quarter three ending 31 December 2024, up 5.5% from £761m in the same period in 2023.
Operating surplus rose 28% year-on-year to £342m, according to unaudited accounts. However, post-tax surplus was just £50m, down 50% from £102m in the same period in 2023.
This is primarily due to £120m costs labelled as “disposal of business interest”, L&Q told the London Stock Exchange. It has previously reported losses following the sale of its strategic land business, L&Q Estates, which it offloaded to developer Urban & Civic in summer 2024 for a reported £200m.
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EBITDA was up at £310m and the landlord’s cash interest cover rose to 170%.
The housing association generated £185m in turnover from sales during the period, of which £84m were for shared ownership homes, down from a total of £254m in 2023.
As of 31 December 2024, L&Q had 618 unsold homes including its joint ventures. Of these, 563 (91%) are for shared ownership.
The landlord said it expects to continue to see “a higher comparative level” of unsold shared ownership stock due to “bulk handovers in short time periods” and limitations to pre-sale meaning “gradual sales rates”.
In the year to date, L&Q handed over 422 and sold 670 shared ownership homes.
L&Q has reduced investment in its development pipeline. It completed 1,410 new homes during the period, down from 1,902 in the same reported period. Sales as a percentage of turnover stood at 22%, down from 30% in 2023.
In its forward guidance for the full financial year ending in March 2025, L&Q said it was expecting gross capital expenditure to be around £635m, up from previous guidance of £560m.
It added that it was expecting to deliver around 2,600 homes, with 316 scheduled to start in the fourth quarter of the year.
Ed Farnsworth, executive group director of finance at L&Q, said “year on year performance has improved” and the results reflected “continued delivery against our corporate strategy to provide better homes and services for our residents”.
He said he expected EBITDA MRI interest cover to reduce over the next quarter to 145-155% “as we increase investment in our homes and services”.
During the third quarter, L&Q revealed that it was selling Metra Living, its private rented sector business, which consists of 3,147 homes in Greater London and an operational platform.
Mr Farnsworth said the proposed sale will “support our strategic objective to simplify our business, prioritise our core purpose as a social housing provider and invest even more in our existing homes and services”.
He continued: “We also continue to rationalise stock that is either outside of our core geographies or uneconomic to maintain for the safety and comfort of our residents.”
As of 31 December 2024, fixed asset sales generated £102m of EBITDA, up from £72m in the first three quarters of 2023-24.
“We are seeking opportunities to continue to deliver affordable housing where it does not divert from our strategic aim to de-risk and invest in our existing homes,” Mr Farnsworth added.
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