Housing association says number of builders going bust has increased provisions
Southern Housing has decided to 鈥渟top making commitments on new developments鈥� as it shifts spending towards improving existing homes.
Paul Hackett, chief executive of the 80,000-home housing association, said the move would enable it to 鈥渟ignificantly derisk the business and focus on core social housing activities鈥�. As a result, the group said it would no longer be monitoring new home starts as one of its key performance indicators.
It said its numbers had been hit by a 鈥渄ifficult contractor market鈥� and added: 鈥淸This] has delayed completion of new schemes impacting anticipated rent and sales income.
鈥淚n addition, with a number of contractors going into administration we鈥檝e reassessed several schemes, writing off abortive costs and increasing the impairment provision.鈥�
The group鈥檚 turnover also fell from 拢642m to 拢609m. This was driven by a 66% drop in annual first tranche sales income, from 拢60m to 拢40m, and a fall in market sales from 拢67m to just 拢4m.
Southern, in its annual financial statement for the year to 31 March, did say it would build out schemes it already owns and would still work in partnership to deliver housing with local authorities.
The association said it started work on 348 homes in 2023/24, down sharply on the 952 reported last year. It completed 776 homes in the year, down on 1,089 last year.
As previously announced, Southern is shifting expenditure into maintaining and improving existing homes.
It spent 拢247m on existing homes in 2023/24, an increase of 33% year-on-year and plans to increase this by a further 拢23m next year.
Southern confirmed last month it would be making redundancies in its development team as a result of the shift in focus.
Southern鈥檚 accounts also revealed the landlord has made a deficit of 拢28m for the financial year, down from a surplus of 拢80m the previous year. The figure was impacted by a 拢30m loss from the fair value movements of property and investments.
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