Housing association says number of builders going bust has increased provisions
Southern Housing has decided to “stop making commitments on new developments” 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 “significantly derisk the business and focus on core social housing activities”. 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 “difficult contractor market” and added: “[This] has delayed completion of new schemes impacting anticipated rent and sales income.
“In addition, with a number of contractors going into administration we’ve reassessed several schemes, writing off abortive costs and increasing the impairment provision.”
The group’s turnover also fell from £642m to £609m. This was driven by a 66% drop in annual first tranche sales income, from £60m to £40m, and a fall in market sales from £67m to just £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 £247m on existing homes in 2023/24, an increase of 33% year-on-year and plans to increase this by a further £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’s accounts also revealed the landlord has made a deficit of £28m for the financial year, down from a surplus of £80m the previous year. The figure was impacted by a £30m loss from the fair value movements of property and investments.
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