Special report: housing associations’ forward spend plans reach £34.8bn

Elsewhere, there was an interesting change at Welsh HA Trivallis, which came seventh in the table after increasing its authorised commitments by £212m.

In its company accounts for the year, the group said it had set up a new development and regeneration team (DART) in 2018.

The board also approved a policy on landbanking and vacant and redundant sites in early 2019. This, it said, would “enable Trivallis to buy land ahead of grant funding to secure our pipeline of new homes more effectively”.

It added: “Due to the significant changes in the DART, just one unit was completed in 2018/19. A new development and regeneration strategy was approved by the board in May 2019. This will ensure our development programme delivers at least 658 homes over the next five years.

“Our programme will comprise the regeneration of our own land and existing homes as well as utilising new development opportunities. The DART is currently recruiting several new staff to help to deliver our new homes target.”

Its development ramp-up comes three years after the company rebranded from RCT Homes, which had previously operated as three subsidiaries.

Top 30 decreased capital commitments

Social Housing also took a look at the largest decreases in authorised commitments. Hyde Housing (£257m) and Southern Housing Group (£243m) experienced the largest drops, each totalling more than £200m.

A spokesperson for Southern said the drop was due to yearly fluctuations: “Capital commitments are presented at a point in time and therefore will fluctuate year-on-year according to changes in the development programme and the subsequent completion of schemes.”

Guy Slocombe, chief investment officer at Hyde, was keen to stress that the group had not reduced its ambitions “in any way”. He added that the group is still “firmly committed to growing our development pipeline”.

He said: “The perceived fall reflects a more phased approach to delivery and approvals over what is in fact a larger pipeline. Our overall delivery ambitions are also greater – developing more in partnership and through joint ventures, which enables us to divert more capital to building safety and stock investment while still supporting a significant development pipeline of over 8,400 homes and growing.”

Moat saw a reduction in authorised commitments of £119m to £8m, which represented three per cent of its total commitments. However its contracted commitments rose by £40m, meaning that its total commitments decreased by 21 per cent or £70m.

Greg Taylor, executive director of finance and corporate services at the association, said this was due to the group rebalancing its pipeline, while citing market challenges.

He said: “Our overall capital commitments decreased by £70m year-on-year, from £330m to £260m, as we rebalanced our development pipeline to reduce our high number of shared ownership commitments and increase the number of rented homes.

“This rebalancing exercise was instigated to manage our sales exposure in an uncertain market and caused a temporary lag in capital and authorised commitments. Our business plan continues to reflect our commitment to developing an average of 650 units per annum.”

England

This report has also broken the statistics down by country, with the 151 largest HAs in England by category (traditional, stock transfer and mixed groups) representing the bulk of the UK’s commitments with £31.7bn. This was made up of £13.7bn contracted and £18bn authorised.

Of these 151 HAs, 60 were large-scale voluntary transfers (LSVTs), 59 were traditional HAs and 32 were mixed groups that include both LSVTs and traditional organisations.

Traditional HAs accounted for around half of that total at £15.9bn. This was up 18 per cent on last year and was made up of £8.7bn in authorised commitments (up 26 per cent) and £7.2bn contracted (up 10 per cent).

Mixed HAs saw the smallest increase, with an eight per cent increase in total capital commitments to £11.6bn. This was made up of £4.4bn contracted (up 11 per cent) and £7.2bn authorised (up seven per cent).

G15

The G15’s commitments totalled more than £15bn, with the majority of the members seeing increases here. The exceptions to this were Southern, NHG, Hyde and Metropolitan Thames Valley Housing (MTVH). MTVH saw a decrease of nearly 40 per cent on last year to £534m. Authorised commitments made up nearly half of its total.

On this, Ian Johnson, chief financial officer at MTVH, said the reduction was due to the phasing of the HA’s development rather than signifying a reduction in activity.

“[The figures in] our annual report are influenced heavily by the timing of phases on our major regeneration scheme at Clapham Park. The board approves this phase by phase and the contractual commitment figure only reflects contracts for units actually under construction.”

He said the scope of this changed during 2018/19 to enable some major infrastructure costs (notably a school) to be taken out for the next board-approved phase.

He added: “The board is currently approving the delivery plan for the next phase of Clapham, which is eight blocks and 1,400 units. This is not the same as authorising the capital expenditure, which will be on a block-by-block basis, and we have just approved the contractual commitment for the next block of 50 social rent units.

“While we are continually assessing our capacity for new development and our appetite for market risk, we remain committed to delivering up to 2,000 homes a year across our geographies.”

Overall, the group has a pipeline of nearly 7,000 units over the next five years, and it plans to spend around £2.3bn in this period.

Scotland

Scotland’s 26 HAs were made up mostly of traditional HAs (20), with five LSVTs and the largest HA, Wheatley. Overall, commitments were up 13 per cent to £1.4bn. This was made up of £792m contracted (up 46 per cent) and £653m authorised (down 12 per cent).

Authorised commitments as a share of total commitments decreased to 45 per cent, from 58 per cent the year before.

Wheatley had total commitments of £157m, which was down 32 per cent on last year. This was driven by a 67 per cent drop in its authorised commitments to £51m. Contracted commitments stood at £106m.

Wales and Northern Ireland

Of the 25 Welsh HAs looked at for this report, 20 were traditional HAs and five were LSVTs. Still, LSVTs accounted for more than half of Wales’ £1.4bn total commitments, which were up by more than a quarter. The high spending by these LSVTs is perhaps unsurprising since stock transfers pledge to invest in their homes when they take on the properties from the local authority.

Authorised commitments made up 70 per cent of the total with £990m (up 19 per cent of the previous year). Contracted commitments saw a 44 per cent increase to £434m.

Northern Ireland’s five HAs had total commitments of £267m, which were made up of contracted commitments only. This was up 24 per cent on last year.

Each month Social Housing focuses on a specific aspect of housing finance and collates and scrutinises the data for hundreds of housing organisations.

The reports below contain unparalleled commentary and analysis along with detailed sortable and searchable data tables.

Unit costs 2019 Our analysis of data from the English regulator has found that unit costs have risen among all types of housing association, with overall maintenance costs seeing the highest weighted average increase of nearly seven per cent

Impairment 2019 Housing associations’ impairments rise almost 40% in a year, driven by fire safety costs, contractor insolvencies and reduced land values

Global accounts 2018/19 Housing associations’ surplus for the year before tax decreased by five per cent to £3.76bn, driven by a 6.6 per cent drop in England

Affordable rent profile 2018/19 The level of affordable lettings dropped for the third year in a row

Staff pay Data from audited accounts of 206 housing associations shows that average staff pay in 2018/19 was £31,787 – a rise of 3.2 per cent over a 12-month period

Professionals’ league Our exclusive professionals’ league finds that activity continued apace in 2019, when housing associations increasingly looked to private placements

Sales proceeds Despite a 10 per cent rise in housing associations’ income from development sales in the last financial year, sales revenue is likely to remain flat over the coming years as a result of the property market downturn

Capital commitments The total capital commitments of 200 housing associations rose by 15 per cent in the past year, analysis by Social Housing has found

Reliance on sales surplus Social Housing finds that the total sales surplus of 150 English registered providers has dropped by nearly 10 per cent, as a result of lower market sales surplus

Stock dispersal How many council areas does your housing association operate in? How concentrated is its stock?

Accounts digest 2018/19 How does your housing association’s finances compare to others?

Housing Revenue Account part two How do councils compare in their 2018/19 Housing Revenue Account positions? Steve Partridge of Savills takes an in-depth look

Diversification of income We look at how housing associations are diversifying their income, and finds that they made 10.3 per cent more revenue from shared ownership and non-social housing activity

Impairment 2017/18 Social Housing takes a close look at the accounts of the 130 largest housing associations, and finds that impairments rose by nearly a third to £78.4m in 2018

Global accounts Social Housing’s analysis of the sector’s global accounts finds that housing associations’ pre-tax surplus fell last year – driven by drops in England, Scotland and Wales (August 2019)

Affordable rent profile We find that the number of affordable rent lettings recorded last year by housing associations in England has dropped for the second year in a row, suggesting that the sector is shifting away from the tenure

Capital commitments We scrutinise the capital commitments of the 208 largest housing associations in the UK (June 2019)

Housing Revenue Account part one Steve Partridge of Savills takes a look at the financial factors councils should consider in their Housing Revenue Account business planning (May 2019)

Reliance on sales surplus Our analysis reveals that profits form 42 per cent of 150 English housing associations’ total surplus (April 2019)

Sales proceeds We look at housing associations’ build-for-sale income and find a two per cent increase in 2017/18 (March 2019)

Shared ownership sales England, excluding London, has seen a four per cent rise in shared ownership sales – much lower than last year’s 16 per cent increase (February 2019)

Stock dispersal We show that housing associations’ general needs stock is becoming more concentrated within their local authority areas (January 2019)

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