Special report: UK housing associations’ capital commitments increase 3%

They added: “A pause was also placed on entering new contracts until the industry-wide price spikes in the market had stabilised. This led to a reduction in the level of contracted commitments during the year.

“The overall net increase of £277m of authorised or contracted expenditure reflects our growing development programme and regeneration pipeline.”

Similarly to last year, L&Q followed Clarion in the top 60 list with total commitments of £2.9bn, which were down nearly five per cent. This decrease could reflect cash flow timings or lower capital costs, with L&Q increasingly building outside the capital (such as in the North West).

Authorised commitments accounted for 15.7 per cent of its total commitments, compared with 24.5 per cent last year.

A spokesperson for the group said: “L&Q is committed to growth, and we’re continuing to build record numbers of new homes as part of our mission to tackle the housing crisis. Our sector-leading development pipeline will see us build on average 3,000 homes every year for the next 10 years – with near 60 per cent affordable levels.

“Last year, we completed 2,699 homes – and this year we’re delighted to report that we’re on track to deliver 4,700 homes. Looking to the future, we’ll be exploring opportunities to deliver more homes through joint ventures, which will enable us to free up balance sheet capacity to invest in our existing homes and services.”

Peabody came third in this list, despite having significantly fewer units than Clarion and L&Q. Its total commitments were down 5.4 per cent, but they were still a significant £2bn. Again, this could reflect higher capital costs, with the HA building in London.

Six of the top 10 in this list had all increased their spending plans. All except Midlands-based Platform either had units in or were based in the South of England.

Top 30 increased authorised commitments

Walsall-based WHG had the largest increase in authorised spend (3,229.2 per cent) to £47.5m. Its authorised spend made up 38.9 per cent of its total commitments, compared with 1.5 per cent the year before.

Gary Fulford, the group’s chief executive, said the increase was due to timing and getting schemes in contract, rather than a change in development ambition.

He said: “We are committed to building 550 new homes across the Midlands each year. Despite the challenges posed by the pandemic, this ambitious development programme has continued at pace, and this is reflected in our overall capital commitment, which increased from £93.5m to £122.1m in 2020-21.

“The substantial percentage increase in authorised expenditure at a given point from the end of one year to another was simply a matter of timing and not getting some schemes into contract within the year, rather than any change in our level of ambition.”

He added: “This was largely due to delays in achieving planning in time – just one symptom felt from the effects of the pandemic. Pleasingly, 77 per cent of this expenditure is now in contract, bringing even more new affordable homes to the region.”

RHP followed with an increase in its authorised spend of 1,798 per cent to £89.8m. As a result, authorised spend as a share of its total increased to 78 per cent, from 11.9 per cent the year before.

This was followed by retirement and extra care provider Housing 21, which saw a 1,312.2 per cent increase in authorised spend to £28.2m. Authorised spend made up 35.5 per cent of its total commitments, compared with 1.7 per cent the year before. A spokesperson for Housing 21 said the increase reflected the group’s ambitious development programme.

“We are committed to one of the largest development programmes for older people’s housing in England and since 2021 we have been aiming to provide up to 800 new properties a year,” they said. “These figures are the result of that commitment coming to fruition, and planning and Homes England approvals throughout the last financial year.”

They added: “The pandemic has shown us how important well-designed accommodation is, and we’re excited to drive the delivery of affordable, high-quality homes and communities for older people throughout 2022.”

Other organisations in this cohort included Notting Hill Genesis, which saw a 133.1 per cent increase in its authorised spend to £222.6m. Authorised commitments made up almost a third of its overall spend, compared with 11.5 per cent the year before. Despite this, the group saw a 13 per cent decrease in its overall commitments, reflecting the continued slowdown in its development programme, as it stated in 2018. 

This meant it acquired fewer plots for the period against its target, reducing to 779 (against a target of 783), according to its financial accounts. The drop was more significant last year when the group acquired 518 plots against a target of 1,400.

Top 30 decreased authorised commitments

Midlands-based Trent & Dove had the largest decrease in authorised spend. It was down by 88.5 per cent to £2.5m, which made up 7.5 per cent of its total commitments compared with last year when its planned authorised spend made up 58.9 per cent of its total.

Trent & Dove was followed by Swansea-based Coastal Housing Group, which had an 86 per cent decrease in its authorised spend to £5.3m. This made up 13.7 per cent of its total commitments compared with 48.3 per cent the year before.

Explaining the decrease, Simon Jones, executive director of finance at Coastal, said the organisation was the project lead on a £30m scheme during 2020, which it delivered in partnership with another organisation.

As the project lead, the development contract was in Coastal’s name, which meant the group recognised the full commitment in its 2020 financial statements. By 2021, it was contracted rather than authorised, which caused the drop.

He added: “We are a regeneration specialist and have experienced fluctuations in programme scale as projects are at different phases. We expect commitments to increase over the next 12 months.”

Your Housing Group (YHG), which describes itself as one of the UK’s largest HAs, had the third-largest decrease in authorised spend of 85.3 per cent to £24.8m, accounting for 16.7 per cent of its total commitments, compared with 78.1 per cent in 2019-20.

A spokesperson for YHG said: “The £168.7m figure [authorised spend in 2020] shows a perceived decrease in spend for Your Housing Group. However, £109m was allocated to a number of large-scale projects that were delayed in part due to COVID-19, and pushed from March into the following financial year. We have a healthy, ambitious build programme with 1,137 homes currently under construction, all of which are affordable. We have already completed 146 new homes this year and we are on course to complete over 220 this financial year.”

The spokesperson added that YHG is investing more than £250m in its existing homes over the next five years.

Elsewhere in this list, Sanctuary had a 44.4 per cent drop in its authorised spend to £258.1m, which accounted for 41.4 per cent of its total commitments. A spokesperson for the group said the figures reflect “a very specific point in time”, with Sanctuary remaining “fully committed” to its development plan.

They added: “This saw us on site building more than 2,000 homes in the last financial year and aiming to complete around 4,000 homes between April 2021 and March 2023. We have a number of development sites in Scotland, building a significant amount of units, and COVID-19 restrictions meant these were shut for almost three months during the 2020-21 financial year. This not only slowed down the progress of work on sites, but it also had an adverse impact on our spend (investment) in this area in 2020-21.”

England

Of England’s total commitments, £18.8bn had been contracted (up 5.4 per cent on 2020), leaving £16.5bn that had been authorised but not yet contracted, which was up by two per cent.

England’s LSVTs again saw the largest increases across the board. Planned spending that had been contracted rose by 9.7 per cent to £4bn, while authorised spending was up 20.6 per cent. In contrast, authorised spend for England’s traditional HAs was down nearly three per cent. 

England’s G15 members – London’s largest HAs – had total commitments of £14.9bn, which accounted for 42 per cent of the country’s total planned spend. Eight of the members had decreased their capital commitments, the largest of which (26.3 per cent) was seen from Metropolitan Thames Valley, which stood at £603.4m. The biggest increase among this cohort came from Southern Housing Group.

The group’s planned spending was up 48.9 per cent to £503.5m.

Contracted spend in England as a share of UK capital commitments was 50 per cent, while authorised spend was 44 per cent. 

Scotland

Contracted spending plans for Scotland’s 20 traditional HAs was down by 23.4 per cent to £545.4m, while authorised spend was down 29 per cent to £290m.

Scotland’s four LSVTs recorded a 6.5 per cent increase in total planned spending with £100.1m. Of this, 58.7 per cent was authorised, compared with 55.1 per cent the year before. This cohort saw a 2.1 per cent reduction in their contracted spend, while their authorised spend (£58.7m) was up 13.5 per cent.

Scotland’s largest HA, Wheatley, had total commitments of £221.7m, which were up 21.2 per cent. Of this, £168.3m was contracted (up 29.1 per cent) and £53.5m was authorised (up 1.5 per cent). 

Authorised commitments as a share of Wheatley’s total commitments was 24.1 per cent, which had reduced slightly on the prior year when its authorised commitments made up 28.8 per cent of its total.

Contracted spend in Scotland as a share of UK capital commitments was two per cent, while authorised was one per cent. 

Wales and Northern Ireland

Authorised spend made up 47.8 per cent of Wales’ total commitments with £443.2m. This was up nearly four per cent on last year. Contracted spend was up 7.1 per cent to £484.3m.

The biggest drop seen was across Wales’ five LSVT organisations, which saw a 24.2 per cent decrease in authorised spend to £104.8m. This saw its authorised commitments as a share of its total reduce to 47.4 per cent, from 68.2 per cent in 2020. Contracted spend for this cohort, however, increased by 80 per cent to £116.2m.

Contracted spend in Wales as a share of UK capital commitments was 1.3 per cent, while authorised was 1.2 per cent. Northern Ireland’s contracted commitments as a share of UK planned spend was 0.72 per cent. It had no authorised commitments.

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