The editor’s rundown: pensions power, deals volume climbs, and a mixed picture in the accounts

In Wales, the collaboration of the nation’s eight Local Government Pension Scheme (LGPS) funds made major investment commitments this month. Wales Pension Partnership (WPP) assigned a £400m mandate to Schroders Capital to invest in positive impact and local investments, including affordable housing.

 

The wider role of pensions funds has continued to attract the new government’s attention, with chancellor Rachel Reeves in July announcing a “landmark pensions review” intended to unlock the investment potential of the £360bn LGPS in England and Wales. Phase one of the review, which is focused on investment, has now launched. Terms of reference published during the past month establish four key policy areas, including how to encourage “further pension investment into UK assets to boost growth across the country”, and tackling “fragmentation and inefficiency” in the LGPS through consolidation and improved governance.

 

Finally, the scheme behind some sector organisations’ own pensions was in the spotlight this month, with the publication of the three-year valuation of the Social Housing Pension Scheme (SHPS). Figures from scheme facilitator TPT Retirement Solutions showed a reduction in deficit to £690m as at September 2023 – down from £1.56bn in 2020. External advisors have suggested that the results present a “real opportunity for associations to significantly improve their financial strength and resilience”.

 

Rents and mergers

 

Greater resilience and financial strength may also be at hand where rumblings of an incoming longer-term rent settlement are concerned. Reacting to reports in the Financial Times that the chancellor is planning to introduce a new 10-year index-linked settlement for social housing in October’s Budget, providers, trade bodies and advisors emphasised the contribution this would make to much-needed stability and financial certainty in the sector.

 

Meanwhile, on a smaller scale, the opportunity for G15 landlord Hyde to bestow some of these qualities onto a currently non-compliant landlord lies behind merger talks that emerged during the month. East London-based Tower Hamlets Community Housing (THCH) was rated G3/V3 in March last year, after the RSH found “weaknesses” in the internal controls framework of the 3,200-home provider. Announcing their merger discussions in August, Hyde and TCHC said that the partnership was intended to “bring stability and the opportunity to do more of what matters to residents”.

 

Financial accounts

 

A number of full-year financial accounts have landed during the month, showing a mixed picture for surpluses and supply.

 

Accent grew its surplus slightly, despite record investment in its existing homes. It also saw its highest completions in a decade.

 

In the South East of England, Portsmouth-headquartered Vivid delivered its highest number of new homes since it formed through a merger in 2017, but saw pre-tax surplus fall.

Sovereign Network Group, which operates across the South of England, including London, saw its pre-tax surplus shrink 12 per cent in the year in which it completed its merger to form an 84,000-home group. The provider attributed the fall to higher interest rates and maintenance costs, as well as non-recurring merger costs and asset write-downs.

 

LiveWest, meanwhile, saw a small rise in underlying surplus, despite increasing investment in its existing homes, which pushed up operating costs on social housing lettings. However, completions for the South West-based landlord fell compared to the previous year.

 

Elsewhere, Paradigm – which manages homes across Buckinghamshire, Hertfordshire and Bedfordshire – grew its pre-tax surplus by almost £2m, driven by strong first tranche shared ownership sales.

 

And housing and care provider Anchor saw a £10m dent in its pre-tax surplus, largely due to an impairment charge relating to a development scheme.

 

Professionals’ league

 

Our professionals’ league for 2024 has uncovered a similarly mixed picture for capital markets deals over the 12 months to 31 March 2024. While the number of deals included in this year’s analysis has dropped a quarter compared to 2023, the overall deal value has risen slightly, to reach almost £4.1bn. Read the report to see the transactions driving the increase and find out which advisors and funders triumphed in this year’s deals tables.

 

Fire safety

 

Next week and the start of September will see the final report from the Grenfell Tower Inquiry published.

 

With it will come renewed focus on the new government and its agencies to ensure lessons are not only learned, but also reflected in effective action – and that buildings where building safety remedial works have still not been completed are swiftly addressed.

 

News this week of a fire at an apartment block in Dagenham – in which, thankfully, all residents have been accounted for – has added further emphasis, once again, to the urgency of addressing building safety.

 

Sarah Williams, editor, Social Housing