Clarion plans £100m fire safety spend over next five years

News30 Jul 2020James Wilmore

Clarion, the UK’s largest social landlord, is planning to spend an extra £100m over the next five years on fire safety work on top of the £50m it has already spent.

Clarion plans to carry out passive fire safety work such as fire door replacement and fire stopping, as well as cladding remediation (picture: Getty)

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Clarion, the UK’s biggest social landlord, is planning to spend an extra £100m over the next five years on fire safety work on top of the £50m it has already spent #UKHousing

The 125,000-home group invested £18m alone on fixing safety issues in high-rise properties in the year to the end of March 2020, which represented a tenth of its pre-tax surplus, its annual report revealed.

Clarion has 116 buildings with more than six storeys. It has completed remedial work on 108 of them, a spokesperson told Social Housing. However, the £100m figure covers fire safety work across the whole of its stock, including street-level buildings.

Work includes cladding remediation as well as passive fire safety work such as fire door replacement and fire stopping, the spokesperson added.

Like many of its peers, Clarion is continuing to address fire safety across its estate, more than three years since the Grenfell Tower fire. Its fellow G15 landlord Optivo has set aside £80m for fire safety work over the next six years.

It comes as the sector prepares for a new building safety regime, after the government this month published draft plans for a major overhaul to tackle post-Grenfell concerns.

Landlords are also grappling with the fall-out from COVID-19, with rent arrears and voids rising because of the worsening economic situation caused by the pandemic.

In a separate update this week, Clarion said its arrears had risen to 6.1 per cent in the three months to 30 June, up from 5.2 per cent at the end of March.

“The group continues to monitor the situation closely and provide support for residents, signposting them to the financial support available and offering guidance on how to manage payments,” the update said.

Clarion rehoused 230 homeless households during the lockdown period, while occupancy rates remained at 98 per cent, it said.

On the development of new homes, Clarion revealed that its pipeline remains at around 17,000 new homes. Since April, the group has completed 265 new homes, of which 95 per cent are at “affordable” tenures. A total of 40 new homes have been started, of which all are “affordable”, Clarion said.

Open market and shared ownership sales brought in income of £30m, up from £23m in the same period last year. However the margin on sales dropped to 7.6 per cent from 18.2 per cent, which Clarion blamed on “forward-funded marketing costs for future launches” and said is expected to improve.

“The easing of lockdown restrictions has brought a degree of pent-up demand and improved market sentiment, boosted by the stamp duty holiday, and sales enquiries have reverted to pre-lockdown levels,” it said.

Meanwhile, the group’s full-year accounts revealed an 11 per cent rise in pre-tax surplus to £170m as the amount banked from selling housing stock as part of a rationalisation strategy nearly doubled.

In the the 12 months to the end of March 2020, Clarion’s pre-tax surplus rose to £170m, helped by £59m of surplus from offloading 1,964 properties.

This compared to £33m the G15 landlord accrued in the prior year from property sales.

The biggest lump of properties sold was a stock transfer of 1,175 homes to Riverside Housing Association.

However, Clarion’s surplus was dragged down by increasing costs. Cost of sales jumped 31 per cent to £111m, while operating costs rose three per cent to £497m, the group said.

Operating and net margins remained flat at 35 per cent and 20 per cent respectively.

The group’s revenue rose three per cent to £842m.

During the year, Clarion completed 2,101 new homes, which represented a 69 per cent increase on the prior year. Of these homes, 86 per cent were deemed “affordable”, Clarion said.

It spent spent £631m on building new homes, up from £541m the previous year. Of this, £535m was spent on affordable homes.

During the year, Clarion invested £102m in property repairs (up from £124m in 2019) and £188m in maintenance.

Mark Hattersley, chief financial officer at Clarion, called the full year a “strong and resilient performance”.

He added: “These accounts detail results up to the end of March this year and while so much has changed in the world since then, this highlights the strength of Clarion’s position as the pandemic hit.”