Financial boost from mergers continues for Aster, amid record new homes delivery

In 2022-23 Aster saw its turnover rise to £301.2m, from £240.9m, which was boosted by a strong sales performance as well as benefits from acquisitions.

The social landlord said its asset sales continued to perform ahead of budget during the financial year because of the continuation of its void disposal programme and an upturn in sales from staircasing of shared ownership homes, due to market conditions.

Sales of shared ownership homes and open market sale homes, predominantly delivered through joint ventures, totalled 560 in 2022-23, a rise from 540 in the previous year.

First tranche sales remained strong, with the group achieving 422 first tranche shared ownership sales, up from 369. The margin on first tranche sales has increased from 13.3 to 16.1 per cent as a result of the focus on larger development opportunities to “capture economies of scale and efficiencies”, the group said.

However, an increase in investment in existing stock for repairs has led to a drop in operating margin, from 31.6 to 22.2 per cent, and operating profit, from £76.2m to £66.8m.

Aster said the margin was primarily impacted by “significant inflationary increases” across the business, an increased demand for repair work and additional investment in its stock following the initial outcome from its stock condition survey.

Social housing costs increased by £44.5m. This was driven by £14.4m on major improvements, repairs and maintenance costs, £11.1m additional spend on services and £8.1m in care and transition services costs following the acquisition of C&C and Enham Trust.

In 2022-23 Aster spent £83.4m on repairs and maintenance, a rise from £78.6m the previous year. Overall, the landlord completed more than 120,000 repairs.

Development

This year Aster delivered 1,312 homes, through spending £256m, its biggest volume of homes delivered to date. This was a rise from 939 homes in 2021-22 from £208m of investment, but the number of homes fell short of Aster’s 1,495-home target.

The majority (698) of the 1,312 homes were for affordable rent, 466 were shared ownership, 17 for market rent and 131 sold on the open market. Aster also acquired a further 82 properties in Wandsworth.

Aster said that delivering the biggest volume of homes to date was a “particularly significant achievement” given the challenges the business faced.

The housing association said that build cost inflation pressures “continue to be a concern”, which although they have eased, the provider does not expect to return to normal levels of inflation for some time. Aster said that its exposure is limited because the majority of its programme is developer-led.

Aster said the planning system continues to present “challenges” for the housing sector and it has experienced long delays in achieving planning consents and clearing planning conditions.

The report referred to the issue of nitrate neutrality, which it said also continues to delay the process, and noted that the landlord was “working diligently to connect with the right stakeholders” to find ways to speed things up where it can.

Earlier this week, the government said it would remove the ‘nutrient neutrality rules’ that it claims have blocked the development of more than 100,000 homes, in an amendment tabled to the Levelling Up and Regeneration Bill.

Looking ahead, Aster said that in line with its seven-year business planning, it has boosted its forward programme by securing contracts on 40 schemes, which will provide 1,706 homes.

Aster said its strategy is focused on investing in modernising its customer services and maintaining and improving its properties. This is while building affordable homes through a variety of land-led schemes and via Section 106 agreements, joint ventures and community land trusts.

Bjorn Howard, chief executive of Aster, said: “This was a transformative year for Aster, as we built more homes than at any other point in our history and diversified our business thanks to the successful integration of care specialist C&C into the group, as well as Enham Trust.

“As a result, we have now expanded further into London, providing good-quality homes and care services for our customers. While developing as many new affordable homes each year remains a key priority, we’re focused on improving our existing portfolio, underlined by the significant amount invested in repairs and maintenance.”

Aster’s gearing rose slightly from 50 to 51 per cent while its EBITDA MRI interest cover dropped from 182.5 per cent to 164.7 per cent.