HA’s surplus slides as it books £10m impairment amid housing market fears

The G15 landlord, which manages around 66,000 homes, posted a six per cent fall in pre-tax surplus to £98.1m in the year to 31 March 2020. Turnover rose nine per cent to £731.5m.

The group, which formed from the merger of Notting Hill Housing Trust and Genesis in 2018, reported that fair value gains from investment properties fell from £36.3m in 2019 to £12.6m this year.

In its annual report, NHG noted that “values have not risen as much in 2020 as 2019”.

The group also booked an impairment of £10m in the year after reviewing the value of its shared ownership homes and inventories in light of COVID-19.

Writing in its annual report, Paul Phillips, finance director at NHG, said: “Some commentators have suggested that values in London may fall by up to 10 per cent.

“Certainly, there are already delays in sales and there will be additional holding costs before we can sell homes to shared owners and others, which we estimate may cost us up to five per cent of selling value.”

He added: “We have, therefore, reassessed the net realisable value of our work in progress for homes being constructed for sale and reduced it by 15 per cent. Where this is below the carrying cost, we have charged it to the cost of sale. This, along with other smaller charges, led to a total impairment of £10m.”

NHG had already slowed down its development programme following a review in 2018. As a result, total spending on new housing fell 28 per cent in the last full year to £468m.

In the year, the group completed 1,962 new homes, compared with 2,111 the prior year. Of these, 720 were for “low-cost” rent and 390 were for shared ownership. A total of 459 were for market sale, up from 121 completions of this tenure the previous year.

The surplus on sales of private homes and shared ownership first tranches grew from £24.2m to £31.6m.

However, NHG started only two market sale homes in the year, compared with 191 the previous year.