G15 giant’s surplus slides 74 per cent after impairment and falling valuations

The landlord also reported an £85m downward valuation on its PRS portfolio, compared with a £35m gain last year.

L&Q said the revaluation reflected the impact of the “current economic environment on long-term valuations”. The landlord manages around 30,000 PRS homes.

L&Q’s overall operating margin fell to 14 per cent, compared with 24 per cent the year before, due to the higher impairment and reduced valuation on its properties.

Group turnover rose by six per cent, to £1.18bn, with 55 per cent of this coming from social housing lettings. New properties and rent increases caused turnover in social housing lettings to increase by £32m to £645m.

However, the operating margin fell to 25 per cent, down from 32 per cent, because of increased costs as a result of high inflation. L&Q also attributed the drop to a move to tackle a backlog of outstanding repair jobs and investing in improving customer standards.

Overall, L&Q’s spending on its existing social housing stock rose 32 per cent, to £347m, as the spotlight remains on tenant conditions in the sector.

Like many of its peers, L&Q has faced scrutiny over the condition of some of its homes. Earlier this year, the Housing Ombudsman said it was investigating the landlord over persistent poor performance regarding damp and mould complaints.

In July, housing secretary Michael Gove wrote to Fiona Fletcher-Smith, L&Q’s chief executive, saying that it had “failed” its residents.

Of the £347m L&Q spent last year, £173m was on “reactive maintenance”, £117m was on capital works, and £57m on planned maintenance.

Turnover from outright sales rose eight per cent, to £156m, producing an operating surplus of £4m, with a margin of three per cent.

Revenue from shared ownership first-tranche sales increased by a quarter, to £146m, producing an operating surplus of £24m and a margin of 16 per cent.

L&Q completed 4,047 homes in the year, down on the previous year’s figure of 4,157. Of the homes handed over, 71 per cent were for social housing tenures and 29 per cent for market tenures.

A total of 2,760 homes were started, up from 2,103 the year before.

Net debt at year-end was flat at £5.3bn. The group’s EBITDA MRI interest cover figure was 169 per cent, down from 222 per cent the year before.

Mr Ahmed added: “In the medium term, we are committed to lowering our risk profile and are targeting lower debt metrics through a reduction in gross capital expenditure.

“Our focus remains on our existing development pipeline rather than new approvals, meaning we expect to continue to reduce the number of sites that we are operating from and homes in the development pipeline.”