Paradigm grows surplus and completions

The housing association’s number of shared ownership sales rose from 103 in 2022-23 to 198 in 2023-24, and the percentage purchased was above expected levels. This resulted in a surplus of £8.1m, greater than the target of £6.1m.

Income from first-tranche and other unit sales totalled £34.6m, an increase from £32m in the previous year.

Paradigm’s operating margin rose slightly from 33.3 to 33.8 per cent, but it was below the target of 40 per cent. The landlord said its first-tranche sales delivered a higher margin than forecast. However, its outright sales from its jointly controlled operation were lower than forecast, driving the overall margin lower.

Paradigm achieved 18 market sales through its jointly controlled operation with Countryside, generating an overall surplus for the group of £885,000.

Alongside this, there was a rise in non-recoverable service charge costs, one-off legal costs and impairment.

“The current economic climate, marked by escalating living costs, inflation and high interest rates, continues to exert pressure on both our budgets and those of our customers,” Richard Moriarty, chair of Paradigm, said in the results.

“Nevertheless, Paradigm is a strong business, and we are able and committed to continue fulfilling our vision. In doing so, we are committed to making sure our homes are safe, affordable and sustainable and continually striving to do more by making the most of our resources.”

Development

In 2023-24, Paradigm developed 522 homes, a 15.7 per cent rise from 446 in the previous year.

This included 167 shared ownership homes, 315 affordable rented homes, 22 social rented homes and 18 sold through the open market.

Paradigm also acquired a further 13 homes from another registered provider and continued the wind-down of its private sector leasing, with 84 homes returned to private landlords.

The housing association’s development pipeline at the end of the year was 990 homes, with 637 new plots having been secured during the year.

This means its development pipeline is at a level where the approved and contracted investment proposals will meet its target of 1,950 homes through to the end of the corporate plan period.

The plan, which covers 2021 to 2026, was adjusted in 2022-23 to reduce the number of new homes Paradigm will deliver, from 2,250 to 1,950, and cut back its planned outputs from 500 to 400 homes per year from 2025.

“The external economic environment posed an ongoing challenge this year. Inflation effects, particularly in the first half of the year, increased the costs of materials and labour in our supply chain,” Paradigm said in its results.

“The rise in interest rates has increased risk in the housing market, as well as having an impact on our investment capacity.

“Despite this, our strong financial position enabled us to continue our commitment to investing in new homes while maintaining our commitment to improving our existing homes by, for example, improving their energy efficiency. The lead time for development activity means that we continue to have a healthy pipeline of existing development commitments.”

Elsewhere, Paradigm spent £31.4m on routine and planned maintenance during the year, a drop from £30.4m in the previous year. Within this, spending on routine maintenance dropped from £20.6m to £13.2m, while investment in planned maintenance rose from £9.9m to £18.2m.

The housing association reported liquidity of £330m and a gearing ratio of 56.3 per cent, a drop from 55.5 per cent in the previous year. This reflected the increase in net debt during the year, as the landlord drew down on its revolving credit facility to fund its development programme.