Network Homes bucks pandemic trend with increased surplus and turnover
Network Homes has increased its surplus by 98%, due to ‘rapid’ sales of homes in a south London regeneration scheme.
The 20,800-home association, a member of the G15 group of large London providers, also increased its turnover for the year to 31 March by 20% to £247 million.
Network’s surplus increase bucks a trend, with many other large housing associations, including Home Group, Sovereign, L&Q and Clarion, posting a fall due to pandemic disruption or building safety costs.
Network, however, sold 74 open market sale homes on its new Thrayle House development in Southwark, the final phase of the £200m Stockwell Park regeneration scheme. This contributed to a doubling of its property sales surplus to £24.9m.
Helen Evans, chief executive of Network, writing in the accounts foreword, said: “Despite many predicting the housing market would slow during the lockdown, it didn’t. Rapid sales at our Thrayle House development in Stockwell Park, South London contributed to strong financial results despite the pandemic”
Evans warned however that the outlook for the housing market remains uncertain due to “the end of stamp duty holiday, the discontinuation of the furlough scheme and the wider economic impact of the pandemic”
Network completed 620 homes in 2020/21, more than double the 302 completed the previous year.
It invested £159.4m in new development, down from £234.3m the previous year, while starts fell to 369, from 601 in 2019/20.
The group’s secured pipeline stood at 1,018 homes at the end of March. It has a target of increasing this to 2,281 next year. It has a target of starting 1,000 affordable homes by March 2023.
In April, Network received planning permission to build 1,600 homes on Northwick Park hospital site in Brent, north London.
Network has put aside £116m over five years to pay for building safety work which it says will be “putting further pressure on resources required for improvements to existing homes or building new affordable homes.”
What are housing association surpluses?
Housing association surpluses are calculated by deducting expenses from income. They differ from profit as they are not paid to shareholders but instead re-invested in building homes and funding services.
Associations are required to post surpluses to maintain lender and investor confidence, assure the regulator of an organisation’s viability and to ensure the business is well-positioned to cope with unforeseen events. Surpluses can be used as future working capital to enable organisations to fund development while reducing their reliance on grant, debt or other types of funding.
Housing associations’ financial statements 2020/21
One Housing falls to £26m loss G15 landlord says its results hit by covid, fire safety costs and a development write-down
Home Group posts 35% drop in surplus Pandemic blamed for reduction in asset sales and lower development
Aster increases turnover despite drop in shared ownership sales Social housing rent increases offset Covid-19 hit to shared ownership income
A2 Dominion reports surplus down 74% but completions up G15 housing association boosts completions by 82%
LiveWest reports 22% drop in surplus South-west based association LiveWest impacted by pandemic disruption and increased fire safety and debt restructuring costs
Notting Hill Genesis bucks trend with 48% increase in surplus Housing association increases turnover and surplus with sales revenue boost
Sovereign posts drop in surplus due to lower property sales Landlord increases turnover despite drop in sales of land and shared ownership homes
L&Q’s investment in new homes falls 43% Housing association misses completions targets amid pandemic lockdown
Bromford misses completions and reinvestment targets Housing association increases surplus but new-build activity hit by covid-19
Hyde Group posts deficit after £155m refinancing costs Large housing association increases starts by 84%
Clarion posts 27% fall in surplus due to pause in stock sales Pandemic hits stock disposal plan and housing starts
Platform misses completions target amid covid disruption Housing association misses completions targets amid pandemic lockdown Housing association builds 909 homes, a fifth less than expected, as pandemic hit