Newly-merged Southern misses build target by a third as it scales back development

Southern Housing Group built nearly two-thirds of its targeted homes in 2022/23 as it battled increased costs and contractor insolvencies, it has said.

The association, which completed a merger with Optivo in December, completed 1,089 homes in the financial year against its original target of 1,704.

The 78,000-home association, in its annual financial statement, said: “The difficult economic operating environment has created a number of issues for us in delivering our programme – we are managing cost increases and the impact of a number of contractors having gone into administration in 2022/23.

“Forecasts of a property market slowdown continue to indicate a housing market correction but as yet not of a significant magnitude.” The figure of 1,089, was however higher than the 851 homes Optivo and Southern combined built in 2021/22.

Southern also confirmed that it is pressing ahead with plans to cut its new build programme to just 250 homes a year for four years “in the face of economic challenges” and to focus instead on improving existing homes. Chief executive Paul Hackett had previously indicated the association would reduce its build by 80%.

The association increased its turnover by 8%, compared to the joint turnover from the year before, to £642 . This included a £35m increase in rental income and an extra £7m from first trance shared ownership sales.

However, its surplus fell from £140m to £80m, as operating costs rose by £65m to £448m. The increase in cost included an extra £20m in maintenance and services and management costs increased by £15m. Southern also recorded an impairment charge of £27m due to two land sites where values have fallen, four schemes where sales values have fallen and one site which will be “subject to redevelopment.”