Revaluations see Legal & General Affordable Homes fall to £24m loss despite 34% rise in turnover

Legal & General Affordable Homes has fallen to a £24.2m loss despite a large increase in turnover as property revaluations hit its bottom line.

The insurance giant’s for-profit affordable housing business operates across seven separate entities, all of which reported results to Company’s House this week which have been aggregated by Housing Today.

They show a major increase in revenue, rising 33.8% from £152m in FY24 to £204m in the latest financial year.

Almost the entirety of the increase came from a single entity - L&G Affordable Homes (Development 3) Ltd - which saw its revenue increase from £92.4m to £142.2m. 

This was driven largely by development and sales activity, with the 568 homes completed and sold more than double the 204 completed in previous year. Many of these sales were to other entities within the group.

But despite the jump in revenue, the group fell to a pre-tax loss of £24.2m, compared with a £9.3m profit last year.

The chair’s statement across the filings notes that the aggregate loss reflected a fall in property valuations across the portfolio.

The group recorded a revaluation loss of £50m, the vast majority concentrated in the Legal & General Affordable Homes Limited entity, which also holds nearly half the group’s portfolio of homes.

The group’s portfolio of homes increased by roughly 1,000 homes, from 5,700 to 6,700. A large proportion of this came from the delivery of the former 2022 Commonwealth Games athletes’ village in Perry Barr, Birmingham, which contributed 487 homes.

The tenure composition of LGAH’s homes is 53% rented (including affordable and social) and 47% shared ownership.

The group is expected to grow to approximately 7,700 homes by the end of 2026.

LGAH underwent organisational and leadership changes during the year. Two entities - Investment 2 and Investment 3 - commenced trading during the year, having previously been dormant.

Meanwhile, Legal & General Affordable Homes (SO) LLP was de-registered as a provider of social housing, while Legal & General Affordable Homes (Development 4) Limited was acquired by Halesworth Lanecroft Partners LP, L&G’s joint venture with Hyde.

Ben Denton was succeeded by Shaun Holdcroft as head of affordable homes after being promoted to head of strategic growth for affordable housing at L&G.

Commenting on the results, Holdcroft said: “Our mission is to provide high-quality affordable homes and support our customers to lead fulfilling lives – and in the past year, we’ve continued to deliver on that commitment, growing the number of homes we build and manage, and making significant improvements to the services we provide to our customers.

“By attracting institutional capital into the sector and deploying it at pace, we are accelerating on all fronts – delivering more affordable housing faster, that are well managed and supporting growth through new and innovative partnerships.

“Looking ahead, our ambition remains clear: build on this momentum and support other providers, so that together we can build the affordable homes the country needs, invest in existing homes and create lasting social impact”

LGAH also received its first regulatory inspection earlier this year, receiving the highest gradings for every measure.