62,000-home housing association increases build rate by 40% as it eyes further development boost through Network merger
Sovereign has increased its development by 40% year-on-year despite a drop in surplus.
The 62,000-home association, in its financial statement, said it completed 1,672 homes in the 2022/23 financial year.
This is a 40% increase on the 1,196 completed the previous year and means it has exceeded its build target of 1,400, taking it to above pre-pandemic levels.
The association invested £303m in new homes in the year, up from £237m the year before.
The group’s turnover increased 25% to £448.2m with a 6% fall in open market sale income being more than offset by a 21% in social housing rent revenue to £358.2m.
However, the group’s surplus fell 20.5% to £66m, which the association said was “due to challenges around repairs volumes and costs as well as utility prices”. The group increased its spend on existing stock from £118.4m to £135.5m.
The figures were published ahead of Sovereign’s planned merger with Network on 1 October. The merger would create an 82,000-home association called Sovereign Network Group.
“If we merge we will be in the top six housing associations by size and have the potential to be in the top three by development programme – that would give us more influence and more opportunities to invest in homes and services”, the statement said.
Sovereign said the “headwinds” currently facing the sector make the merger more appealing. It said the combined financial resilience of the organisation would shield it from risk and mean it can maximise development opportunities. It believes the merger will enable it to build 25,000 homes over 10 years, around 4,000 more than the two organisations would have built separately.
>>See also: Sovereign and Network announce top team for merged association
>>See also: Spinning plates: an interview with Sovereign boss Mark Washer
Sovereign is shifting towards more land-led development, as opposed to purchasing homes off housebuilders through section 106 deals. It said this year more than 60% of secured developments will be land-led.
In October the landlord bought a second major shopping centre as part of a strategy to “regenerate high streets and support communities in town centres” while looking for opportunities to drive returns from commercial development to support affordable house building.
Sovereign acquired Princes Mead shopping centre in Farnborough and adjacent sites to bring forward a 350-home mixed use scheme. This followed the October 2020 purchase of Clifton Down shopping centre in Bristol for £27.2m with an eye to a future mixed-use development on the site.
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