South-west based HA reports sharp fall in housing completions in first quarter of financial year

The number of homes built by major developing housing association Sovereign has fallen by a quarter in the first three months of the 2022/23 financial year, according to a trading update.

Sovereign said it built 125 homes in the quarter to June this year, down 24.7% on the 166 built in the first quarter of the previous year.

Sovereign Housing Association

The decrease in completions came despite an increase in sales at the 60,000-homes landlord, which works across the south-west of England. The organisation said it sold 152 homes, up from 116 in the same quarter last year, an increase of 31%.

Soverign reported turnover and surplus both up slightly and in line with last year, at £114m and £24.2m respectively, but said in a statement that “ongoing inflation impacts continue to create headwinds throughout our supply chain and show no sign of abating”.

Last year Sovereign built 1,196 new homes, which was 97 more than in the pandemic-hit 2020/21 year but below its target. It blamed this on the impact of further lockdowns in 2021.

Commenting on the first-quarter results it said: “The development programme has continued to be challenging due primarily to resource and material availability issues impacting the whole of the building sector, however we were able to add an additional 125 units during the past quarter.”

Sovereign also said it expected to need extra financing in 2022/23 in order “to fund development spend and maintain liquidity” in line with its financial “golden rules”. It added that it had breached one of its financial rules – to keep its operating margin above 30% – due to “the combination of continued cost pressures the business is experiencing across our property services and increased spend in our transformation programme which will support the long-term performance of the business”.