Housing association giant identifies stock to sell and switches to land-led development
Sovereign plans to sell or transfer around one in five of its homes to other housing associations as it prioritises its spending in the face of competing decarbonization, building safety and development costs.
Mark Washer, chief executive of the 60,000-home housing association told Housing Today this week that the organisation’s ‘asset grading’ exercise has identified around 20% of its stock that it considers is not worth investing in to improve.
Washer, in an exclusive interview, said: “There is probably 20% of our stock where we have to accept that it won’t get to the standard that we want, and the level of investment would be prohibitively expensive.
“But this isn’t only through the lens of finance, it is still going to be a suboptimal home for someone to live in or it may be relatively expensive to heat and so on, so disposal is a core part of this strategy.”
Washer added that a further 20% of stock may need refurbishing, around 40% will need more minimal work such as retrofitting while 20% is “in a really good place”. Sovereign is planning to spend £138.6m a year over the next decade on existing stock, including on decarbonisation.
Washer also said Sovereign is shifting rapidly from a development model based mainly on section 106 – meaning it forward buys affordable housing units from developers required under planning requirements - to directly building its own homes.
It has shifted the percentage of its new homes it builds itself from single digits in 2018, when Washer become chief executive, to 27% this year. This is expected to increase to 50% in 2023/24.
He said: “It [section 106] doesn’t give you control over design, it doesn’t give you control over quality, it doesn’t give you control over placemaking, and it doesn’t give you control over the point at which you want to bring schemes to the market. So you are very much in the hands of the developers.”
The organisation has set itself a target of building 2,400 homes a year by 2026/27. It however only completed 458 homes in the first six months of 2021/22, only slightly more than the 857 it had planned. It said this was due to material and labour shortages. An update last month revealed it has made up some ground and is now expecting to build 1,200 homes in the year, but this is just two thirds of the 1,900 it was originally hoping to deliver.