Metropolitan Thames Valley Housing’s balance sheet hit by £105m in building safety write-downs

Metropolitan Thames Valley Housing’s (MTVH) balance sheet for 2023/24 will be hit by £105m in write-downs and one-off cost provisions relating to fire and building safety works.

The 57,000-home housing association announced today that it is revising down its expectations for both its overall surplus and its operating surplus as a result. It has however declined to quantifiy the level of surplus it is now expecting.

In a short trading update today, MTVH said it has now decided to recognise the costs, which relate to its decision to cover building safety remediation bills for leaseholders, in its 2023/24 accounts. 

It said: “As a result of changes in building safety legislation and MTVH’s own commitment to protect its leaseholders, the estimated costs of fire safety works to leaseholders’ properties (assumed in our overall five-year fire safety works programme) will be fully provided for in the current year.”

It added: “As part of the same full review, MTVH has written down the value of other buildings where future expected life is materially reduced.”

In 2022/23 it posted operating surplus of £109m and pre-tax surplus of £33m.

MTVH announced last April that it would not be passing on any building safety remediation costs to leaseholders in buildings higher than five storeys.

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MTVH said its underlying operating surplus, which excludes one-off costs, will remain in line with expectations.

Ian Johnson, chief financial officer at MTVH said it will seek to recover costs from third parties “wherever possible.”

He said: ”These costs were always fully included in our five-year business plan and now meet the accounting tests for them to be recognised in our financial statements at this point. The underlying cashflows associated with these costs are unaffected by this accounting treatment. 

”We are committed to bearing these costs, even though we are not responsible for the fire safety issues that, in large part, reflect defects in the course of original building construction.”