Notting Hill Genesis’ surplus falls by nearly 80% as sales income plummets

Notting Hill Genesis has become the latest housing association to report a steep drop in sales income as its surplus for the first half of the year fell by nearly 80%.

The 66,000-home association reported a surplus of £18.3m for the first six months of the financial year, down from £87m for the same period in 2022.

The figure was impacted by a drop in income from home sales, decreasing from £67.5m to £12m as it sold 41 homes compared to 242 the previous year.

It also said the volume of shared ownership owners ‘staircasing’ - increasing their shares in their homes – also fell, reducing surplus on sale of fixed assets by 58.6% from £26.6m to £11m. NHG said its new build sales programme is “budgeted to be much lower in 2022/23.”

While its turnover increased by 5.7% to £318.5m, NHG’s operating costs rose 17.7% meaning its rental operations surplus fell by £21.1m.

It spent an extra £15.1m on safety and repairs and £4m more on property costs.

NHG is the latest housing association to report a drop in sales. Southern Housing reported open market sales income of just £3m for the first half of the year, which it said was due to contractor failure.

The Regulator of Social Housing earlier this week said it is forecasting homes built for sale by housing associations to reduce by 25% over the next five years due to market decline.

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NHG in September announced a plan to spend nearly half a billion pounds (£497.4m) in improving existing stock over the next decade. It described its plan to build new homes as “constrained” but said it will still build more than 1,000 homes in 2023/24 as part of a target to build 5,000 by 2028.

Yesterday’s trading update did not the mention number of homes completed or started in the half-year.

Patrick Franco, chief executive at NHG, said: “We have delivered a resilient performance in the first half against an increasingly challenging economic backdrop. Our rental income base remained stable although a combination of increased operating costs, higher spend on repairs and lower sales has resulted in a reduction in operating surplus.

“The group remains financially strong, which allows us to continue building new homes, as well as investing to improve our existing homes and estates.”