Paradigm confirms plan to cut development by 15%

Paradigm has announced it is cutting the number of homes it intends to build through its corporate plan by 15%.

The 16,000-home association, in its financial statements for the year to 31 March, said that it has lowered its target for housing delivery from 2021 to 2026 in a move it said reflected “the challenging economic environment.”

Paradigm will now seek to complete 1,950 homes over the five-year period instead of 2,250. From 2025 its annual build target will be 400 homes instead of 500 as previously stated.

He said: “While Paradigm is in a strong financial position and well-placed to pursue new development/stock opportunities, we are not complacent about potential risks to the business.

“As such, we continue to undertake robust risk assessments, use prudent assumptions that are regularly reviewed and run sensitivity analysis on all investment and development opportunities.”

In common with other housing associations, Paradigm’s interest cover - which compares earnings to interest payments and is used as a measure of financial capacity and liquidity- fell. It reduced from 156.4% to 142.8% year-on-year, against a target of 182.4%. Paradigm said the fall was due to higher borrowing costs as a result of using a revolving credit facility to fund development at a higher interest rate than previously expected

Paradigm’s pipeline of as of 31 March was 848 homes, half of its original corporate plan target of maintaining a pipeline of 1,600 homes a year.

It said: “While the pipeline of new homes is not where we had hoped, reflecting the challenging economic environment and competition for scarce opportunities in our core geographical areas, we have largely contracted and approved schemes that will meet our revised new homes target.”

The association, which is based in Buckinghamshire and operates across the south east of England, however built 446 homes in the year, exceeding its target of 422 and nearly doubling last year’s total of 225.

It increased its annual turnover 4.7% to £122.3m, boosted by a £5m increase in social rental income. It posted an overall surplus of £17.8m, up from a loss of £11.2m in 2021/22 when it faced refinancing costs.

The group’s operating surplus, which excludes one-off items, fell slightly from £50.1m to £47.6m. Paradigm said this was due to increased costs due to extra investment in existing stock and inflationary pressures. It increased its investment in existing homes from £5.5m to £8.1m.