Landlords scales back development and invests more in improving existing stock as it shifts to neighbourhood model
Peabody has posted an 11% reduction in its annual turnover.
The 108,000-home housing association, in its financial statement for the year to 31 March, reported total turnover of £989m, down from £1.1bn the previous year.
The group’s social housing lettings income increased from £711m to £768m, however its non-social housing activity fell from £260m to £92m. This included a £172m drop in market sale activity, from £200m to £28m.
In the report, Peabody said: “Overall revenues reduced due to planned lower levels of sales in the year.”
It said £40m of contracted sales income has been carried over into 2024/25 due to delays on site, further impacting this year’s figure. The group’s shared ownership first tranche sales income dipped, from £113m to £102m.
The group’s overall surplus was £57m, down on the £1.9bn last year, which was skewed by a £1.1bn accounting gain relating to Peabody’s acquisition of Catalyst. When this was omitted, Peabody’s surplus fell from £89m to £57m, with an increase of £43m in net finance costs. Its operating surplus increased by 18%, however the previous years figure was hit by £50m due to a change in valuation of investment property. When this is excluded the operating surplus fell from £257m to £244m.
It said its sales margins have increased from 10% to 12%, “reflecting careful management” of its development programme.
As previously announced in an update in June, Peabody’s development of new homes fell sharply in 2023/24, with 1,381 homes completed compared to 2,399 the previous year.
Peabody said it was focusing “on getting the basics right” and has increased its spend on existing homes. It spent £371m in total on existing homes in 2023/24 compared to £356m the previous year. This figure includes £171m on planned repairs, and £200m of home improvement works including £50m on building safety.
Ian McDermott, chief executive of Peabody, said: “This year has proven to be financially challenging. We’ve significantly and correctly increased our investment in existing homes and services and are determined to see this strategy through to completion.”
Peabody has also been moving to a more localised model of housing management.
McDermott said: “We’ve laid the foundations for the new Peabody, creating 140 local neighbourhoods, each of which will have their own plan tailored to their needs. And as we become more local, we’ll increase the investment in our infrastructure.”
McDermott also said Peabody plans to invest in technology.
He said: “Our goal is to develop our expertise as a data-led organisation, investing heavily in technology so we get real insight into what services and support residents really need.
“This way we can be sure we’re spending our money wisely. Residents have told us that we need to improve our services and we hear this loud and clear.
“We are confident that the combination of local services, backed up by high-quality support and central services, will deliver that for the new Peabody.”
Philip Jenkins, executive director for development at Peabody, told the Housing Community Summit in Liverpool earlier this week that the landlord is looking to sell assets which are non-core or could be managed better by other registered providers.
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