Sovereign surplus falls 11% as development slowdown continues

Sovereign has reported an 11% drop in surplus quarter-on-quarter due to ‘headwinds’ caused by materials shortages.

The 60,000-home housing association, in its 2021/22 third quarter update, reported a surplus of £19.6m, down from £21.9m in the second quarter of the year.

The housing association said the drop in its overall and operating surplus was expected due to “headwinds with specific risks around materials shortages and increased prices, along with longer lead times to fill vacancies.”

Sovereign also revealed its development programme, which earlier in the year had been scaled back due to materials shortages, has delivered 751 homes in the year to date.

The association now expects to build around 1,200 homes in the financial year. This would be higher than the 1,099 built during lockdown-affected 2020/21. It is substantially lower however than the 1,900 homes Sovereign originally targeted this year.

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“The development programme has continued to be slower than expected due primarily to resource and material availability issues impacting the whole of the building sector” a Sovereign spokesperson said.

The organisation reported turnover for the quarter of £106m fuelled by 121 sales completions. It currently has a development pipeline of 8,513 homes.

Sovereign was last week issued with a notice by the Regulator of Social Housing after it was found to have breached a standard due to gaps in its statutory data for safety checks in communal areas. Sovereign said it has set up a programme to establish which blocks need up-to-date checks and this will be completed by the end of this month.