Surplus doubles due to one-off merger gain but repair costs rise

Stonewater has increased its annual development by 23%.

Nick Harris

Nick Harris, chief executive of Stonewater

The Leicester-based housing association, in its financial statements for the year to 31 March, said it completed 1,185 homes in 2023/24, up from 963 the previous year. This was,however, lower than its 2022-30 strategic plan target in to deliver 1,500 new homes per year.

The group spent £248m on development in the year, up 28% on the £194m it spent the previous year.

In its accounts, the 36,000-home provider said: “Stonewater’s development programme is strong and ambitious and is among the largest in the sector.”

The group also increased its spend on existing properties from £36m to £32m.

Stonewater’s surplus more than doubled to £131.4m this year, primarily due to its takeover of the 1,650-home Mount Green Housing Association in February, which generated a one-off gain of £121.7m.

However its operating surplus, which excludes one-off gains, dropped from £65.7m to £60.5m as repair costs increased.

Stonewater’s operating costs increased from £157.3m to £187.2m, largely owing to an increase in repairs and maintenance costs.

Stonewater said: “The overall costs reflect increased volumes of repairs, ongoing maintenance and improvements for our customers’ existing homes and the investment in our transformation programme to drive future efficiencies.”

The housing association’s operating margin dropped from 22% to 19%. It attributed this decrease to a strategic decision to invest more resources and incur higher costs to meet the growing demand for quick and responsive repairs, increasing spending by £15m compared to the previous year.

The housing association’s Earnings Before Interest, Taxes, Depreciation and Amortisation and major repairs (EBITDA MRI) included fell to 79.3%, well below its target of 124%, as a result of the decrease in its operating surplus, higher interest rates and higher investment in properties.

The group’s operating surplus for the year went down from £65.7m to £60.5m.

In the financial report, Nicholas Harris, chief executive of Stonewater, said: ”It is fair to say that this year has been an especially testing one for customers, colleagues, and for the entire sector, as a whole, because of the ongoing cost-of-living crisis and the continuing tough operating environment.” He added that he is “pleased to report that we are weathering the storm”.

Stonewater’s staircasing receipts from shared ownership sales dropped from £14m in 2022/23 to £8m in the year to 31 March 2024, while open market sale receipts dropped by £1.4m to zero.

The group’s turnover increased to £271m, from £239m in 2022/23. Its rental income increased by £24m, or 14%, due Stonewater delivering more homes, rent increases, the acquisition of Greenoak Housing Association in 2023 and the addition of homes following Mount Green Housing Association joining Stonewater.

Housing association financial statements 2023/24 

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Orbit’s development drops by 30% as it ramps up spend on existing homes  Midlands housing association’s surplus falls by 39%

Turnover and surplus up at Onward Homes North-west landlord posts an 11% increase in its annual turnover

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Guinness undershoots development target by nearly half Landlord says resource pressures and contractor administrations hit annual development figures

Housing delivery up 31% at Places for People Repair and maintenance spend exceeds planned budget

Flagship boosts surplus by 16% despite fall in open market sales and higher salaries East of England provider built 744 homes in the 2023/24

Aster’s surplus hit by higher interest costs and writedowns The housing association’s pre-tax profit falls 14%  due to a combination of an increase in costs caused by inflation and an ‘all-time high’ investment in its homes

Abri invests ‘record’ £100m in existing homes but sees 19% dip in annual completions The 50,000-home housing association reports  ‘exceptional’ surplus of £518m due to merger with Silva Homes.

Hyde Group misses build target by nearly half as it’s hit by £39m in write-downs 44,000-home association reports 78% drop in surplus as it is hit by contractor insolvencies on two schemes

Home Group increases development 17% Home Group handed over 1,284 homes last year, according to its financial statement for the year to 31 March 2024.

Moat reports squeezed margins and lower surplus Moat Homes has reported a drop in surplus and turnover, as its social housing lettings margin fell sharply.

Midland Heart increases development as it eyes 4,000-home target 35,000-home association increases investment in new build and improving existing stock

LiveWest undershoots affordable homes target due to delayed starts on site South west-based association built fewer affordable homes in 2023/24 than its target due to “site specific” issues.

Paradigm exceeds development target Buckinghamshire-based housing association says new build “central part” of mission as it increases surplus and turnover

Karbon increases development but sees margins squeezed due to hike in repairs costs Newcastle-based landlord builds 644 homes in 2023/24

BPHA boosts turnover but reports deficit due to one-off refinancing costs Bedfordshire landlord increases completions by 20%

Vivid increases development to more than 1,500 homes a year Housing association boosts development by 10% in face of surplus squeeze

Southern stops committing to new developments as surplus falls 80,000-home housing association ramps up spend on existing homes

Surplus down but turnover rises in SNG’s first post-merger financial accounts The merged organisation, which is aiming to develop 25,000 new homes over the next decade, says its balance sheet is ‘robust, diversified and resilient’

Platform Housing’s surplus falls due to pension scheme exits costing £18m The Midlands-based housing association also cited cost pressures from investment in homes, customer services, and high inflation

Bromford Housing reports increase in turnover, but higher operating costs Housing association cites  higher repair volumes

Clarion reports drop in turnover and surplus as it takes ‘cautious’ approach to development Housing association giant increases spend on existing stock from £393m to £418m

Sanctuary increases turnover despite 35% drop in sales income  Giant housing association misses development target

Turnover and surplus up at Onward Homes North-west housing association increases shared ownership sales income

L&Q trebles surplus as operating costs fall The 109,000-home housing association has spent £112m on capital works as it shifts expenditure towards existing homes

Jigsaw Homes delivers ‘record’ 929 new homes and increases surplus The housing association’s surplus increased by £8.5m during the year

Wheatley boss warns build pipeline depends on Scottish government grant funding 94,000-home group reports fall in annual development and warns government budget cuts will affect build rates