Thursday, 18 September 2014

Places for People hit by sector’s highest ever write-down with £4.1m spent on payoffs

Landlord suffers £25m land hit

Places for People has seen the value of its land plummet by £25 million - a fifth of the total fall predicted for all housing associations in 2009/10.

The 60,000-home association’s annual accounts reveal it wrote down £25 million on the value of its land bank last year. The huge drop dwarfs the previous highest write-down in housing association history of £13.5 million - made by Affinity Sutton in 2008/09.

The last quarterly survey of housing associations accounts, published by the Tenant Services Authority in September, said it was anticipating £120.1 million of impairment charges from all English associations this year.

PfP’s accounts also reveal that it spent £4.1 million on severance pay over the past two years. This sum, paid out following a major restructure, was almost double the next highest figure recorded in a survey of redundancy and compensation payments made by 25 of the largest housing associations.

David Cowans, chief executive of PfP, said its future plans involved large-scale developments and that it had ‘secured enough land to build more than 20,000 homes over the next 15 years’.

The association posted a pre-tax profit of £23 million - although it would have posted a deficit without £36 million of assets arising from its merger with Cotman housing association.

A spokesman for PfP said that the value of the group’s land holdings which are not currently under development ‘went down as land prices across the UK fell’. He added. ‘The land will be used to develop new homes which, in time, we anticipate will generate a profit for the group. Some of these developments will span up to three economic cycles of good times and bad and will be subject to changing economic environments.’

The spokesman added that the severance pay had been made because of a group-wide restructure designed ‘to make sure we are best positioned to deliver on the large scale communities we are creating, building and managing’.

Jonathan Pryor, director of assurance and business services with Smith & Williamson, said that in general he had seen ‘almost no impairment in 2010 accounts’. Gary Moreton, partner and head of auditor Baker Tilly’s social housing group, said impairment was still a key audit focus and deprived areas have typically seen the biggest fall in land values.

£25 million
Reduction in land value 2009/10

£4.1 million
Severance pay 2008 to 2010

£23 million
Total group profit before tax

Readers' comments (9)

  • £4.1 million in severance pay in two years? How many people lost their jobs at P4P?

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  • When the tide goes out, you see who is swimming naked.

    The tide hasn't gone out, yet. David Cowans is coming up the beach.

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  • Sidney Webb

    Where's Melvin when you need him - THIS IS GOOD NEWS

    Well Ok, not for those who've been sitting on land (waiting for the profits to kick back in) that could have had housing built on it by now, providing well needed places for people to live (hopefully affordable social rent), but brilliant news for those organisations looking to buy land to build places for people to live (hopefully affordable social rent) as it is obvious that doing so has just got cheaper - Hurrah!

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  • Poor old PSR. Just doesn't get how society works, does he?

    PfP, as do other HAs, fund construction with dosh from the taxpayer and loans based on valuations of their assets ie, their land holdings.

    With the government going awol that means the focus is on the valuation of their assets. So would you throw fivers at a fella where the security for the loan is disappearing before your eyes.

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  • Sidney Webb

    How odd Anonymous. When I project managed social housing development we funded the building from grant/loans/and cross subsidy from sales and shared ownership. Perhaps you inhabit a different society.
    Had a portion of the land bank been used it would now be delivering a rent stream, would have delivered from sales, and would represent an asset worth greater than the land itself.
    If there is anything there that you do not understand Nonnie, do feel free to ask!

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  • Are you familiar with these scenarios (All hypothetical):

    I landbank, you landbank, they pay for it. (who is they, you don't mean the customers, do you?)

    Board gets it wrong, but they always have the praise of the executive.

    Development gets it wrong, maintenance do not have the budget to put it right

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  • Yes

    Yes

    Yes

    Hypothetical? - No

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  • Is this the end of the idea of Landbanking as a concept, or is it just a temporary economic blip? If land prices fall to hold too much undeveloped land could be financially damaging to RSL's Business Plans?

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  • Chris

    Temporary - there is too much vested interest in land prices rising for the economy to be engineered any other way - you can not expect the major land owners to agree 'that we are all in this together' now can you.

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