Clarion reports building safety costs of £35m as joint venture partnerships result in a loss

Clarion’s share of turnover from joint venture partnerships increased by £6m to £56m, but the landlord said these resulted in a £3m net loss after financing, a drop of £6m year on year. This was due to an £8m impairment charge.

“Where possible, the group will also seek recovery of its building safety provision from developers or through the government’s cladding safety scheme,” Clarion said, adding that no recovery income had been secured as of 31 March.

Clarion’s turnover reached a “record” £1.09bn, up from £993m the previous year, which it said had enabled it to absorb some of the provisions for building safety throughout the year.

The jump in turnover was driven by a 20% increase in operating surplus for its core social housing lettings activity, which reached £219m, Clarion said.

Its operating surplus dropped by £5m to £232m and its net surplus fell from £87m to £82m, while its operating margin fell three percentage points to 21%. Last year, the landlord reported a 10% drop in annual post-tax surplus. 

Clare Miller, group chief executive of Clarion, said: “As we mark 125 years of delivery, this year’s results reflect both our resilience and our social purpose – from the 1,727 new homes delivered, to the more than £1bn in social value generated for communities across the country since 2016.

“The government’s recent 10-year housing settlement offers the long-term certainty the sector has called for, and we welcome the flexible, grant-based model which we hope will enable us to unlock thousands of homes in our pipeline.”

Spending on new development and regeneration dropped slightly, from £486m to £420m, but Clarion increased its delivery of homes by 12.3% year on year, completing 1,727. Its future homes pipeline also increased from 19,694 to 20,173.

Routine maintenance spending fell year on year, dropping 3.1% to £185m, with overall spending on repairs and maintenance falling by £1m to £417m.

While Clarion said it had missed its target for its EBITDA MRI (earnings before interest, tax, depreciation and amortisation, major repairs included) cover of 103.6%, reaching 101.8% instead, this still marked an improvement on last year’s 92.2%. This was due to a change in the metric’s regulatory definition to include grant linked to investment in existing homes.

The 125,000-home landlord also reported a £23m drop in surplus generated from social housing property disposals, totalling £43m, after it took the decision to adopt a “more cautious approach to in-sector sales”.

It transferred 774 homes to other registered providers in 2024-25, compared with 1,117 the previous year.

Mark Hattersley, chief financial officer at Clarion, said: “These results demonstrate that, whilst operating in a constrained economic environment, Clarion has been able to deliver improved services to its residents, build more new affordable homes, invest in our existing homes and maintain a strong and resilient financial profile.

“Our financial strength – demonstrated by our successful return to the capital markets during the financial year – means we are well positioned to deliver on our long-term objectives and withstand ongoing market volatility.”

Clarion’s director of housing recently said housing associations should be putting local authorities at the top of the list for stock disposals and working together more closely.