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COVID-19 sees Clarion’s new home starts and investment drop but surplus remains steady
Investment in new homes by the UK’s largest housing association fell by 22% and its new home starts plummeted 94% in the first quarter of the year, as a result of the significant disruption to construction caused by the coronavirus crisis.
Clarion’s total capital investment in new homes during the first quarter of financial year 2020/21 hit £98m, down 22% from the £126m invested in the same period the previous year.
The first quarter saw the association, which owns and manages 125,000 homes across the country, start only 40 homes, compared with 681 homes in the first quarter of 2019/20.
Its investment in existing homes also fell from £12m to £5m, as lockdown measures affected its repairs and maintenance work.
However, despite the COVID-19 crisis, the association’s surplus was £72m for the quarter, down by just £1m on the £73m recorded in the first quarter of 2019/20.
Clarion said in the update, which covers the three-month period to the 30 June, that the surplus figure showed a “resilient performance” in the context of the COVID-19 disruption.
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The accounts come the same day that Clarion raised an additional £100m through a private placement. The money was tapped from the £350m bond it secured in April 2018 and had an all-in yield of 2.078%.
In its accounts, Clarion said it was forced to pause all development activity at the start of April but says sales offices and construction sites were reopened in early June. Since then, it has completed 265 new homes and started 40 new homes, which were all for affordable tenures.
Completions of outright and shared ownership sales increased from £23m for the first quarter last year to £30m for the same period this year, but the margin on those sales was down from 18.2% to 7.6%. Clarion said that the lower margin reflected forward-funded marketing costs and expected it to increase as the year progresses.
The association said that it had resumed a full repairs service by the start of July and its occupancy rate had remained above target at 98% despite the lockdown restrictions.
However, arrears stood at 6.1% for the period, which was an increase from the 5.1% recorded at the end of March. Rent arrears for the same period last year were 5.4%.
Throughout lockdown, Clarion has rehoused 230 homeless households, issued £113,000 of emergency funding to 90 charities and organisations, and made 117,000 calls to residents.
Last week, Clarion published its full accounts for the year ending 31 March 2020. This showed its surplus after tax grew by 9% from £154m in 2018/19 to £168m in 2019/20 and its turnover increased from £816m to £842m over the same period.
It also reported that it had completed a record 2,101 new homes, making it the third biggest builder in this year’s Inside Housing Biggest Builders Survey.
Responding to the latest quarterly update, Mark Hattersley, chief financial officer at Clarion Housing Group, said: “We are very pleased to report a resilient performance for the first quarter of the year in the context of the significant disruption caused by COVID-19.
“Our focus has been on operating in the safest possible way to maintain business continuity and provide support for our residents. Having last week reported a strong performance for 2019/20, we entered the new financial year in a robust financial position and we remain prepared and well-placed to manage a range of adverse scenarios.”
