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Largest housing associations to spend £13bn on 52,000 new homes over next three years

The largest housing associations are forecasting a jump in their market sale activity over the next three years as they spend £13bn on the construction of 52,000 new homes.

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Largest housing associations forecast jump in market sale activity #ukhousing

Eleven largest associations forecasting to build 52,000 new homes over next three years #ukhousing

These figures were released by Will Perry, assistant director at the Regulator of Social Housing, at the National Housing Federation’s finance conference last week.

He said the 11 largest housing associations, which between them own nearly a third of housing association homes, are forecasting that between a fifth to more than half of their turnover over the next three years will come from non-social housing activities.

He said: “If you track that back a few years practically nobody was up to that kind of proportion of non-social housing activity and the ones who were getting close had large care operations.


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“We’ve seen quite a substantial switch there, particularly in organisations based in London and the South East with the scale of their market sale programmes. [It’s a] different risk and if you talk to the ratings agencies it’s something they will ask you in searching detail about.”

Moody’s has warned the sector about the risks of increased market sales.

Over the next three years these associations are forecasting to build 52,000 new homes, which is 8% of their existing stock, Mr Perry said. He added: “They’re moving pretty fast and they’re very substantial.”

The regulator’s latest quarterly survey, published last month, revealed housing associations sold 31% more homes on the open market compared to the previous quarter.

There were 1,171 market sale homes sold in the period from October to December 2017, up from 897 in the quarter before. It was also a 7% increase on the same period in 2016, when 1,094 homes were sold.

On average these 11 associations have 63,000 homes each and their interest cover is “generally pretty strong”, Mr Perry said, although for “one or two of them” their interest cover “only just nudges over 100%”, particularly for social housing.

He added: “They’re spending a lot – £13bn of capital expenditure over the next three years and £1.2bn on average, and they’re taking a lot of debt to support that.”

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