ao link
Twitter
Facebook
Linked In
Twitter
Facebook
Linked In

You are viewing 1 of your 1 free articles

Associations respond to rent cut with ‘impressive’ margins

Housing associations have boosted their core margins since the rent cut was introduced, research from estate agents, Savills, has shown.

Linked InTwitterFacebookeCard
Picture: Getty
Picture: Getty
Sharelines

Housing associations have boosted core margins since the rent cut #ukhousing

Chris Buckle, director at Savills Residential Research, revealed the sector had increased its core margins from 32.3% to 34.5% at the Social Housing Finance Conference last week, saying the sector’s achievements were “seriously impressive”.

These core margins relate to social housing lettings activity only.

According to the research – based on analysing the accounts of 202 housing associations owning 95% of the general needs homes in the sector – turnover from social housing continued to rise despite the rent cut.

Some of this, Mr Buckle said, was driven by conversions from social rent to the more expensive affordable rent, but the main factor was associations building new rented homes.


READ MORE

Average margins rise to 28.3%Average margins rise to 28.3%
Margins queried by regulatorMargins queried by regulator
Sector Scorecard reveals housing associations’ strong operating marginsSector Scorecard reveals housing associations’ strong operating margins

Costs also fell slightly in 2017, in contrast with the previous two years, in which they had gone up steadily.

As a result, the sector’s core margin went up more last year than it had in either of the previous two years, even though rent income fell thanks to the four-year 1% rent cut introduced by George Osborne from 2016.

Margins for small, medium and large associations were all pretty similar in 2017 at around the average. There was little difference either between traditional, stock transfer and mixed associations, either.

Regionally, there was fairly significant variation. In the South, much higher rents contributed to higher margins than in the North.

Mr Buckle told the conference: “It’s pretty obvious: costs have gone down, turnover went up, so clearly margins have gone up. That’s seriously impressive stuff, and I’m sure many people are patting themselves on the back.”

Linked InTwitterFacebookeCard
Add New Comment
You must be logged in to comment.