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G15 landlord’s surplus rises by 15% despite development slowdown
Optivo has posted a surplus increase of 15% against a backdrop of falling home starts and completions in the past year.
The association, which part of the G15 group of London’s largest landlords, reported a surplus after interest of £53m, up 15% from £46m in 2019/20. Total turnover rose slightly from £322m to £331m in the year to 31 March 2021.
In its unaudited annual results, Optivo reported a fall of 33% in new home starts from 1,500 to 1,002 over the course of the year. Completions also dropped off from 838 to 577, while the number of open market sales homes in contract at the end of the financial year fell by 39.6% from 416 to 251.
The landlord said it would be “easing the pace” of development going forward in order to deal with costs arising from the building safety crisis.
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Sarah Smith, chief financial officer at Optivo, said: “With requirements evolving, we’re investing more in building safety and energy-efficiency programmes.
“To keep our financial metrics where we want them, we’re easing our pace of development growth and weighting future projects to affordable lettings rather than sales.”
In April, Optivo announced it had agreed a £120m contract with asset management firm Engie to carry out fire safety remediation work over a seven-year period.
The association managed to bring void rental losses down from 1.6% to 1.1% and overall rent arrears from 4.3% to 4.1%.
However, Optivo said void losses in its student accommodation portfolio were higher as a result of a move to online learning.
It disposed of its direct-let student accommodation in Southampton and its former office in south London. The landlord said void losses were partly offset through home working and saving on travel expenses.
Ms Smith added: “Results for 2020/21 underline the financial resilience of our business model and validate our decisions over a number of years to focus our investments in core social housing activity.
“This year we’ve also shown an operational resilience of which we’re proud, with arrears down and extensive mobilisation of customer-facing and social impact teams to help residents through the COVID-19 crisis.”
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