You are viewing 1 of your 1 free articles
Large London association sees unsold homes hit 610 amid ‘market challenges’
Notting Hill Genesis (NHG) has reported that it had 610 unsold homes at the end of 2019/20 as a difficult London sales market continues to affect the G15 landlord.
According to its annual report, NHG entered the 2019/20 financial year with 605 unsold homes. This increased slightly to 610 unsold homes by the end of 2019/20, despite NHG transferring a number of homes to rented tenure, selling 596 individual homes and executing a bulk sale of 75 shared ownership homes to Hounslow Council.
The high number of unsold homes was cited in NHG’s annual report as one of the “challenges” it faced in 2019/20.
Fears over a market slowdown in the capital led to NHG reducing the net realisable value of its under-construction homes for sale by 15%. This, alongside other smaller charges, led to a total impairment of £10m.
NHG previously warned that the challenging sales market in London, fuelled by Brexit uncertainty, was having an impact on the number of homes it was able to sell when it reported 406 unsold units in February last year.
READ MORE
According to the 66,000-home landlord’s latest update, Brexit uncertainty continued to have an impact on the market in 2019/20, with NHG’s sales time to completion increasing from 25.9 weeks in 2018/19 to 45 weeks in 2019/20.
The results come after NHG’s board made the decision in 2018 to significantly reduce the landlord’s development programme amid concerns around the delays in selling homes.
As a result, NHG started just 665 new homes in 2019/20, compared with 1,018 in 2018/19. Of the 665 homes started last year, just two were for market sale. In 2018/19 the landlord started 191 homes for market sale.
Total spend on new housing in 2019/20 was only £468m, falling 28% from £654m in 2018/19.
NHG’s overall post-tax surplus was £98.1m, which marked a 6% drop from £106m in 2018/19.
Turnover rose by 9% from £670.6m in 2018/19 to £731.5m in 2019/20, while NHG’s operating margin remained stable at 29.1%, compared with 30.5% in the previous year.
Despite the challenging market, NHG’s surplus from private and first-tranche shared ownership sales grew by 31% from £24.2m in 2018/19 to £31.6m in 2019/20. This was due to a high number of completions in the most recent financial year.
In 2019/20, NHG completed 1,962 homes compared with 2,111 in 2018/19. Of the 1,962 new homes, 720 were for low-cost rent, 390 for shared ownership, 459 for market sale and 393 for market rent.
The London-based landlord continued with its stock rationalisation programme that aims to reduce the organisation’s geographical footprint to London and its immediate surroundings.
Stock in Aylesbury Vale was transferred to The Guinness Partnership; homes in Crawley, Epsom and Ewell were transferred to Mount Green Housing Association; homes in Slough were transferred to Inquilab; and stock in East Anglia and Essex was transferred to Sanctuary.
NHG said it is currently difficult to measure the impact the COVID-19 crisis will have on all parts of its business. The association said it continues to monitor key risks going forward, including rent arrears, occupancy levels, valuations and unsold homes.
Paul Phillips, group finance director at NHG, said: “Achieving this level of surplus is a solid achievement given the prevailing market conditions during 2019/20 and gives us the financial strength to invest in our existing homes and continue providing the affordable homes so needed by lower-income households.
“These results give our customers, investors and other stakeholders confidence in our ability not only to withstand challenges within the housing sector but also to continue to deliver homes for a range of needs across the capital and beyond.”
