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L&Q sells 150 discounted homes in response to stagnant housing market
London’s largest housing association, L&Q, made a “bulk sale” of 150 discounted homes in response to the capital’s stagnant housing market, Inside Housing has learned.
Speaking at the recent Home Builders Federation conference, David Montague, the 90,000-home association’s chief executive, revealed that this was one reason it was forced to wipe £170m from its expected surplus.
He told the conference: “We’re seeing in London that the market is fairly flat. This year, we’ve bitten the bullet. We’ve done a bulk sale at discount to a third party. That means that’s profit that we didn’t get.”
An L&Q spokesperson later told Inside Housing that this was a sale of 150 homes “and was a decision made jointly with a [joint venture] partner”.
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L&Q could not disclose any further details.
Inside Housing revealed in January that in the face of Brexit uncertainty, some house builders have been selling homes to housing associations at a discount but it appears now that some associations are following suit.
Charles Cleal, director of affordable housing at JLL, told Inside Housing: “Some registered providers with large private sale programmes are now doing the same to reduce sales exposure and de-risk developments. We are seeing substantial growth in interest from private investors into shared ownership at this point in the market cycle.
“At certain price points there is ability to change from private to shared ownership at a level that works for both the investor and the developer.”
Just this week, for-profit housing association ReSI Housing bought homes from large housing association Metropolitan Thames Valley, planning to use grant from City Hall to convert them to shared ownership.
Going into further detail on the reasons behind L&Q’s dramatic reduction to its projected surplus, which saw it cut nearly in half, Mr Montague said that fire safety work also contributed to the reduction.
L&Q is an early adopter of Dame Judith Hackitt’s recommendations around building regulations, meaning it is already working to the more stringent requirements in her post-Grenfell report.
Mr Montague said: “That [fire safety work] will have an impact on our bottom line. Over the course of the next five years, we expect our operating margins to be depressed by 4% a year for each of the next five years as a direct consequence of fire safety.”
Assuming Dame Judith’s recommendations are adopted by the government, Mr Montague said: “What is happening to us will happen to every housing association, every owner of housing.”
