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Major housing association’s development target hit by pandemic
Giant housing association Sovereign’s first-quarter results show it is struggling to hit development targets this year due to the COVID-19 outbreak.
The 60,000-home landlord said that the shutting down of construction sites by development partners between March and May has “adversely impacted” its ability to reach a target of 1,900 homes this year.
Despite the slowdown in construction, in the three months to June 2020 the group completed 135 homes – down from 484 in the same period last year. A total of 132 of these homes were affordable.
Before the pandemic Sovereign said it was on track to meet its target of 1,900 homes despite rising fire safety costs.
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Sovereign’s pre-tax surplus fell by 10.9% from £25.6m to £22.8m over the three-month period.
Turnover for the year to date fell by 9% from £100.5m to £91.5m, while its operating surplus dropped slightly from £38.9m to £37.4m.
The group said: “This has been a difficult quarter impacted by the global coronavirus pandemic. However, Sovereign has continued to operate strongly by tackling the direct and indirect effects of the virus head on.
“The results presented here highlight the effect the coronavirus has had on us and on the building industry. It has adversely impacted our ability to deliver our plan of building 1,900 houses for this year but it also demonstrated our financial resilience.”
During the lockdown period Sovereign completed 50 shared ownership first tranche sales, down from 137 on the previous year.
The group’s assets increased from £3.7bn to £3.9bn and liquidity facilities reached £931m through the £125m issue of retained bonds.
Sovereign also revealed in its results that it has joined several housing associations in signing up to the Bank of England via the Covid Corporate Financing Facility, though it is yet to drawn down from the scheme.
Update at 15:45 17/08/20: Story edited to make clear Sovereign has not drawn down on the CCFF
