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Metropolitan Thames Valley shared ownership surplus tumbles

A major London housing association has reported a 70% drop in money raised through shared ownership sales in its first accounts since merging last autumn.

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Picture: Getty
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MTVH shared ownership surplus tumbles #ukhousing

Housing association Metropolitan Thames Valley has seen a 70% decrease in its shared ownership surplus #ukhousing

Metropolitan Thames Valley Housing (MTVH), which owns or manages around 57,000 homes following a merger between Metropolitan Housing Trust and Thames Valley Housing in October 2018, saw its turnover dip to £411m for 2018/19, down from £414m the previous year.

The drop was driven by a slowdown in market and shared ownership sales, with turnover for this area of the business falling to £85m from £96m in 2017/18.

First tranche shared ownership sales fell 18% to 431, achieving a £6.2m surplus with a 10% margin. In the previous year, the group’s associations sold 524 shared ownership units, raising £20.5m at a 26% margin.

MTVH said the decrease “reflects a challenging year for sales, with sales rates suffering from the economic uncertainty prevalent in the market”.

It is one of several large London housing associations to have reported difficulties with the sales market in 2018/19.


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Surplus from outright sales rose to £3.5m from £1.7m in 2017/18, with the margin increasing from 10% to 15%, but the number of sales dropped from 80 to 60.

Turnover from social housing activity was £288m, up from £280m.

The group’s total underlying operating surplus was £149m, including £6m in one-off merger costs – an 8% decrease on 2017/18.

Its post-tax surplus fell from £100m to £6m for 2018/19, with MTVH attributing the drop to £78m in “non-recurring merger financing costs”.

MTVH said the move has reshaped the structure of its combined debt and made its covenants “fit-for-purpose”, releasing around £800m of extra borrowing capacity.

Overall underlying operating margin was 36%, down from 38% in 2017/18 as operating costs rose by £14m to £226m. Social housing lettings operating margin was 34%, a reduction from 36% the previous year.

The association delivered 1,037 new homes in 2018/19, with 87% for affordable tenures including 192 for social rent.

This was a third short of its target, although MTVH has said it is sticking with its strategy to build up to 2,000 homes a year.

Speaking to Inside Housing last week, Geeta Nanda, chief executive of MTVH, confirmed plans by the organisation to reduce the number of market sale homes in its pipeline, but she said that this would not reduce overall numbers.

In its accounts, MTVH reported spending £361m on buying land and developing over the year, having pegged the figure at just £255m in unaudited accounts released in May. The 2017/18 spend was £299m.

A spokesperson for MTVH said this discrepancy was because the unaudited accounts exclude spending on developments for market sale and first tranche shared ownership.

MTVH invested £118m in its existing stock, with £35m capitalised as improvements.

More than 3,000 fire risk assessments were carried out in the association’s stock, resulting in 21,000 actions.

Customer satisfaction among legacy tenants of Metropolitan was 64.3%, below the 67% target, while satisfaction for former Thames Valley residents was 78.4%, missing the 82% target.

MTVH is currently carrying out a review of its customer contact centre and plans to overhaul its customer services.

The accounts also reveal that the group expects arrears of Universal Credit tenants to more than double to £4m by the end of 2019/20 as the system roll-out continues.

Overall arrears for social housing was 4.45%, equating to £8.86m.

MTVH is now 41% geared, up from 39% in 2017/18, with undrawn facilities of £326m.

Ian Johnson, chief financial officer at MTVH, said: “We’re very proud of what we’ve achieved so far in a relatively short period of time.

“As a new, more resilient group, we’ve delivered more than a thousand new homes, and invested in the safety and condition of our existing properties, as well as our long-term financial strength.

“Our integration plans are firmly on track, and our business transformation continues as we maintain our focus on the partnership’s key strategic objective of improving the services we provide to our customers.”

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