North East landlord’s surplus rises by £3m as repairs costs dent interest cover

The 34,000-home landlord’s turnover rose by 14.4% to £219m, which it said was due to the annual rent increase of 7.7%, as well as rent from developing new homes and its merger with Leazes Homes, a Newcastle-based housing provider with 759 homes.

During 2024-25, Karbon delivered 707 homes, up from 644 the previous year. It added that this was 120 homes below target, due to construction delays and material and labour shortages.

Its overall operating margin, excluding asset sales, improved from 23% to 24.4%. This was also lower than the 25% margin targeted, which Karbon said was due to extra repairs costs.

“An additional 5,607 repairs were carried out compared to budget in the financial year. Undertaking more repairs has meant having to rely more on subcontractors and agency staff,” the report said.

Last year, it posted an operating margin of 23% – a decrease on its 26.6% margin the previous year – because of additional repairs costs.

In 2026, Karbon plans to spend £134.1m developing and acquiring homes, while £101.2m has been allocated for planned and responsive maintenance.

Scott Martin, executive director of resources at Karbon, said: “Despite the continued pressures on the business, with increased inflation, higher interest rates and ongoing regulatory changes, we’ve had a year of strong performance with lots of success stories to celebrate.”

Mr Martin noted that Karbon had maintained its A credit rating from S&P Global.

“In particular, it highlights our capacity for continued investment in our existing homes, along with our commitment to building safety and improving the energy efficiency of our homes,” he said.

“We have invested over £99.6m on planned and responsive investment, and our place-based property services model has continued to focus on preparing for Awaab’s Law and delivering energy improvement measures.”

At the end of last year, Karbon announced it was aiming to launch its own for-profit provider, Graphite Living.

Mr Martin said: “To maximise our future delivery of new affordable homes, we’re exploring possible new investment partners to work with us through our recently established subsidiary, Graphite Living.

“We are currently progressing with a registration with the Regulator of Social Housing for Graphite Living.”

He added that the merger with Leazes Homes “has helped us strengthen our presence in [Newcastle], which in turn helps generate greater capacity to invest in our homes”.