ao link
Twitter
Facebook
Linked In
Twitter
Facebook
Linked In

You are viewing 1 of your 1 free articles

Sanctuary sees surplus fall more than 10% after COVID-19 affects care and student housing arms

The country’s second largest housing association has seen its surplus drop by more than 10% after its care and student accommodation businesses were negatively affected by the coronavirus pandemic.

Linked InTwitterFacebookeCard
Picture: Getty
Picture: Getty
Sharelines

Sanctuary has seen its surplus drop by more than 10% after its care and student accommodation businesses were negatively affected by the coronavirus pandemic #UKhousing

Sanctuary revealed in its latest annual accounts that its pre-tax surplus was £46.9m for the year up to 31 March 2021, a 10.6% drop when compared with the £52.5m posted last year.

The 105,000-home landlord said this was driven by the effects of the pandemic and lockdowns on its care and student business, as well as having additional financing costs linked to forward funding future development activity.

Detailing how the pandemic has hit its income, Sanctuary said there has been a significant drop-off in student accommodation occupancy rates, particularly in London.

Sanctuary owns more than 12,230 student homes across the country. Overall, the percentage of these student properties occupied during the year up to 31 March was 79%, down from 94% in 2020. In the years before 2020, the average occupancy level was 97%.


READ MORE

Glasgow-based housing association to consult tenants over transfer to SanctuaryGlasgow-based housing association to consult tenants over transfer to Sanctuary
Southern Housing and Sanctuary in talks over merger to create UK’s largest housing associationSouthern Housing and Sanctuary in talks over merger to create UK’s largest housing association
What happened to… Sanctuary bringing all development in-house?What happened to… Sanctuary bringing all development in-house?

The low occupancy rates resulted in the revenue generated in this part of the business dropping from £56.7m last year, to £49.8m this year.

In the accounts, Sanctuary said this was mainly driven by a drop in demand from international students who were unable to travel into the country because of the travel restrictions brought in as part of the pandemic mitigation measures. However, it did report a slight uptick in demand from domestic students.

Sanctuary, which manages 5,201 care bedspaces, also saw the revenue generated from this part of its business hit, with year-on-year occupancy levels also significantly reduced.

The pandemic had a significant impact on its occupancy rates in its care business, with just 83% of its care properties occupied in 2020/21, down from 92% last year. However, the landlord added that analysts are predicting a recovery to the sector, with occupancy levels expected to recover to pre-pandemic levels by quarter three of this financial year.

Nevertheless, the low occupancy levels and increase operational costs to mitigate the spread of COVID-19 saw the revenue in Sanctuary’s care business during the financial year fall from £194.1m in 2019/20 to £188.7m this year. The margin on its earnings also fell, from 11.2% last year to 5.4% for 2020/21.

Despite drops in revenue for its care and student arms, Sanctuary’s affordable housing income grew from £377.1m last year to £386.5m this year. This part of the business also benefited from improved operating margins, with operational efficiencies driving that margin to 38.4% this year, up from 37.4% last year.

The income growth was partially driven by an increase in the number of social homes Sanctuary now owns after stock transfers and it taking on smaller housing associations. In March last year, it acquired 800 properties from Notting Hill Genesis, of which 460 were supported homes. Sanctuary also purchased 284 supported homes from Accent in a deal completed in March this year.

Sanctuary’s stock was further bolstered by a transfer of nearly 1,700 home from Scottish provider Thistle Housing Association.

Of the £386.5m made this year, £354.2m came from social housing lettings.

Overall, the housing association completed 620 homes in the year, which is an increase on the 604 completed last year. It has 5,130 homes in development, with 2,855 on site.

As part of its commitment to fixing the widespread building safety issues being found on developments across the country, Sanctuary has pledged to fully fund the remediation of all buildings taller than 11m in the next eight years. It has already committed to updating fire risk assessments in all social housing blocks and launched a programme of retrofitting sprinklers on all high-rise buildings.

Ed Lunt, group finance director at Sanctuary, said: “We are immensely proud of the dedication of the Sanctuary team who have continued to go above and beyond to support our residents and deliver services through the most testing of times.

“While the pandemic has had short-term adverse effects on parts of the business, the strong fundamentals of our operating financial performance and position ensures Sanctuary will continue to be there for residents and stakeholders over the long term.”

Sign up for our development and finance newsletter

Sign up for our development and finance newsletter
Linked InTwitterFacebookeCard
Add New Comment
You must be logged in to comment.