Accounts digest 2025: pre-tax surpluses rise 8.3% across UK

Fixed asset sales

Surpluses on sales of fixed assets have risen again. They rose by 27 per cent among traditional providers in England and 18 per cent among LSVTs, although now there are only five organisations in this category, as many of the original transfers are too old to be included, under the RSH’s definition.

The regulator has warned against using fixed asset sales to prop up cash flow, but acknowledges that well thought-out sales can be part of a good asset management strategy.

Nathan Mallows, chair of the National Housing Federation’s Finance Policy Advisory Group and director of finance, people and change at Coastline Housing, says “you’re essentially getting three new homes for the price of one” if the cost of the void is close to the subsidy for a new home (providing money for two new homes on top of the one being developed). Asset management disposals done for good reasons and leading to a net increase in homes “feel like a win for everybody”, he adds.

Impairments

Impairments continued to be a theme in 2024-25. The RSH’s Quarterly Survey for the final quarter of 2024-25 said 75 organisations were expecting to report an impairment charge in their accounts – an increase of five percentage points on the previous year – with a total of £407m.

The cohort in the Quarterly Survey is different to the cohort here. In the Quarterly Survey, sites under development formed around half of the impairment charged with the rest, including building safety problems, old IT systems and properties set for demolition.

Lee Cartwright, partner at Menzies (formerly Beever and Struthers), says: “I think the fire safety agenda has caused many to conclude this year that the building just isn’t economic to repair, so just knock it down and start again. That is coupled with contractor insolvencies and building cost increases.”

Accounting policies

Some associations have tried to make accounting policy changes such as altering the lifespan of assets, what is classed as a component, capitalising more, or writing items off over a longer period. Some of these changes are more legitimate than others.

“I think there is a search in the sector to protect their margins going forward by looking at their existing accounting policies. We’ve had to push back on a number of occasions to say, ‘No, you can’t do that,’” Mr Cartwright says.

“Examples would be extending asset lives beyond sector norms, or changes to the way that costs of sale are apportioned to shared ownership first tranche sales. [Some housing associations are thinking:] ‘How can we reduce the elements of the cost of building the property that we release to the income and expenditure account on the first tranche disposal?’

“So we’ve pushed back on some interesting ways in which the profit on first tranche could be increased.”

He adds that depreciation charges have risen by about a third among the accounts he has seen, an inevitable consequence of increased spending on developing new homes and on large capital works programmes on existing stock.

Reduced diversification

As finances come under pressure, some associations are cutting back on non-social housing activity. Mr Mallows mentions that several associations have moved out of private rental and supported housing.

Mr Cartwright says activity going through subsidiaries is low this year. “They are going back to basics,” he says. He adds that there are far fewer medium-sized associations with a build-for-sale subsidiary.

Pensions

Exits from defined benefit local government pension schemes (LGPS) continued this year. Mr Cartwright says: “Many LGPS ones are now closed. Pretty much all of them were continuing three years ago, but we’re down to probably about a third remaining active.”

The schemes are almost all in a net assets position – having had net liabilities three years ago – so associations can exit with a smaller cessation payment or even receive a cash lump sum on cessation.

Turnover

Turnover for the 159 associations we looked at across the UK was up nine per cent. Sanctuary had the highest turnover at £1.2bn after a full year of income from Johnnie Johnson Housing, and an increase in revenue from existing homes and increased occupancy rates in its student housing business. Last year’s largest – L&Q – was in the second spot with £1.1bn, a decrease of £11m following its earlier decision to slow down development, particularly in market sale.

The largest rises and falls in percentage terms were among for-profit RPs. Sage Homes RP had the largest rise of 458 per cent, going from £54.9m to £306.3m following the growth in its stock from 416 to 8,875 homes. Sparrow saw the largest fall, although it was sold by Sage to the Universities Superannuation Scheme (USS), with some transfer of homes to Sage Homes RP before the sale, which had a significant impact on the figures (see for-profits section, below).

Surplus

Notting Hill Genesis (NHG) had the highest pre-tax loss at £129.5m, and Abri had the largest surplus at £467.3m.

NHG made a £42.1m provision for future remediation works and had a £119.2m decrease in fair value on investment properties because of falls in its market and commercial rent portfolios. It also had a rise in turnover due to a £29.4m increase in rental income, which more than offset a fall in sales revenue that NHG said was due to the timing of its development programme. It said the underlying operational performance improved when allowing for sales timing.

BPHA saw the largest percentage rise in surplus of 1,469 per cent, going from a loss of £1.5m to a surplus of £20.1m. The prior year’s loss had resulted from exceptional break costs on a swap of £22.7m as part of a restructure of banking facilities. West Kent saw the biggest percentage fall from a surplus of £6m to a loss of £23m.

Without its LGPS exit costs, which included non-cash movements, it would have made an £8.6m surplus. Its 2024 figures were for 15 months (following a change of financial year end), which also contributed to the year-on-year difference.

Across the UK, surpluses rose by 8.3 per cent. Some categories, such as traditional English associations, barely saw any change overall. Meanwhile others, such as the six largest for-profits and the five largest care providers – which we will focus on later – saw significant percentage rises in aggregate, although that disguised a wide range of individual results.

Regions

In England, there were significant regional variations in the percentage change in pre-tax surplus from 2024 to 2025, and in median EBITDA MRI interest cover. Interest cover, which measures surplus compared to interest payable, could be used as a rough indicator of where there might be capacity to service more debt for development. Median interest cover was only above 130 per cent in the North East (152.8) and above 100 in the East Midlands (125.2), the East of England (118.6) and the North West (108.9).

London’s median EBITDA MRI interest cover was down at 52, and the mixed-region associations, which includes some large national organisations, sat at 97.4. The figure for the G15 group of London’s largest developing associations was at only 85.

This suggests that development capacity has moved away from the high-priced regions of the South, where the biggest developing associations have been in the past. Aggregate pre-tax surpluses have fallen in the South West, among mixed-region associations and particularly in London, but grown elsewhere to varying degrees.

Wales

Pre-tax surpluses fell 12 per cent across the 22 organisations we looked at in Wales. Turnover climbed nine per cent, but operating costs rose 11 per cent. Bron Afon had the largest pre-tax loss at £4.2m due to increases in routine maintenance spend and costs from exiting the LGPS. Wales & West had the largest surplus at £14.5m, which was due to a return on investments.

Scotland

Pre-tax surpluses rose in Scotland, boosted by a particularly large percentage rise at the largest housing association, Wheatley, from £7.4m to £87.8m. The group recorded a rise of more than £100m in turnover. Rent increases, new lettings and grant on the 844 new homes completed in the year contributed to growth.

The smallest figure – a loss of £1.9m – was at River Clyde, but this was an improvement on the £3.4m loss in 2024. At River Clyde, increased revenue from lettings boosted the figures in 2025.

Turnover in Scotland was up 12 per cent. The lowest figure was £15.1m at Hebridean, which is also the smallest Scottish association in the cohort by stock, and the highest was £516.8m at Wheatley, which is the largest. Hebridean saw income from rent rise but also a small fall in repairs spending.

Northern Ireland

The pre-tax surplus for the five Northern Irish associations we looked at rose nearly 13 per cent, while turnover was up 10 per cent. The highest pre-tax surplus was at shared ownership specialist Co-Ownership with £22m, and the lowest was at Apex at £3.2m – up from £2m the year before. Co-Ownership said an impairment review had led to a release of £1.1m to the surplus as house prices rose and repossessions were low.

For-profits

For a second year we have analysed the six largest for-profits separately. They have very different structures and funding models. This year saw Sage sell Sage Housing Ltd to pension fund USS, which rebranded it as Sparrow Shared Ownership. Prior to the sale, Sage transferred affordable rent and development activities to Sage Homes RP, so Sparrow held 3,059 shared ownership units at 31 December 2024, whereas Sage Housing Ltd had held 7,681 a year earlier.

Sparrow is operating debt-free, having repaid borrowings as part of the change of ownership. Consequently, there were also big falls in turnover and costs, and a reduction in the pre-tax loss from £46.6m to £16.8m.

The accounts provide pre and post-transaction figures for some of its 2024 numbers, to show that it became profitable post-transaction. It had a £21.9m operating loss in 2024 up to transfer on 12 August, and £5.2m profit for the rest of the year post-transaction.

Sparrow’s reduction in turnover from £217.1m to £51.4m was due to falls in first tranche sales of £140.5m and in rental income of £25.2m, after homes were transferred to Sage Homes RP.

M&G UK Shared Ownership was the only one of the five for-profits listed here to make a surplus, with £10.1m of pre-tax profit, up from £1.9m a year earlier.

Heylo always makes £0 because all profit and comprehensive income is attributable to the owners of its parent.

Several have no debt, including M&G UK Shared Ownership, Heylo and Sparrow. Heylo reported on gearing and EBITDA MRI for the group and these figures are reported in our analysis.

Care and supported housing

We looked at five providers where around 30 per cent or more of the stock is older people’s housing or supported housing. The top five includes two organisations that provide entirely older people’s housing and three that also have general needs stock.

All saw rises in their pre-tax surpluses. The largest surplus was at Housing 21, at £15.8m.

The largest rise in pre-tax surplus was at Anchor, influenced by a reduction in impairment charges and higher fees and occupancy levels in its care business.

Future

The trend for mergers looks set to continue into 2025-26. Newly merged Bromford Flagship has proposed a tie-up with LiveWest. Other deals include Melin and Newport City Homes forming Hedyn and Tower Hamlets Community Housing being taken over by Hyde, both in April; Settle and Paradigm merging in October; Places for People in talks with both Elim and South Yorkshire Housing; and CHP and Estuary entering merger talks.

Amendments to the application of the accounting standard by housing providers – the housing statement of recommended practice – have been published for consultation.

The final version will be published by 31 March 2026 and will be used in the accounts for the year ending 31 March 2027. It changes a range of areas including revenue recognition, bringing leases onto the balance sheet and grant accounting.

Notes and definitions for tables

Total turnover = income from all activities, excluding joint ventures

Operating surplus/turnover = operating costs (operating costs plus costs of sales) as a percentage of turnover

Pre-tax surplus/turnover = pre-tax surplus as a percentage of turnover

Total assets = fixed assets plus current assets

Debt per unit = total loans, bonds, finance leases and intercompany debt divided by units

In England, EBITDA MRI interest cover and gearing are taken from the RSH’s value for money metrics in each housing association’s accounts. They have been calculated for those in England that did not state a figure and for housing associations in Wales, Scotland and Northern Ireland as follows: gearing = debt/net book value of housing

Housing associations with LSVT-type finance will usually have planned high levels of debt relative to assets, including mixed groups with a significant LSVT presence

EBITDA MRI interest cover = (operating surplus - surplus on sales of fixed assets - amortised government grants - government grants taken to income) + interest receivable + total depreciation charge for period - capitalised major repairs and improvements/capitalised interest + interest payable

Housing associations carrying properties at valuation will not have any amortised grant

Sanctuary was the only association to adopt EU IFRS rather than FRS 102. In England, its gearing and EBITDA MRI interest cover figures are taken from its accounts. We have not calculated them for Sanctuary Scotland because it uses EU IFRS rather than FRS 102

Source of data: audited accounts for year ended 31 March 2025, except Sage Rented, Sparrow Shared Ownership, Sage Housing RP, Wales & West, Legal & General Affordable Homes (31 December 2024), Heylo Housing and ReSI Housing (30 September 2024)

Click on the button below to download the data tables for ‘Accounts digest 2025’

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