A return to new development is ‘a question of when, not if’ for Southern Housing

According to its unaudited results for 2024-25, starts declined further, to 127 during the year, while completions rose to 807 homes.

Mr Paul said that Southern Housing was already operating “outside of its financial risk appetite”. The landlord is rated V2 for financial viability by the regulator, but was upgraded to G1 for governance in August 2024.

Its latest unaudited results showed that Southern’s EBITDA MRI cash interest cover figure fell to 27 per cent, compared to 39 per cent the year before and 74 per cent in 2022-23. Southern said the latest figure was “significantly reduced” as a result of a £13m write-off on costs relating to its Centrium 1 block in Woking, which was evacuated in 2023 due to structural issues.

“We want to improve our interest cover metrics, and then we can borrow more and develop more,” Mr Paul said. “It’s a question of when, not if. I’m hopeful that the totality of everything announced will enable us to get some development done in this parliament.”

Mr Paul said the low-interest loans could be “the game changer” for his group, because while the landlord’s financial plan was “very strong” in the medium and long term, its short-term interest cover metrics were low and below its risk appetite.

He said it was conceivable that Southern would be in a position where it was unable to bid for any grant under the new £39bn Social and Affordable Homes Programme, unless there is a low-interest loan coming with it, or the amount of grant that it bids for would be “massively amplified” by access to low-interest loans.

“That’s the part we’re really excited about,” he said.

“Low-interest loans over the medium term can be the difference between incremental development activity setting us back on our financial recovery journey or being neutral on our financial recovery journey, and if we get the right amount of low-interest loan as well as grant and then taking on debts, we’ll be able to get developing again at scale sooner than we might otherwise do.”

Mr Paul said that another key takeaway from the government’s announcements for Southern Housing is equal access to remediation funding, including the Building Safety Fund.

He said that if Southern could access grant for the facades it needs to remediate on its rented homes, this would be another “game-changer” for the landlord.

“We’ve got £200m in the financial plan for spend on starting remediations, so any financial support on that would be massive for us, which is why, at that scale, every bit of detail matters,” Mr Paul said.

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