PA Housing scales back development pipeline

The landlord noted that it only builds affordable homes for rent or shared ownership and does not pursue opportunities for other tenures.

 

The housing association is also focusing on investment in existing homes.

 

Jessica Friend, chief financial officer at PA Housing, said: “Prudent financial stewardship remains at the heart of protecting PA Housing’s existing social homes and our board continues to take this into consideration when taking decisions, such as on the size and shape of future development ambitions.

 

“This is a key part of our culture to adapt to new information, risks and opportunities.”

 

Michael McDonagh, chief executive of PA Housing, said: “The next 12 months will continue to be challenging, and we will face these challenges head-on.

 

“We will do our part in building new homes, but our priority will continue to be existing homes. Together with our residents, stakeholders, funders and regulators we will make a real difference and continue to put people first.”

 

PA Housing said that as part of its 2024-29 corporate plan, it has “significantly increased investment” in its planned maintenance programme.

 

The housing association invested £28.6m in capital planned maintenance in existing homes, a rise from £15.5m in the previous year.

 

Ms Friend said: “This investment has been a strategic priority and is expected to pay off in future as the quality of our residents’ homes improves further.

 

“This faster rate of investment was made possible by the support of our funders in recognising the social and environmental benefits of restating covenants in 2023-24 to provide us with increased investment capacity in 2024-25 and beyond.”

 

Routine and planned revenue repairs and maintenance costs rose by 19.5 per cent from £49m to £58.6m. This was driven by continued cost pressures, including construction cost inflation and increased volumes of work to address prior-year backlogs.

 

The provider added that there were more communal area jobs in response to resident demand, and short-term costs associated with mobilising the landlord’s expanded in-house repairs team across the Midlands.

 

Mr McDonagh said: “We will continue to invest in people’s homes; safe and warm will continue to be our north star.

 

“This does place financial pressure on us, but we are prepared to do the right thing in parallel with maintaining financial stability. In many ways, PA was ahead of the sector when in January 2023 we reset our organisation, something now which many other providers have done.”

Record completions

 

PA Housing completed a record 407 new homes during 2024-25, a rise from 365 in the previous year. The total included 168 homes at affordable or social rent and 239 for shared ownership.

 

This was despite the landlord reducing its investment in new homes from £134m to £98m, while grant subsidy fell from £56m to £7m.

 

Suki Kalirai, chair of PA Housing, said: “We will continue to play our part in delivering new supply of social housing but this will again be subject to capacity and we are very clear that investment into our existing homes and estates must come first.”

 

Finances

 

PA Housing posted a pre-tax surplus of £2.6m in 2024-25, following a loss of £1.1m in the previous year. The results are affected by impairment charges of £5.2m last year and £15.6m in the previous year. These relate to increased completion costs on certain development schemes following contractor insolvencies.

 

The investment in existing homes contributed to a rise in operating costs from £154.5m to £166.2m.

 

Meanwhile, the housing association grew its operating surplus from £37.7m to £43.9m, with the operating margin rising from 18.2 per cent to 19.6 per cent.

 

Overall turnover increased from £207m to £224.1m, while income from social housing lettings activities rose by 10.6 per cent to £193.1m.

 

Income from the first tranche sales of shared ownership homes fell slightly from £25.6m to £23m, which PA Housing said was in line with expectations and “the usual fluctuations in sales from one year to the next”.

 

Ms Friend said: “Our financial performance in 2024-25 was challenged by increased costs in some areas and this did mean that we missed our targets on some financial metrics, particularly operating margins.

 

“However, our investments in homes and services have facilitated an improvement in tenant satisfaction measures and overall financial results were robust.”

 

Elsewhere, the landlord posted liquidity (comprising treasury cash balances and undrawn committed bank facilities, excluding cash held on behalf of others) of £373m at year end. This was a drop from £477m at the end of 2023-24.

 

Gearing rose slightly from 52.7 per cent to 54.5 per cent.

 

Cash balances of £22m were held, a drop from £133m, and overall borrowing dropped slightly from £1.31bn to £1.3bn over the same period.

 

PA Housing said its “primary use” of liquidity in 2024-25 continued to be the ongoing investment in its new build development programme.

 

Mr Kalirai said: “Overall, our key financial metrics are broadly ‘in the pack’ of the wider sector but we have deliberately increased our investment into property improvements as one of our key strategic drivers.”