L&Q reports record investment in homes as it publishes financial results for 2022/23
L&Q today publishes financial results that demonstrate how the housing association is investing record amounts to improve residents’ existing homes while transforming services and building new affordable homes.
Investment of £347m (2022: £262m) in L&Q’s maintenance programme during the year is a material increase that will address its strategic priority of improving the quality and safety of resident’s homes. This programme has delivered and will continue to deliver, major internal and external works inclusive of measures to address damp and mould, fire safety, energy efficiency and wide-ranging estate improvements.
In making this investment, L&Q has faced strong inflationary pressures. Despite the challenges faced, EBITDA at £313m was at a similar level to the prior year's performance of £327m. In the year ended 31 March 2023, L&Q achieved an operating surplus of £162m (2022: £271m), and stabilised net debt year-on-year at £5.3bn. Available liquidity at £1.2bn demonstrates that L&Q has a well-capitalised balance sheet that can absorb risk.
Waqar Ahmed, Group Finance Director at L&Q, said: “L&Q, and the wider housing sector, has experienced significant financial pressures at a time when we are making record levels of investment to improve the safety, quality and sustainability of existing homes, transform services, deliver a realistic year-on-year increase in new affordable homes, and continue providing additional support to help improve the lives of residents who need it most.
“These financial pressures mean we have to prioritise where investment is directed, but through new approaches to working in partnership with residents, we are ensuring the investment is directed where residents need it most.”
He added: “Our financial statements show a net impairment of £109m which has lowered operating surplus but has no impact on EBITDA. The impairment represents the adverse implications of build programme extensions as we address defects, expected build cost inflation, tenure conversion, our decision to land-bank sites and a higher cost of capital.”
In the last financial year, L&Q completed 4,047 new residential homes, of which 71% (2022: 61%) are for social housing tenures. During the same period, building work started on an additional 2,760 homes (2022: 2,103), with the majority of these starts being later phases of existing developments.
Mr Ahmed said: “Despite economic headwinds and market uncertainty, we are committed to doing all we can to tackle the housing crisis by building more high-quality homes. Homelessness and overcrowding are two of the greatest issues facing Britain, and they will only be alleviated by increasing the supply of social housing.
“During the final quarter, we saw early signs of recovery in sales rates and a pick-up in land sales activity that has contributed to better-than-expected sales margins. Of note, with the end of Help to Buy, we have seen, and continue to expect an uplift in demand for shared ownership as evidenced by higher reservation rates and higher than expected first tranche percentages sold.
“In the medium term, we are committed to lowering our risk profile and are targeting lower debt metrics through a reduction in gross capital expenditure. Our focus remains on our existing development pipeline rather than new approvals meaning we expect to continue to reduce the number of sites that we are operating from and homes in the development pipeline.”
In a year when the cost of living crisis has significantly impacted many of the most vulnerable residents, the charitable L&Q Foundation has played a vital role in supporting those who need it.
A core service offered is Pound Advice, which works with a network of providers to give tailored support to people on a range of financial advice and debt management issues. In 2022/23, Pound Advice has helped more than 2,800 residents secure over £10 million. The gains made for residents have ranged from small one-off grants to large payments of benefits and everything in between. Additionally, L&Q’s in-house tenancy sustainment advisors supported 564 residents to manage their tenancies more successfully.
Alongside financial inclusion support, L&Q’s employment service helps people increase their incomes by finding paid work. The team has helped over 500 people start work in the last year.