Contractor going under delays jobs at £950m housing association

Sanctuary has increased its development by 14% despite a ‘turbulent year for the construction industry” which saw delays to schemes because of a contractor insolvency.

The housing association giant, in its financial statements for the year to 31 March, said that it completed 1,278 homes in 2022/23 including units built through joint ventures and consortia.

This is an increase on the 1,121 built last year but below its initial target of 1,500.

But it said the insolvency of one of its contractors caused a delay to three of its development schemes which meant that it expected more work in the future to be done by its in-house construction team.

It said: “Our ongoing success has been achieved despite it being another turbulent year for the construction industry as the recovery from the pandemic, coupled with the impact of the highest inflation rates seen for many years, has impacted on the financial health of our supply chain.”

It added: “This highlighted one of the key benefits of having our own in-house construction team, that of increased resilience to such failures, as the in-house team stepped in to deliver the part-completed schemes. Fixed price contracts have mitigated the impact of inflation where possible. The in-house construction team continues to successfully expand its operations to deliver an increasing proportion of our programme.”

Sanctuary sold fewer homes in the year than it had hoped for with 307 units sold against its target of 532. However, this still generated £36.7m more revenue from sales than in the previous year.

As a result of its rescue takeover of troubled association Swan in February, Sanctuary has increased its build target next year from 1,137 to 1,420. This is still lower than the 1,500 target for 2022/23.

Sanctuary increased its annual turnover by 16.2% from £812.5m to £943.8m.

Its surplus near doubled from £58.6m to £101.3m, inflated by a £38.5m net gain from the association’s acquisition of 13,000-home Swan.

Its underlying surplus – which excludes one off gains and losses from deals and restructuring- increased by 23% to £58.1m.

The association’s margin tightened however, due in part to development costs it inherited from Swan but also because of the impact of inflation.