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Housing associations treble surpluses

November 01 2010
Stockpiling cash may be a sign that the not-for-profit organisations are gearing up for preparing cuts

Housing associations have seen their annual surpluses treble in the last year, ahead of widely anticipated spending cuts.

A study of 24 of the country's largest associations found they have a surplus of almost £280m, an increase of £180m from the £96.7m combined amount for last year.

Housing associations are not-for-profit organisations, so any surplus they make after tax is used to maintain existing homes and help build new ones. The money is also used to run shared ownership schemes to help people who cannot afford to buy their homes outright. The stockpiling of cash may, however, be a sign that associations are preparing for government spending cuts.

Affinity Sutton, which, with 55,000 homes, is one of the country's largest associations, reported a surplus of £44m - more than double the £20m in 2008/2009. Finance director Mark Washer warned that associations need a "stronger financial base" to cope with forthcoming spending cuts and avoid the need for future bailouts.

Catalyst, which manages 16,000 homes across the South-East, also saw its net surplus double from £7.1m to £16.7m. In its annual statement, the company said it wanted to increase this amount further, saying a surplus was "essential to be able to access the private finance required to fund that part of the cost of new homes not met by social housing grants."

The report added: "Our aim is to generate an annual net surplus of £20 m by March 2013. We will be exacting about financial performance and added value across our range of activities and will use a lean approach to drive out waste." The group also stressed that all profits are reinvested in providing "homes, services and community regeneration."

Another association, Bromford Group, which owns 26,000 homes across central England, saw its surplus almost treble from £5.5m in 2008/09 to £14.1m in 2009/10 - a record for the group.

There are around 1,400 non-profit housing associations across England, which manage around 1.8m homes. Their role is to provide low-cost social housing, and they are the country's biggest provider of rental homes and shared-ownership schemes. Many have specialist projects for people with mental health or learning disabilities or substance misuse problems; and for homeless people, young people, ex-offenders and women fleeing domestic violence.