Group statement of comprehensive net expenditure – Year ended 31 March 2024

	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Expenditure
Grants	4	2,594,518	1,663,912
Cost of land and property disposals	5	75,082	182,609
Programme costs	6	74,137	83,376
Staff costs	7a	79,831	70,672
Pension costs	7a	21,177	31,863
Administration expenses	8	28,293	30,190
Impairment of land and property	16	134,242	106,924
Impairment or (impairment reversal) of financial assets measured at fair value through profit or loss	12f	187,902	254,790
Impairment or (impairment reversal) of financial assets measured at amortised cost	12f	63,645	(7,309)
Increase or (decrease) in provisions	—	(2,569)	854
Total	—	3,256,258	2,417,881
Income
Proceeds from disposal of land and property assets	5	119,632	267,742
Valuation gains on financial assets measured at fair value through profit or loss	12f	(15,594)	646,815
Gain on disposal of financial assets	12f	36,735	41,191
Interest income	12f	118,132	96,248
Other operating income	9	151,489	87,904
Total	—	410,394	1,139,900
Net operating expenditure	—	2,845,864	1,277,981
Interest payable	—	428	440
Share of profits of associates and joint ventures	10	5,317	(3,309)
Pension fund finance costs	18d	(11,315)	(4,886)
Net expenditure before tax	—	2,840,294	1,270,226
Income tax credit	—	(14,962)	(8,766)
Net expenditure for the year	—	2,825,332	1,261,460
Other comprehensive expenditure
Actuarial gain from pension fund	18e	(77,037)	(63,767)
Income tax charge on items in other comprehensive expenditure	—	19,259	15,942
Total	—	(57,778)	(47,825)
Total comprehensive expenditure for the year	—	2,767,554	1,213,635

All activities above derive from continuing operations. Net expenditure is financed by Grant in Aid as explained in note 1e, with the exception of non-cash expenditure, for example depreciation, amortisation, provisions and impairments.

Group statement of financial position — Year ended 31 March 2024

	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Non-current assets
Intangible assets	—	21,502	9,282
Property, plant and equipment	—	9,234	11,000
Investments in associates and joint ventures	11b	59,303	61,931
Pension assets	18a	318,460	233,226
Trade and other receivables	12b	140,774	176,780
Financial assets held at amortised cost	12c	832,731	846,979
Financial assets held at fair value through profit or loss	12c	18,097,486	19,622,677
Total	—	19,479,490	20,961,876
Current assets
Land and property assets	16	1,064,633	1,069,359
Trade and other receivables	12b	286,289	368,300
Financial assets held at amortised cost	12c	354,343	570,566
Financial assets held at fair value through profit or loss	12c	107,502	109,670
Cash and cash equivalents	12a	166,687	217,485
Total	—	1,979,454	2,335,380
Total assets	—	21,458,944	23,297,256
Current liabilities
Trade and other payables	17	(495,425)	(555,453)
Provisions	—	(301)	(3,889)
Total	—	(495,726)	(559,342)
Non-current assets plus net current assets	—	20,963,218	22,737,914
Non-current liabilities
Trade and other payables	17	(20,195)	(25,324)
Provisions	—	(5,443)	(4,821)
Pension liabilities	18a	(3,223)	(5,858)
Total	—	(28,861)	(36,003)
Assets less liabilities	—	20,934,357	22,701,911
Reserves
Income and expenditure reserve	—	20,934,357	22,701,911
Taxpayers’ equity	—	20,934,357	22,701,911

The accompanying notes are an integral part of these Financial Statements. Approved by the Board on 23 July 2024 and signed on their behalf by Peter Denton, Chief Executive and Accounting Officer.

Agency statement of financial position — At 31 March 2024

	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Non-current assets
Intangible assets	—	21,502	9,282
Property, plant and equipment	—	9,234	11,000
Investments in subsidiaries	11a	100,000	50,000
Investments in associates and joint ventures	11b	14,184	20,615
Pension assets	18a	318,460	233,226
Trade and other receivables	12b	140,774	176,780
Financial assets held at amortised cost	12c	832,731	846,979
Financial assets held at fair value through profit or loss	12c	18,097,486	19,622,677
Total	—	19,534,371	20,970,559
Current assets
Land and property assets	16	1,064,633	1,069,359
Trade and other receivables	12b	286,289	368,300
Financial assets held at amortised cost	12c	354,343	570,566
Financial assets held at fair value through profit or loss	12c	107,502	109,670
Cash and cash equivalents	12a	166,687	217,485
Total	—	1,979,454	2,335,380
Total assets	—	21,513,825	23,305,939
Current liabilities
Trade and other payables	17	(551,748)	(571,170)
Provisions	—	(301)	(3,889)
Total	—	(552,049)	(575,059)
Non-current assets plus net current assets	—	20,961,776	22,730,880
Non-current liabilities
Trade and other payables	17	(20,195)	(25,324)
Provisions	—	(5,443)	(4,821)
Pension liabilities	18a	(3,223)	(5,858)
Total	—	(28,861)	(36,003)
Assets less liabilities	—	20,932,915	22,694,877
Reserves
Income and expenditure reserve	—	20,932,915	22,694,877
Taxpayers’ equity	—	20,932,915	22,694,877

The accompanying notes are an integral part of these Financial Statements. Approved by the Board on 23 July 2024 and signed on their behalf by: Peter Denton, Chief Executive and Accounting Officer.

Statement of cash flows — Year ended 31 March 2024

Group and Agency	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Net cash outflow from operating activities	(a)	(1,032,546)	(1,532,265)
Cash flows from investing activities
Purchase of property, plant and equipment	—	(1,489)	(384)
Purchase of intangible assets	—	(14,075)	(4,690)
Investment made in group companies	11b	(2,688)	(3,500)
Net cash outflow from investing activities	—	(18,252)	(8,574)
Cash flows from financing activities
Grant in Aid from sponsor department	SoCTE [*]	1,000,000	1,562,548
Net cash inflow from financing activities	—	1,000,000	1,562,548
(Decrease) or Increase in cash and cash equivalents in the period	—	(50,798)	21,709
Cash and cash equivalents at 1 April	12a	217,485	195,776
Cash and cash equivalents at 31 March	12a	166,687	217,485

a) Reconciliation of net operating expenditure to net cash flow from operating activities

	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Net operating expenditure	SoCNE [**]	(2,845,864)	(1,277,981)
Financial assets
Financial asset investments made by the Agency	12d, 12e	(312,195)	(2,672,858)
Proceeds from disposal of financial asset investments	12d, 12e, 12f	1,927,638	2,822,375
Gain on disposal of financial assets	12f	(36,735)	(41,191)
Reversal of valuation gains or (valuation gains) above cost on financial assets held at fair value through profit and loss	12f	15,594	(646,815)
Valuation losses below cost on financial assets held at fair value through profit and loss	—	187,902	254,790
Increase or (decrease) in impairment of financial assets	12f	63,645	(7,309)
Interest added to financial assets held at amortised cost	12e, 12f	(88,310)	(76,671)
Land and property
Additions to land and property assets	16	(202,273)	(182,429)
Cost of land and property assets disposed	—	72,757	177,253
Increase in impairment of land and property	16	134.242	106,924
Other
Depreciation and amortisation	8	5,111	5,123
Pension costs	18d, 18f	483	12,422
Payments of income tax	—	(10,263)	(9,750)
Total	—	(1,088,268)	(1,536,117)
Decrease or (increase) in receivables	—	118,310	(48,123)
(Decrease) or increase in payables	—	(59,622)	58,981
Decrease in provisions	—	(2,966)	(7,006)
Net cash (outflow) or inflow from operating activities	—	(1,032,546)	(1,532,265)

[*] SoCTE: Statement of Changes in Taxpayers’ Equity

[**] SoCNE: Statement of Comprehensive Net Expenditure

Group statement of changes in taxpayers’ equity — Year ended 31 March 2024

	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Balance at 1 April	—	22,701,911	22,354,370
Change in accounting policy on 01 April 2022	—	—	(1,372)
Net expenditure for the year	—	(2,825,332)	(1,261,460)
Actuarial gain from pension fund	18e	77,037	63,767
Income tax on items in other comprehensive expenditure	—	(19,259)	(15,942)
Total comprehensive expenditure for the year	—	(2,767,554)	(1,215,007)
Grant in Aid from sponsor department	1e	1,000,000	1,562,548
Balance at 31 March	—	20,934,357	22,701,911

Agency statement of changes in taxpayers’ equity — Year ended 31 March 2024

	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Balance at 1 April	—	22,694,877	22,349,534
Change in accounting policy on 1 April 2022	—	—	(1,372)
Net expenditure for the year	—	(2,819,740)	(1,263,658)
Actuarial gain from pension fund	18e	77,037	63,767
Income tax on items in other comprehensive expenditure	—	(19,259)	(15,942)
Total comprehensive expenditure for the year	—	(2,761,962)	(1,217,205)
Grant in Aid from sponsor department	1e	1,000,000	1,562,548
Balance at 31 March	—	20,932,915	22,694,877

Notes to the financial statements year ended 31 March 2024

1 Statement of accounting policies

a) Statutory basis

The Homes and Communities Agency, trading as Homes England (hereafter, the Agency), is an executive non-departmental public body and statutory corporation created by the Housing and Regeneration Act 2008 (as amended by the Localism Act 2011). Homes England is sponsored by the Ministry of Housing, Communities and Local Government (MHCLG).

The Financial Statements of Homes England are governed under the provisions of the Housing and Regeneration Act 2008 and by the Accounts Direction given by the Secretary of State, with approval of HM Treasury under the Act. The Direction reflects government policy that the Financial Statements should, insofar as appropriate, conform to the accounting and disclosure requirements contained in Managing Public Money, Government Financial Reporting Manual (FReM) and in HM Treasury’s Fees and Charges Guide. The Financial Statements have been prepared in accordance with the 2023 and 2024 FReM issued by HM Treasury.

The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. Where the FReM permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of the Agency for the purpose of giving a true and fair view has been selected. The policies adopted by the Agency are described here. They have been applied consistently in dealing with items that are considered material to the Agency’s accounts.

b) Accounting convention

The Financial Statements are prepared under the historical cost convention modified by the revaluation of financial assets held at Fair Value Through Profit or Loss (FVTPL) and property, plant and equipment.

c) Basis of preparation and consolidation

The Group Financial Statements incorporate those of the Agency and the investees controlled by the Agency. No Statement of Comprehensive Net Expenditure is presented for the Agency as this is not materially different to that presented for the Group.

No significant judgements or assumptions have been made relating to the determination of investee status, joint control, or significant influence.

The Group’s associated undertakings are all undertakings in which the Group has a participating interest and over whose operating and financial policy it exercises significant influence. The Group’s joint ventures are all undertakings in which the Group exercises joint control. In the Group Financial Statements, investments in associates and joint ventures are accounted for using the equity method, where an investment is initially recorded at cost and subsequently adjusted to reflect the investor’s share of the net assets of the associate. The consolidated Statement of Comprehensive Net Expenditure includes the Group’s share of profits and losses of associates and joint ventures, while its share of net assets of associates and joint ventures is shown in the Group Statement of Financial Position.

The share of net assets and profit information is based on unaudited Financial Statements or management information to 31 March 2023 for most associates. Where this information is not available, Financial Statements with a different reporting date have been used, where this reporting date is within 3 months of that of the Agency and where this does not produce significantly different results. Adjustments have been made on consolidation for significant transactions following the reporting date of the information used.

English Cities Fund Limited Partnership prepares its annual Financial Statements up to 31 December, the same reporting date as its investee partner.

Countryside Maritime Limited prepares its annual Financial Statements up to 30 September, which is the reporting date of the joint venture partner.

Tilia Community Living LLP prepares its annual Financial Statements up to 30 June, which is the reporting date of the joint venture partner.

Newton Development Partners LLP prepares its annual Financial Statements up to 31 March. The partnership was incorporated in the year and will produce its first set of audited accounts for the year ended 31 March 2024.

d) Investments in subsidiaries, associates, and joint ventures

Investments in subsidiaries, associates, and joint ventures, as recorded in the Agency’s own Statement of Financial Position, are accounted for at cost (subject to annual assessment for impairment).

e) Funding

The Agency’s activities are funded in part by income generated from operations and in part by Grant in Aid provided by the Ministry for Housing, Communities and Local Government (MHCLG) for specified types of expenditure.

Grant in Aid received to finance activities and expenditure which support the statutory and other objectives of the Agency is treated as financing income. It is regarded as a contribution from a controlling party and is therefore credited to the income and expenditure reserve in full. The net expenditure for the period is transferred to this reserve.

f) Critical accounting judgements and key sources of estimation uncertainty

The Agency’s critical accounting judgements are impacted by the macro-economic uncertainty in the current markets and alternative economic scenarios are considered in the Performance report, within the Impact of macro-economic uncertainty section.

Financial assets measured at fair value

Where assets are to be measured at fair value, this is performed with reference to the requirements of International Financial Reporting Standard 13 Fair Value Measurement (IFRS 13), applying considerations which follow the 3 hierarchies set out under the standard for determining fair value.

The majority of financial assets measured at fair value are investments in homes, such as those under the Help to Buy scheme, as analysed in note 12d. These assets are valued with reference to regional house price indices, supplemented by experience adjustments, which are calculated by comparing the Agency’s actual disposals occurring in the 3 months leading up to the year-end, to the comparable expected disposal values computed with reference to regional house price indices alone. Together, these provide a reasonable estimate of the fair value of these assets because house price indices alone cannot accurately predict the value of individual homes — and disposal proceeds to date, although a good indicator of market performance, may not occur at the same level in the future.

As the Agency’s security over the Help to Buy investment is via a second charge over the property with the main mortgage provider holding the first charge, if the amount needed to settle the homeowner’s main mortgage does not leave sufficient sale proceeds available to settle our original percentage share, then the Agency will not receive its full percentage share of the proceeds. Instead, it will receive the available remaining cash after the first charge has been settled. In an economic scenario where there was a significant decrease in house prices, there is a risk that the Agency may not recover the full amount of its equity loan balance due to this first charge effect.

The valuation of investments in homes (through equity-loan programmes such as Help to Buy) is highly sensitive to changes in assumptions about market prices. Investments in homes are also the Agency’s most significant asset category so the judgement exercised by management, both in the application of indexation to the home equity portfolio and in the experience adjustments applied to this indexation, is a source of material estimation uncertainty in the Agency’s financial statements.

Analysis showing the sensitivity of the valuation of these assets to changes in market prices, and therefore to management’s judgement in estimating this valuation, is shown in note 14a. In addition, note 15a outlines the Agency’s analysis of the sensitivity of the valuation of the Help to Buy portfolio to key modelling assumptions.

Other financial assets measured at fair value are generally valued with reference to cash flow forecasts, which are by their nature based on estimates. Exceptions to this are the Agency’s investment in the PRS REIT plc, which is valued with reference to quoted unit prices on the London Stock Exchange.

More information on the Agency’s application of IFRS 13 to support fair value measurement is set out in note 12c and note 13.

Expected credit losses

The Agency is required to calculate an Expected Credit Loss Allowance for financial assets measured at amortised cost. The majority of the assets the Agency measures at amortised cost relate to funding the Agency has provided as loans, and a small number of non-current trade receivables. The Agency also calculates a simplified expected credit loss allowance for current trade receivables as permitted under International Financial Reporting Standard 9 Financial Instruments (IFRS 9).

The expected credit loss allowance at 31 March 2024 is analysed in note 12h. There are various key assumptions applied to the expected credit loss model to which the calculation is highly sensitive, therefore the assumptions applied are a key judgement of management.

The key assumptions applied are:

• Probability of default — probability of default values are determined with reference to current economic conditions, notably with reference to increased household costs due to inflation. The Probability of Default values are applied to each investment in relation to their individual Credit Risk Rating (CRR).

• Economic scenarios and relative weightings: IFRS 9 requires the Agency to consider alternative economic scenarios in the calculation of the Expected Credit Loss Allowance. These scenarios consist of an upside, downside and base case, and are detailed in the Performance Report within the Impact of macro-economic uncertainty section. For each identified scenario, variations are made to the Probability of Default values applied based on an individual investment’s CRR. The amount of change applied is dependent on the scenario. Weightings are applied to the Expected Credit Loss calculations for each scenario, determined in relation to the Agency’s view of the probability of each scenario occurring, with reference to current market and credit risk expectations.

• Loss Given Default (LGD) Floor: The Agency has determined that available historic default data is insufficient to provide an evidence base for anticipated losses on default. As a result, a minimum percentage value has been applied to the LGD calculation with reference to individual investments. This floor has been derived on the basis of management judgement and interpretation of Prudential Regulation Authority guidance. At 1 April 2023 and 31 March 2024, the LGD floor applied was 35%.

• Moderated Security Values (MSVs): To reflect the expected value which might reasonably be realised from the sale of security in the event of default, MSV percentages are applied to gross security values to determine a measure of LGD (when compared against the estimated exposure on default). The MSVs are varied depending on the type of security held. A lower MSV percentage results in a higher discount applied to the determined security values.

Changes to the above assumptions can have a significant impact on the expected credit loss allowance calculation. A sensitivity analysis has been performed in relation to the above assumptions in note 15b.

Note 12h provides an analysis of the movements in the expected credit loss allowance between 1 April 2023 and 31 March 2024, including the impact of changes in credit risk assumptions over the period.

Land and property assets

Determination of the value of land and property assets involves a significant amount of judgement and estimation uncertainty, particularly given the complexity of some of the Agency’s properties and the range of anticipated routes to disposal. Valuations are performed by independent qualified valuation experts. Most land and property assets, based on value, are assessed by these independent valuation specialists. However, as the assets are held under the historic cost convention, the judgement and estimation uncertainty involved in property valuations only affects carrying value where an impairment is identified.

Defined benefit pensions

The value of the Agency’s defined benefit pension assets and liabilities have been assessed by qualified independent actuaries. In making these assessments, it is necessary for actuarial assumptions to be used which include future rates of inflation, salary growth, discount rates and mortality rates. Differences between those estimates used and the actual outcomes will be reflected in taxpayers’ equity in future years.

As the assets managed under the Agency’s pension scheme are predominantly quoted investments there is significantly less uncertainty surrounding their valuation than unquoted assets held elsewhere on the Agency’s Statement of Financial Position. There are some investments in property that may be subject to valuation uncertainty, but these represent a small proportion of scheme assets, 6.36% (7.06% in 2022 and 2023). Similarly, the discount rates used for scheme liabilities are derived from bond markets and so determined with reference to published figures at the Statement of Financial Position date.

Overall there is no material uncertainty over the valuation of scheme assets within the defined benefit pension scheme.

g) Grants

Payments of capital and revenue grants to registered providers of social housing (RPs) and other bodies are accounted for on an accruals basis.

Payments of Affordable Housing Grants may be paid in 1, 2 or 3 instalments depending on scheme and provider eligibility — an acquisition tranche, a start on site tranche and a completion tranche. In the 2 years disclosed the tranches for schemes were:

• 40% on acquisition (where eligible), 35% on start on site (where eligible — this tranche may increase to 75% if the scheme is not eligible for an acquisition payment), 25% on completion

• for those RPs who have been selected for continuous market engagement, payment flexibility of up to 95% against eligible expenditure can be claimed at acquisition and, or, start on site

• Affordable Housing grant under Strategic Housing Partnerships are paid quarterly in arrears, in line with total eligible development expenditure

• Housing Infrastructure Fund grants are paid in line with development costs incurred in the financial year

h) Grant recoveries

Recoveries of Affordable Housing Grants from RPs are accounted for when the amount due for repayment has been agreed with the RP and invoiced. RPs may retain grant recoverable from sales within their own accounts for recycling, with the funds becoming due back to the Agency if unused within 3 years. Recovery of other grants are accounted for when the repayment becomes contractually due. While judgement is involved in the calculation of the recoverable amount, this is not deemed to be material to the Financial Statements.

i ) Revenue recognition

Homes England recognises revenue from its contracts with customers in line with International Financial Reporting Standard 15 Revenue from Contracts with Customers (IFRS 15).

Income from the disposal of land and property assets is recognised when there is a legally binding sale agreement, which has become unconditional and irrevocable by the end of the reporting period. The transaction price is the amount of the consideration to which the Agency expects to be entitled in exchange for transferring the risks and rewards of ownership of the asset. Payment terms for such transactions may vary depending on the nature of the agreement. Where payment is on deferred terms the associated receivable is discounted to reflect the net present value of the receipt.

Income from rent and other property income is recognised over the period to which it relates and is invoiced in line with the terms of the lease. Invoices are payable upon issue.

Income from homeowner fees is recognised in the period to which it relates and is paid monthly in arrears. The fee accrues daily after the financial instrument reaches a defined maturity and the income is recognised to the extent that it has accrued at the reporting date.

Income from projects where the Agency acts as developer, where external contractors manage build and sales on behalf of the Agency, is recognised when a performance obligation in the contract is met. This is normally at legal completion and measured at the fair value of the consideration received or receivable for the property. Where income is based on a contract and recognised over time, it is recognised by reference to the stage of completion of the contract activity at the Statement of Financial Position date. This is normally measured by compliance inspector reports of work performed to date. A contract asset is recognised when the Agency has completed a proportion of the contract activity prior to payment being received. A contract liability is recognised where cash has been received in advance of the contract activity being completed.

j) Income tax

The income tax charge represents the sum of current tax and deferred tax. Both current and deferred tax are recognised in the Statement of Comprehensive Net Expenditure, except to the extent that they related to items recognised directly in taxpayers’ equity, in which case they are recognised in taxpayers’ equity.

Current tax is the expected tax payable on the taxable surplus for the year, based on tax rates that have been enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax is calculated at the tax rates expected to apply in the period when the liability is settled or the asset realised, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.

A deferred tax asset is recognised only to the extent that it is probable that future taxable surpluses will be available against which the temporary differences can be utilised.

k) Land and property assets

Valuation

Land and property assets are shown in the Statement of Financial Position at the lower of cost and net realisable value (NRV). Cost comprises direct costs that have been incurred in bringing the land and property to their present location and condition, including the capitalisation of staff time where appropriate. NRV is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale, including marketing, legal and panel solicitor fees. NRV is an entity specific valuation methodology which reflects Homes England’s circumstances, the purpose for which the asset is held and the future disposal strategy for the asset. This is different from fair value methodology which is a market-based measurement, and which establishes a value based on a price that would be received to sell an asset in an orderly transaction between market participants.

A NRV at each reporting period will be obtained for land and property assets if there is evidence of a change in NRV brought about by certain trigger events and in all cases, where the net realisable value of the asset was more than or equal to £5 million in the preceding year. Such trigger events include the receipt of planning permission, significant capital expenditure, or a change in expected disposal strategy. If no trigger event occurs and the net realisable value of the asset was less than £5 million in the preceding year, the asset will retain the net realisable value from the last assessment.

However, for this year, in light of the current economic environment (increases in base rates, below average buyer demand for new build homes, inflationary pressures), the decision was made to revalue all assets, even where no trigger events have occurred (‘whole portfolio revaluation’). This replicates the approach in recent years, although in those years the uncertainty mostly related to the COVID-19 pandemic and inflationary pressures.

Whilst a whole portfolio revaluation has taken place, new de-minimis rules were introduced this year. This means that any asset with a prior year valuation of less than £500,000 can be rolled forward for up to 5 years where there has been no significant change in the status of the asset, such as a receipt of planning permission or a change in disposal strategy. The new rules increased the de-minimis threshold from £150,000 and the roll forwarad from 3 years.

An estimate of the NRV at the reporting period is obtained in accordance with the current edition of RICS Valuation – Global Standards, effective from 31 January 2022 and the RICS Valuation – Global Standards 2017 UK national supplement, (collectively known as ‘The Red Book’), as amended, extended or updated from time to time. In establishing a net realisable value for each asset, the following will be taken into account:

• there is a willing buyer and seller

• the transaction is at arm’s length

• each party has acted knowledgeably, prudently and without compulsion

• the reasons for Homes England holding the asset and future disposal plans for the asset

Following the determination of net realisable value at the reporting period, each asset is individually assessed to calculate an impairment or reversal of impairment. A reversal of an impairment charge for previously impaired assets may occur where the net realisable value increases. Increases are limited to an amount which results in assets being carried at their historic cost. Any movements in the valuation of land and property assets are shown in Net Expenditure as an impairment charge or credit.

Options purchased in respect of land are capitalised initially at cost. Options are reviewed annually for impairment as part of the valuation of the whole portfolio.

The valuation of land on which the Agency acts as developer, where external contractors manage build and sales on behalf of the Agency, is based on the value of the contract and progress to date. The contract value is adjusted to reflect any costs expended and any sales achieved in year.

Disposal of land and property assets

Where proceeds are receivable over a period of more than 12 months after the end of the reporting period, the proceeds are discounted at a rate prescribed by HM Treasury to reflect the net present value of the receipt. The rate applied during the year was 2.05% (2022 and 2023: 1.9%), in accordance with HM Treasury’s PES (Public Expenditure System) (2023) 10, Discount Rates for General Provisions, post-employment benefits, financial instruments and leases (under IFRS 16); Announcement of rates. This paper was issued by HM Treasury on 4 December 2023.

Where a land sale agreement includes an overage clause, IFRS 9 requires that any associated receivable is measured (discounted to reflect the net present value of the receipt as described here) and disclosed as a financial asset at FVTPL. Over time, the initial discount unwinds through Net Expenditure as a valuation gain. The associated overage clause is measured and disclosed separately as a financial asset at FVTPL (level 3 hierarchy).

Where no overage clause exists, the receivable is measured and disclosed as a financial asset at amortised cost. Accounting policy m) Financial assets, under subheading Impairment, sets out the factors to be considered when measuring financial assets at amortised cost. Over time, the initial discount unwinds through Net Expenditure as interest income.

l) Provisions

Provisions are made for environmental liabilities where the Agency is under a statutory, contractual, or constructive obligation to remediate land to relevant standards. The amounts provided are the best estimate of the expenditure required to settle the obligation, based on circumstances existing at the reporting date. Expenditure expected to be incurred in future years is discounted in accordance with HM Treasury’s PES (Public Expenditure System) (2023) 10, Discount Rates for General Provisions, post-employment benefits, financial instruments and leases (under IFRS 16); announcement of rates. This paper was issued by HM Treasury on 4 December 2023. The rates applied during the year for short, medium and long term provisions were 4.26%, 4.03% and 4.72% respectively (2022 and 2023 — 3.27%, 3.20% and 3.51%)

Provisions are recognised for other liabilities as appropriate and discounted in line with HM Treasury’s guidance if applicable.

m) Financial assets

Recognition and derecognition

Financial assets are recognised in the Statement of Financial Position when the Agency becomes a party to the contractual provisions of the instrument (this is usually when cash is initially advanced to the counterparty, but for home equity assets this is at the point of legal completion of the underlying property purchase) and measured at fair value on recognition.

Where differences between the fair value at initial recognition, as calculated using the methods described in note 12c and note 13, and the price paid by the Agency to acquire the instrument are significant, then 1 of the following is applied:

• they are recognised as grant expenditure where fair value is estimated to be below cost, in accordance with IAS 20 Government Grants and Disclosure of Government Assistance

• they are deferred and released over the expected life of the instrument, in accordance with IFRS 9

The Agency fully derecognises a financial asset only when the contractual rights to the cash flows for the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership to another entity. Partial derecognition occurs where part of the contractual cash flows is received, for example, where a homeowner chooses to partially redeem their equity loan. Here, the element of the asset which relates to the repayment is derecognised.

Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents comprise amounts in bank accounts where there is an insignificant risk of changes in value, with less than 3 months’ notice from inception. Third party cash comprises cash held by solicitors at year-end in relation to deals which were in progress and cash received by the Agency’s mortgage administrator for home equity redemptions.

Trade and other receivables

Trade and other receivables may be measured at fair value or amortised cost depending on the nature of the individual balance. Where the balance is measured at amortised cost, the carrying value is subject to an Expected Credit Loss calculation. Land sale agreements that contain clauses for the recovery of overage are measured at FVTPL.

Financial asset investments

The Agency follows IFRS 9 for all investments, subject to interpretations and adaptations for the public sector context as defined in the FReM.

Classification and measurement of financial assets

2 criteria are used to determine how financial assets should be classified and measured under IFRS 9:

• the business model for managing the asset

• the contractual cash flow characteristics of the financial asset

The measurement categories reflect the nature of the cash flow and the way they are managed. The 3categories are:

• financial assets measured at amortised cost (AC)

• financial assets measured at fair value through other comprehensive income (FVTOCI)

• financial assets measured at fair value through profit or loss (FVTPL)

The contractual cash flow characteristics are either:

• financial assets held to collect cash flows only

• the assets are held to collect cash flows and to sell

Financial assets are measured at AC if they are held within a business model whose objective is to hold financial assets to collect contractual cash flows and their contractual cash flows represent solely payments of principal and interest.

Financial assets are measured at FVTOCI if they are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and their contractual cash flows represent solely payments of principal and interest. Currently, the Agency has no assets which meet the requirements to be recognised under this classification.

Other financial assets are measured at FVTPL. There is an option to make an irrevocable election for non-traded equity investments to be measured at FVTOCI, in which case dividends are recognised in profit or loss, but gains or losses are not reclassified to profit or loss upon derecognition, and impairment is not recognised in the income statement. The Agency has not chosen to make this election for any financial assets.

Consequently, all financial assets which do not meet the criteria for classification to be recognised and measured at AC are recognised and measured at FVTPL. Business models are determined on initial application. The Agency assesses the business model at a portfolio level. Information that is considered in determining the business model includes:

• policies and objectives for the relevant portfolio

• how the performance and risks of the portfolio are managed, evaluated, and reported to management

Financial assets managed on a fair value basis are held at FVTPL with no elections made to classify as FVTOCI.

In assessing whether contractual cash flows are solely payments of principal and interest, terms that could change the contractual cash flows so that it would not meet the condition for solely payments of principal and interest are considered, including:

• contingent and leverage features

• non-recourse arrangements

• features that could modify the time value of money

 Assets measured at fair value

Most of the Agency’s financial assets are measured at fair value. Under IFRS 9, the Agency is required to value assets in accordance with IFRS 13. The practical application of this standard is explained with reference to the Agency’s asset portfolios in notes 12c and 13, with detail regarding the key assumptions which support the Agency’s most significant fair value estimate set out in note 15a.

When determining the fair value hierarchy level under which a financial asset should be disclosed under the requirements of IFRS 13, the Agency considers the observable inputs used within the valuation of the asset.

The Agency considers the following factors in determining whether there have been any transfers between levels of the fair value hierarchy:

For financial assets previously valued using unobservable inputs and therefore disclosed under Level 3 of the fair value hierarchy:

If it has been determined that observable inputs are now available to measure the fair value of the asset, the Agency would consider whether the asset should be disclosed within Level 1 or Level 2 of the fair value hierarchy

For financial assets previously valued using observable inputs and therefore disclosed within Level 1 or Level 2 of the fair value hierarchy:

If it has been determined only unobservable inputs are now available or observable inputs must be adjusted using unobservable inputs, the Agency would consider whether the asset should be disclosed within a lower level of the fair value hierarchy.

The above factors are considered at least annually for particular asset groups or where there has been a contractual change for an individual asset.

Assets measured at amortised cost

Assets are valued by applying effective interest rates, calculated to recognise interest in accordance with IFRS 9 requirements to capitalise transaction costs and recognise fee income as finance income, spread over the life of the investment. Valuation of assets is subject to the impairment requirements of IFRS 9 for recognising write-off adjustments, modification adjustments and expected credit loss allowances.

Impairment

IFRS 9 requires the Agency to recognise expected credit losses anticipated within the next 12 months based on unbiased forward looking information. Where a significant increase in credit risk is identified the Agency is required to recognise total lifetime expected credit losses.

The measurement of expected credit loss involves increased complexity and judgement including estimation of probabilities of default, loss given default, a range of future economic scenarios, estimation of expected lives and estimation of exposures at default and assessing significant increases in credit risk.

Key concepts and management judgements

The impairment requirements are complex and require management judgements, estimates and assumptions. Key concepts and management judgements include:

Determining a significant increase in credit risk since initial recognition — IFRS 9 requires the recognition of 12 month expected credit losses (the portion of lifetime expected credit losses from default events that are expected within 12 months of the reporting date) if credit risk has not significantly increased since initial recognition (stage 1), and lifetime expected credit losses for financial instruments for which the credit risk has increased significantly since initial recognition (stage 2) or which are credit impaired (stage 3).

The Agency assesses when a significant increase in credit risk has occurred based on quantitative and qualitative assessments for individual investments.

Default — Default is deemed to have occurred when a Borrower has materially defaulted on their obligations and, or, there is evidence that a counterparty is experiencing financial difficulty and their ability to repay is impaired. Homes England rebuts the presumption that exposures where payments past due exceed 90 days results in default. This is rebutted on the basis Homes England primarily advances development loans where interest is accrued and capitalised and repayment primarily comes from the sale of developed collateral (dwellings or land) and a delay in a sale or repayment is not always reflective of a Significant Increase in Credit Risk (SICR) or default.

In determining whether a counterparty and resultantly a financial asset is classified as being in default, Homes England assess a range of factors including, but not limited to:

• whether a significant breach of lending terms and obligations has occurred such as a breach in financial covenants, legalisation or litigation has occurred

• the availability of cure, remedy or standstill periods and whether these have lapsed. These provisions, where agreed with the borrower at the outset, provide an opportunity (during a restricted time period) for the borrower to rectify a default before enforcement action is taken.

These provisions are commonly used by lending institutions:

• whether there is a realistic prospect for any distress to be remedied by the counterparty or Beneficial Owners without significant lender intervention and contract modification

• where relevant, if another lender to the counterparty has recognised a default resulting in a SICR regardless of whether this triggers cross default provisions

As Homes England’s loans and advances which meet the requirements to be measured at amortised cost are broadly consistent in nature, all being commercial loans and advances to companies involved in housing investment and development, a consistent approach to default is taken across the organisation.

Counterparties and associated financial assets which are deemed to be in default are only considered to have cured and returned to Stage 2 or Stage 1 following completion of a restructure which has resulted in the counterparty’s ability to repay their obligations no longer being impaired. Any restructure which results in Homes England absorbing a loss as a result will result in the financial asset being classified as in default.

Homes England does not utilise probation periods when assessing the staging of a financial asset and therefore assets can move upwards through the stages without restriction. The approach reflects the nature of Homes England’s activities which are heavily concentrated in development finance and whereby distress and default is ordinarily only reversed through significant intervention or modification or a fundamental change in economic conditions. In the absence of these factors, our expectation is that defaulted assets will remain in default until exited.

Forward-looking information

Credit losses are cash shortfalls from what is contractually due over the life of the financial instrument. Expected credit losses are a measure of unbiased probability-weighted credit losses which might reasonably be expected, determined by evaluating a range of possible outcomes and considering future economic conditions. When there is a non-linear relationship between forward-looking economic scenarios and their associated credit losses, a range of forward-looking economic scenarios, currently expected to be a minimum of 3, will be considered to ensure a sufficient unbiased representative sample of the complete distribution is included in determining the expected loss.

Homes England assigns CRR to all counterparties with whom the organisation has provided financial assets that are measured at amortised cost. The CRR utilises a combination of qualitative and quantitative information including previous financial performance and strength, projected cashflows and leverage alongside more qualitative factors such as management experience. This assessment culminates in a single CRR figure and associated probability of default being applied based on the overall credit assessment of the given counterparty. This rating takes into consideration past financial performance (where evident) and expected performance of a given counterparty, and critically, the underlying project.

The probability of default values associated with each CRR under the most likely central scenario have been determined by Homes England by adjusting the average probability of default values, which have been established using methodology applied in previous years by the MHCLG, to allow for current economic projections by considering historical movements in the various economic indexes. This methodology is then combined with an overall expert subjective opinion to produce estimates of the final adjusted probability of default rates.

To ensure compliance with IFRS 9, Homes England has adopted an additional probability weighted assessment of expected credit losses, utilising 2 plausible alternative economic scenarios. As Homes England operates in a single sector (Housing) the loans and advances made are greatly concentrated, and as a result, defaults may be more greatly correlated in comparison to a loan portfolio which benefits from sector diversification.

The alternative economic scenarios adopted during 2023 and 2024 are derived from the macro-economic forecast scenarios provided by the Office for Budget Responsibility. Sensitivity analysis regarding this judgement is provided in note 15b.

The decision on how to weight these scenarios against the central scenario is primarily derived from expert judgement within Homes England. Alternative scenarios and weightings are reviewed on a minimum of a 6-monthly basis and scrutinised through the Agency’s forums and committees.

Expected life

Lifetime expected credit losses must be measured over the expected life of individual agreements. For modelling purposes, this is restricted to the maximum contractual life of investments. Potential future modifications of contracts are not considered when determining the expected life or exposure at default until they occur.

Discounting

Expected credit losses are discounted at the effective interest rate at initial recognition or an approximation thereof and are consistent with income recognition. For loan commitments, the effective interest rate is the rate that is expected to apply when the loan is drawn down and a financial asset is recognised. For variable or floating rate financial assets, the spot rate at the reporting date is used and projections of changes in the variable rate over the expected life are not made to estimate future interest cash flows or for discounting.

Modelling techniques

Expected credit losses are calculated at the individual financial instrument level by multiplying 3 main components, being the probability of default, loss given default and the exposure at default, discounted at the original effective interest rate. The methodology and key assumptions are outlined in detail in note 15b.

Write-offs

Homes England manages distressed financial assets through a specialist team with experience in restructuring and insolvency.

Most of Homes England’s loans and advances have the benefit of security. Write-offs take place once all such security has been realised or there is no realistic prospect of recovery and the amount of the loss has been determined.

Events that typically result in a write-off ahead of security being fully realised include, but are not limited to:

• the financial asset is subject to insolvency proceedings and the only funds that will be received are the amounts estimated by the Insolvency Practitioner

• security (typically property) is disposed of and a decision is made that no further funds will be received

• independent professional advice (typically third-party valuations or assessments) shows a significant shortfall with limited evidence that any shortfall will be recouped

Any further recoveries of amounts previously written off are generally considered fortuitous gains and reduce the amount of impairment losses recorded in the Statement of Consolidated Net Expenditure.

n) Financial liabilities

Financial liabilities are recognised in the Statement of Financial Position when the Agency becomes a party to the contractual provisions of the instrument.

All non-derivative financial liabilities are initially measured at fair value and subsequently measured at amortised cost.

Financial liabilities consist of trade and other payables and certain provisions. Financial liabilities are classified as current liabilities unless the Agency has an unconditional right to defer settlement for at least 12 months after the end of the reporting period.

The Agency derecognises a financial liability only when the Agency’s obligations are discharged, cancelled or they expire.

o) Pension costs

The Agency accounts for pension costs in accordance with International Accounting Standard 19 Employee Benefits (IAS 19). During the year the Agency’s employees were able to participate in 1 of the following contributory pension schemes:

• The Homes and Communities Agency Pension Scheme
• The City of Westminster Pension Fund
• The West Sussex County Council Fund

All 3 schemes are multi-employer defined benefit schemes as described in paragraph 8 of IAS 19.

Plan assets are measured at fair value. Liabilities are measured on an actuarial basis and discounted to present value. The net asset or obligation is recognised within pension assets or liabilities, respectively, in the Statement of Financial Position. The operating and financing costs of the schemes are recognised separately in the Statement of Comprehensive Net Expenditure. Service costs are spread over the working lives of employees and financing costs are recognised in the period in which they arise. Actuarial gains and losses are recognised in full in taxpayers’ equity.

p) Financial Commitments

The Agency recognises a financial commitment when it is legally or constructively committed to pay another body in relation to a specific matter. It is legally committed when it is subject to statute or is contractually bound. It is constructively committed when it has created a valid expectation in others, via its policies, conduct or established pattern of practice, for example, that it will be bound by certain obligations. The value of the financial commitment is determined by the amount which is still to be paid at the reporting date and profiled with reference to cash flow forecasts.

q) Impact of standards and interpretations in issue but not yet effective

International Financial Reporting Standard 17: Insurance Contracts (IFRS 17)

IFRS 17: Insurance Contracts replaces IFRS 4 Insurance Contracts. The new standard will apply more standardised and rigorous requirements on accounting for insurance contracts, setting out clearer expectations on the recognition, classification and measurement of assets and liabilities in relation to insurance contracts. The implementation is not planned until 2025 and it may require further adaptation for the public sector. We anticipate that the standard will not be significant to the Agency’s Financial Statements.

2 Operating segments

a) Operating segment analysis

The Agency’s operational performance is managed by reference to financial and non-financial targets, within the constraints of programme and operational expenditure limits set by MHCLG. These programmes are managed with Directorates which therefore form the basis of the Agency’s operating segments as defined by International Financial Reporting Standard 8: Operating Segments.

All of the Agency’s activities, and therefore its income, expenditure, assets and liabilities, occur within the UK. An analysis of the various types of income which the Agency receives is shown in the Statement of Comprehensive Net Expenditure.

As many of the Agency’s programmes do not generate their own revenue and are financed by Grant in Aid, the financial measure used by the Board to assess the Agency’s operating performance and manage its resources is programme and administrative expenditure and receipts against Departmental Expenditure Limits (DEL). The programme and administrative expenditure and receipts information here is presented on the basis of the information presented to the Board.

Programme	Expenditure (£ million) 2023 and 2024	Receipts (£ million) 2023 and 2024	Total (£ million) 2023 and 2024	Expenditure (£ million) 2022 and 2023	Receipts (£ million) 2022 and 2023	Total (£ million) 2022 and 2023
Help to Buy	20.6	(83.1)	(62.5)	2,237.2	(53.3)	2,183.9
Investment	420.3	(684.3)	(264)	533.4	(627.9)	(94.5)
Housing Infrastructure Grants	470.3	(0.1)	470.2	299	—	299
Development	180.1	(188.1)	(8)	211	(364.1)	(153.1)
Markets, Places and People [**]	15.9	—	15.9	13.5	—	13.5
Affordable Housing [***]	20,11.3	(6.6)	2,004.7	1,300.1	(10.6)	1,289.5
First Homes [***]	40.7	—	40.7	56.2	—	56.2
Building Safety and Remediation [**]	41.4	—	41.4	11.7	—	11.7
Evolve	25.6	—	25.6	20.9	—	20.9
Brownfield, Infrastructure and Land	32.9	—	32.9	—	—	—
Programme Administration	2.0	—	2.0	0.9	—	0.9
Total programme expenditure and receipts	3,261.1	(962.2)	2,298.9	4,683.9	(1,055.9)	3,628
Administration	128.8	—	128.8	119.1	(2.5)	116.6
Total expenditure and receipts reported to Board	3389.9	(962.2)	2,427.7	4,803	(1,058.4)	3,744.6
DEL not reported to the Board in respect of Expected Credit Loss charges, write off charges and DEL impairments [*]	66.8	—	66.8	(7.1)	—	(7.1)
Total Net DEL	3,456.7	(962.2)	2,494.5	4,795.9	(1,058.4)	3,737.5

[*] Whilst ECL, write-off charges and DEL impairments are not reported to Board as part of the monthly performance management information, they are sighted through reporting to various committees.

[**] In the 2022 and 2023 Annual Report and Financial Statements, the £26.1 million of expenditure shown against the Programme Administration line included £11.7 million of expenditure in relation to the Agency’s building safety and remediation programmes (including Cladding Safety Scheme) and £13.5 million of Markets, Places and People programme expenditure. For 2023 and 2024, it was deemed more appropriate to present building safety and remediation expenditure, and Markets, Places and People expenditure, on separate and appropriately named lines. To allow comparison against the prior year, both the £11.7 million and £13.5 million expenditures for 2022 and 2023 have been re-presented on the new lines. This has consequently reduced the 2022 and 2023 Programme Administration expenditure presented from £26.1 million to £0.9 million.

[***] In the 2022 and 2023 Annual Report and Financial Statements, the £1,356.3 million of expenditure shown against the Affordable Housing line included £56.2 million of expenditure in relation to the First Homes programme. For 2023 and 2024, it was deemed more appropriate to present First Homes expenditure on its own line. To allow comparison against the prior year, the £56.2 million of First Homes expenditure for 2022 and 2023 has been re-presented on the new line. This has consequently reduced the 2022 and 2023 Affordable Housing expenditure presented from £1,356.3 million to £1,300.1 million.

The administration income referred to in the Financial Review section of this Annual Report is recorded in the Operating Segments disclosure against the relevant programmes through which the income originates from.

b) Reconciliations to net expenditure

Net DEL expenditure, the financial measure used to report the Agency’s performance to the Board, excludes certain items which are disclosed separately in the Statement of Comprehensive Net Expenditure such as provisions for impairment, movements in other provisions, depreciation and income tax. It also includes items of expenditure which, for statutory reporting purposes, are capitalised in the Statement of Financial Position. Such items include additions to and disposals of non-current assets, loans and land and property assets. In addition, there are instances where there are timing differences between income and expenditure recognised for statutory reporting purposes and for DEL reporting, such as a restriction on recognising income on certain disposals until cash is received. For statutory reporting purposes income is recognised when the Agency is contractually entitled to receive the income. These rules are prescribed by HM Treasury.

A reconciliation of total DEL expenditure to net expenditure before tax as shown in the Statement of Comprehensive Net Expenditure is as follows:

	Note	2023 and 2024 (£ million)	2022 and 2023 (£ million)
Total net DEL expenditure above	—	2,494.5	3,737.5
Reconciling items
Increase in impairment of land assets	—	130.6	106.9
Decrease or (reversal of decrease) in fair value below cost of assets measured at fair value passing through the SoCNE	—	181.2	254.6
Reversal of increase or (increase) in fair value above cost of assets measured at fair value passing through the SoCNE	—	48.9	(614.7)
(Decrease) or Increase in provisions	—	(2.6)	0.9
Utilisation of provisions	—	(0.4)	(7.9)
Share of losses or (profits) of associates and joint ventures	11b	5.3	(3.3)
Investment in joint ventures and associates	11b	(2.7)	(3.5)
Pension movements	—	(10.8)	7.5
Book value of land and property assets disposed	—	72.8	177.3
Book value of assets measured at fair value disposed	12d, 12f	1,396.3	2,332.5
Help to Buy and FirstBuy receipts not included within net DEL expenditure [*]	12f	(1,358.6)	(2,259.2)
Loan repayments (for loans measured at amortised cost and at fair value)	12d,12e	494.5	448.7
Capital items recorded as programme expenditure
Additions to assets measured at fair value	12d, 12e	(74.1)	(2,301.9)
Additions to land and property assets	16	(202.3)	(182.4)
Loans advanced, including interest added to loans measured at amortised cost	12e	(326.1)	(447.3)
Additions to property, plant and equipment (PPE) and intangible assets	—	(15.6)	(5.1)
Recovery of long term receivables recorded as programme income	—	9.4	29.6
Net expenditure before tax as stated in the Statement of Comprehensive Net Expenditure	—	2,840.3	1,270.2

[*] Help to Buy and FirstBuy receipts are not reported to the Agency’s Board as they are outside the scope of budgets delegated to the Agency to be managed. Cash received is transferred as Consolidated Fund Excess Receipts via the Ministry of Housing, Communities and Local Government (MHCLG) to HM Treasury.

All of the income reflected in the Statement of Comprehensive Net Expenditure, with the exception of increases in fair value of financial assets measured at fair value through profit or loss, arises from contracts with customers and is accounted for in line with International Financial Reporting Standard 15 Revenue from Contracts with Customers (IFRS 15). Programme receipts reported to the Board materially comprises the proceeds from the disposal of land and property assets, interest income and the bulk of other operating income, which are income streams arising from contracts with customers and accounted for under IFRS 15, together with certain capital receipts, such as loan repayments, which are not reflected in the Statement of Comprehensive Net Expenditure and are not within the scope of IFRS 15. The vast majority of gains on the disposal of financial assets (which is an income stream arising from contracts with customers, accounted for under IFRS 15 and reflected in the Statement of Comprehensive Net Expenditure) arise on the disposal of Help to Buy equity loans. These disposal receipts are not included in the Board reporting as they are outside of the scope of budgets delegated to the Agency to be managed.

A reconciliation of programme receipts as shown above to income as stated in the Statement of Comprehensive Net Expenditure is as follows:

	Note	2023 and 2024 (£ million)	2022 and 2023 (£ million)
Total receipts reported to the Board	—	962.2	1,058.4
Reconciling items
Clawback of grants recorded as income but shown net within expenditure in Board reporting	—	49.5	18.7
Other income shown net within expenditure in Board reporting	—	1.6	1.1
Expenditure shown net within income in Board reporting	—	—	7.8
Disposal of non-current assets held for sale	—	—	(2.5)
Valuation gains on financial assets held at FVTPL not reported to Board	—	(48.9)	614.7
Recovery of long term receivables recorded as programme income	—	(6.5)	(6.1)
Receipts from disposal of capital items recorded as programme income
Proceeds from the disposal of financial asset investments measured at fair value	12d,12f	(1,396.3)	(2,332.3)
Loan repayments (for loans measured at amortised cost)	—	(497.2)	(472.2)
Joint venture disposal proceeds	11b	(12.6)	(6.9)
Help to Buy and FirstBuy receipts not included within DEL receipts [*]	—	1358.6	2,259.2
Income as stated in the Statement of Comprehensive Net Expenditure	—	410.4	1,139.9

[*] Help to Buy and FirstBuy receipts are not reported to the Agency’s Board as they are outside the scope of budgets delegated to the Agency to be managed. Cash received is transferred as Consolidated Fund Excess Receipts via the Ministry of Housing, Communities and Local Government to HM Treasury.

c) Impairment charges or (reversals) by operating segment

The impairment charges or (reversals) reflected in the Statement of Comprehensive Net Expenditure are attributed to the Agency’s operating segments as follows:

Programme	Impairment of land and property 2023 and 2024 (£ million)	Impairment of financial assets measured at amortised cost 2023 and 2024 (£ million)	Total 2023 and 2024 (£ million)	Impairment of land and property 2022 and 2023 (£ million)	Impairment of financial assets measured at amortised cost 2022 and 2023 (£ million)	Total 2022 and 2023 (£ million)
Investment	—	63.1	63.1	—	(8)	(8)
Development	134.2	0.5	134.7	106.9	0.7	107.6
Total	134.2	63.6	197.8	106.9	(7.3)	99.6

d) Major customers

During the year, income from individual customers did not exceed 10% of total income (2022 and 2023 —nil)

 3 Principal or agent relationships

Homes England is party to a number of significant arrangements where it acts as an agent for another entity. In these arrangements, Homes England uses its skills and expertise to help bring forward programmes and initiatives. These programmes and initiatives are in addition to the core business of the Agency. It therefore would not be appropriate to show income or expenditure in respect of these transactions or to report on assets and liabilities. We set out these arrangements here.

Managing programmes for MHCLG

The Agency has agreements with MHCLG for the management and delivery of their Cladding Fund, Building Safety Fund, Next Steps Accommodation, Rough Sleepers Accommodation and Voluntary Right to Buy programmes:

Private Sector Cladding Remediation Fund — the fund was set up to replace aluminium composite material (ACM) cladding panels on large-scale residential social housing and this has been extended to the private sector. During the year, grants totalling £17.7 million (2022 and 2023 — £24 million) were paid out by the Agency and reimbursed by MHCLG.

Building Safety Fund — this fund is focussed on unsafe non-ACM cladding systems (high pressure laminates, other metal composite materials and such) on both social and private sector buildings over 18 metres in height. The Fund opened to new applications in July 2022 for eligible buildings. During the year, grants of £254.4 million (2022 and 2023 — £254.4 million) were paid out by the Agency and reimbursed by MHCLG.

Next Steps Accommodation Programme — Homes England is supporting MHCLG, leading housing associations and local authorities to deliver the ambitious plans which will fast-track thousands of long-term homes for rough sleepers. During the year, grants of £6.6 million (2022 and 2023 — £6.6 million) were paid out by the Agency and reimbursed by MHCLG.

Rough Sleepers Accommodation — Homes England is supporting MHCLG, leading housing associations and local authorities to deliver the ambitious plans which will fast-track thousands of long-term homes for rough sleepers. During the year, grants of £17.6 million (202 2 and 2023 — £41.8 million) were paid out by the Agency and reimbursed by MHCLG.

Single Homelessness Accommodation — Homes England is supporting MHCLG, providing supported housing, Housing First and housing-led accommodation for 2 target groups — adults experiencing multiple disadvantage who may have a history of rough sleeping and require high levels of support, and young people at risk of or experiencing homelessness or rough sleeping. During the year, grants of £21.9 million (2022 and 2023 — nil) were paid out by the Agency and reimbursed by MHCLG.

Managing assets for third parties

The Agency manages home equity portfolios on behalf of the Greater London Authority (GLA), Ministry of Defence (MoD) and multiple housing developers via our Mortgage Administrator. At the year-end the Agency managed 5,204 (2022 and 2023 — 5,547) assets on behalf of these parties. During the year the Agency also collected 343 (2022 and 2023 — 690) disposal receipts with total proceeds of £9.2 million (2022 and 2023 — £20.1 million). The Mortgage Administrator collects and distributes disposal receipts to the GLA and housing developers on behalf of the Agency. The Agency receives disposal receipts on behalf of the MoD and subsequently transfers the receipts to the MoD. At the year-end the Agency held £0.2 million (2022 and 2023 — £5.6 million) which is due to be paid to the MoD.

The Agency manages a science park on behalf of the Department for Science, Innovation and Technology (DSIT). During the year the Agency incurred expenditure of £0.4 million (2022 and 2023 — £0.6 million) and collected income of £2 million (2022 and 2023 — £6.9 million) as a result of day to day management of the site. The net receipt of £1.6 million is due to DSIT from the Agency.

MHCLG Guarantee Programme

Homes England acts as Licence or Concession Manager on behalf of MHCLG for a number of guarantee programmes:

Affordable Housing Guarantee Scheme 2013 — a £3.5 billion programme to support the delivery of additional new-build affordable homes by enabling registered providers to borrow on a long-term fixed rate basis. The loans carry a government guarantee and the benefit of the guarantee is passed through to borrowers in the form of a lower cost of borrowing. This scheme is closed to new applications.

Private Rented Sector Guarantee Scheme — a £3.5 billion programme to support the building of new homes for the private rented sector by enabling developers or investors to raise low cost debt to refinance development funding on a long-term basis. The scheme is closed to new applications, but applications submitted before the December 2018 deadline continue to be progressed.

Affordable Homes Guarantee Scheme 2020 — this is a £6 billion successor programme to the 2013 scheme and also provides low-cost long-term loans to registered providers of homes for affordable social rent, affordable rent and shared ownership. It funds new homes and quality and energy efficiency improvements to existing homes.

 Provision of shared services

In addition, the Agency continues to have a close working relationship with the Regulator of Social Housing (RSH). A service level agreement sets out the services provided by Homes England to RSH. Services provided may include, but are not limited to, the provision of accommodation or facilities, the provision of staff time and expertise and the provision of technical resources. During the year, Homes England has charged RSH a fee of £1 million (2022 and 2023 — £0.6 million) for these services, credited to other operating income. Invoices are raised and paid monthly. In addition, due to this close working relationship, the systems and processes of Homes England are an important part of the control environment of RSH, and as such, the annual statutory audit of RSH covers a review of the systems and processes. Further disclosure regarding this relationship is provided in the Fees and Charges section of the Annual Report.

4 Grants

Payments were made to registered providers of social housing, local authorities and other public and private sector partners under the following programmes:

Programme	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Affordable Housing — Strategic Partnerships	1,529,396	799,331
Affordable Housing — Affordable Housing	528,518	517,833
Housing Infrastructure Fund	427,737	264,609
First Homes	41,248	56,194
Cladding Safety Scheme	28,247	—
Other	21,127	10,096
City Growth Deals	13,172	4,403
Brownfield, Infrastructure and Land	5,000	—
Local Authority Accelerated Construction	73	11,446
Total	2,594,518	1,663,912

The Agency’s largest grant programme is the Affordable Housing Grant programme. This aims to increase the supply of new affordable and shared ownership homes in England. Strategic Partnerships is part of the Affordable Housing Grant Programme. These partnerships provide additional support to registered providers for the construction of affordable homes.

The Housing Infrastructure Fund aims to unlock house building by funding local authorities to build vital physical infrastructure projects, including the construction of roads, bridges, energy networks and other utilities.

The First Homes scheme offers discounts to first time buyers, which means they may be able to buy a home for 30% less than the market value. The home can be a new home built by a developer, or a home you buy from someone else who originally bought it as part of the scheme. This is subject to eligibility criteria. The First Homes scheme closed in September 2023.

The Cladding Safety Scheme allows eligible building owners or their representative to come forward and apply for grant to help them pay for the costs associated with making a building safe in relation to fire risk. The scheme will focus its effort on making over 5,000 buildings safe from risk caused by unsafe cladding — providing funding for remediation of buildings over 11 metres (11 to 18 metres in London) with unsafe cladding.

Other includes Markets, Partners and Places revenue grants to Local Authorities and land grants.

Brownfield, Infrastructure and Land (BIL) is a new £1 billion programme which will span Homes England’s land, grant and equity activities so it can better support the needs of places, partners and their projects. The primary objective of BIL is to bring forward strategic sites and housing-led opportunities which support economic growth and long-term housing supply, with at least 60% of activity focused on brownfield land (land that has been previously used and is now vacant, derelict and sometimes contaminated).

The Local Authority Accelerated Construction programme closed in 2022 and 2023. The small amount of spend in 2023 and 2024 relates to some legacy schemes that delivered spend and outputs in 2023 and 2024.

Affordable Housing grant

Within the Affordable Homes Programme there are 2 routes to access funding, providers can apply for funding on a scheme-by-scheme basis bidding through continuous market assessment, or providers can become a strategic partner and access grant for a longer-term development programme through a multi-year agreement. Both types are paid to partners across England.

The table below shows the geographical split. The table shows the geographical split.

Region	Total Grant 2023 and 2024 (£’000)	% 2023 and 2024	Total Grant 2022 and 2023 (£’000)	% 2022 and 2023
East and South East	395,601	19%	304,149	23%
South West	353,430	17%	191,904	15%
Midlands	423,128	21%	244,018	18%
North East and Yorkshire	488,446	24%	201,594	21%
North West	397,309	19%	303,706	23%
Total	2,057,914	100%	1,317,164	100%

Top 10 Recipients of Funding to 31 March 2023

Table: Analysis of top 10 recipients of funding by counterparty to 31 March 2024

Counterparty	Payments (£’000)	Percentage of Total Grant Payments
Counterparty 1	133,487	5.1%
Counterparty 2	122,782	4.7%
Counterparty 3	95,421	3.7%
Counterparty 4	90,376	3.5%
Counterparty 5	87,996	3.4%
Counterparty 6	86,515	3.3%
Counterparty 7	84,946	3.3%
Counterparty 8	79,564	3.1%
Counterparty 9	74,156	2.9%
Counterparty 10	65,616	2.5%
Total Top 10 counterparties at 31 March 2024	920,859	35.5%
Remaining grant payments at 31 March 2024	1,673,659	64.5%
Total grant payments to 31 March 2024	2,594,518	100%

5 Disposal of land and property assets

Criteria	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Proceeds from disposals	—	119,632	267,742
Cost of disposals — Book value of disposals	16	72,757	174,803
Cost of disposals — Direct costs of sale	—	2,325	7,806
Total	—	75,082	182,609
Gain on disposal	—	44,550	85,133

The proceeds from disposals above can be further analysed as follows:

Criteria	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Disposals of land (freehold disposal or building lease)	—	106,225	199,733
Direct commissioning (market sales)	—	11,332	46,070
Direct commissioning (affordable contracts)	—	2,075	21,939
Proceeds from disposals	—	119,632	267,742

Income from the disposals of land (freehold disposal or building lease) is recognised when there is a legally binding sale agreement, which has become unconditional and irrevocable by the end of the reporting period. The income is recognised at the unconditional date and measured at the fair value of the consideration received or receivable for the disposal of land. Income is from contracts with customers.

Income in relation to Direct Commissioning (market sales) is recognised at legal completion and measured at the fair value of the consideration received or receivable for the property.

Income in relation to Direct Commissioning (affordable contracts) is recognised over time by reference to the stage of completion of the contract activity at the balance sheet date. This is normally measured by compliance inspector reports of work performed to date. A contract asset is recognised when the Agency has completed a proportion of the contract activity prior to payment being received. A contract liability is recognised where cash has been received in advance of the contract activity being completed.

6 Programme costs

Cost	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Land	20,551	20,983
Evolve	10,145	15,729
Markets, Partners and Places	8,728	8,898
Cladding Safety Scheme	8,350	7,511
Financial Investment Programmes	7,950	7,997
Help to Buy	7,386	12,900
Managing programmes on behalf of MHCLG	5,679	4,511
Housing Infrastructure Fund	2,276	2,805
Affordable Homes	1,918	1,185
Strategy Research Analysis Sponsorship	1,154	857
Total	74,137	83,376

Programme costs are the operational costs incurred by Homes England to run the various programmes. They are typically professional fees to cover activities such as due diligence, legal advice, financial investigation, administration of payments, and property servicing.

Evolve is a specific programme funded by MHCLG to support the Agency in meeting its mission and objectives by creating new, more efficient services, teams, infrastructure and ways of working. In the current year there has also been £14.1 million (2022 and 2023 — £4.7 million) of capital expenditure incurred in relation to Evolve.

Note 3 details the programmes that Homes England manages for MHCLG and other government departments, the costs included within programme costs are the staff costs and professional fees associated with these programmes.

7 Staff costs

The costs of salaried staff for the year, excluding Board members, were as follows:

a) Total staff costs

	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Staff costs charged to net expenditure comprise
Staff costs	79,831	70,672
Pension costs	21,177	31,863
Total staff costs	101,008	102,535

The costs above can be further analysed as follows:

Cost	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Salaries and wages	79,472	70.559
Social security costs	8,984	8,644
Pension costs — current service cost [*]	18,595	29,716
Pension costs —past service cost and losses on curtailments and settlements	7	—
Pension costs — expenses	2,575	2,147
	109,633	111,066
Temporary staff	14,265	15,562
Seconded staff	249	88
	124,147	126,716
Less staff costs capitalised — Land and Property	(12,104)	(10,709)
Less staff costs transferred to programme costs	(11,035)	(13,472)
	101,008	102,535
Non-Executive Board Member expenses	—	—

[*] The current service pension cost does not include costs relating to early retirements, which are included within Administration expenditure,note 8.

During the year, £12.1 million of staff costs were capitalised (2022 and 2023 — £10.7 million) against Land and Property assets. The costs relate to direct labour involved in the enhancement of land and property assets. During the year, no staff costs were capitalised (2022 and 2023 — nil ) against intangible fixed assets.

In addition, £11 million (2022 and 2023 — £10.1 million) of staff costs, in relation to the Homes England Evolve Programme, the Building Safety Fund and the Next step Accommodation Programme, were reclassified to programme costs. These programmes are partly funded by the Agency’s programme budget. The Homes England Evolve Programme covers ongoing work involved in transforming the services, processes and infrastructure of Homes England, and is described more fully in note 6.

b) Staff bonuses

Staff members who are direct employees of the Agency benefit from a Performance Related Pay scheme whereby any bonuses are determined with reference to performance against agreed objectives during the year. Performance Related Pay accrued but not yet paid during the year totalled £0.3 million (2022 and 2023 — £0.4 million).

During the year, directors received bonuses of £32,000 (2022 and 2023 — nil). The bonuses received during the year relate to 2022 and 2023 performance. The Accountability section of the Annual Report includes further details of bonuses, the average number of staff employed by the Agency, staff numbers by pay band and exit packages.

c) Staff composition

The average number of staff employed by the Agency (full-time equivalents) over the course of the year is as follows:

Staff type	2023 and 2024 (number)	2022 and 2023 (number)
Permanent UK staff	1,259	1,167
Fixed term UK staff	89	95
Temporary staff	142	142
Board members	9	9
Seconded staff	3	2
Total	1,502	1,415

d) Loans to employees

The Agency has provided travel season ticket loans, cycle scheme loans and charge point loans to employees during the year. The total amount outstanding in respect of these at 31 March 2023 was £19,000 (2021 and 2022 — £18,000). There were no other loans to employees.

8 Administration expenditure

Cost	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Accommodation and office running costs	9,999	9,423
Professional fees	3,508	5,425
Depreciation and Amortisation	5,111	5,123
Travel and subsistence	3,876	3,291
Taxation not recoverable	3,280	3,318
Staff welfare, learning and development	1,917	12,184
Other	631	889
Auditor’s remuneration (Statutory Audit)	575	575
Total	28,293	30,190

Included within Other is £305,000 (2022 and 2023 — nil) relating to restructuring costs (PILON, Enhancements, Redundancy). The Accountability section of the Annual Report includes further details of exit packages.

9 Other operating income

Income type	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Homeowner fees	12f	87,579	57,621
Grant clawback	—	51,442	19,836
Other	—	7,698	5,611
Rent and property income	—	4,770	4,836
Total	—	151,489	87,904

Homeowner fees represent income due from homeowners who have acquired a home via the Help to Buy loan equity scheme or other historic equity loan schemes. In relation to the Help to Buy equity scheme, from the fifth anniversary of ownership interest is due, calculated as 1.75% of the loan outstanding (applied monthly), the interest rate increases each year by RPI plus 1%.

Grant clawback mostly comprises grant recovered from registered providers of social housing via the Affordable Homes Programme. Clawback may arise where the recipient of grant funding does not meet the conditions set out in the grant agreement resulting in recovery.

Other includes income from investments, income charged to the Regulator of Social Housing in respect of services provided, planning windfall income (where a developer buys land which subsequently receives planning permission increasing its value and the Agency shares in this uplift in value) and other windfall income (where the legal restriction on land sold is varied resulting in income to the Agency).

10 Share of profits of associates and joint ventures

The aggregated amounts of the Group’s share of results of associates and joint ventures (JVs) included in the Statement of Comprehensive Net Expenditure is as follows:

Share type	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Share of results of associates	(4,089)	2,393
Share of results of joint ventures	(1,228)	916
Share of profits of associates and joint ventures	(5,317)	3,309

The aggregate share of results is the net profit or loss from continuing operations. There was no profit or loss from discontinued operations and no other comprehensive income was recognised in the year.

11 Investments in subsidiaries, associates and joint ventures

a) Subsidiary undertakings — Agency

Cost	2023 and 2024 (£’000)	2022 and 2023 (£’000)
At 1 April	50,000	50,000
Investments in the year	50,000	—
Redemptions	—	—
At 31 March	100,000	50,000

The Agency invested an additional £50 million in its wholly owned subsidiary, English Partnerships (LP) Limited, in January 2024.

During the year, the Agency held interests in the following subsidiaries, each of which are registered in England and Wales and are wholly owned by the Agency:

Name of undertaking	Share capital	Nature of business
English Partnerships (LP) Limited	£100,000,000	Investment holding company
The Estuary Management Company Limited	£1	Property management company
Norwepp (NWDA subsidiary) Limited	£500	Investment holding company
AWM (Subsidiary) Limited	£1	Investment holding company
ONE North East General Partner Limited	£100	Investment holding company
Blandford Brewery Estate Management Company Limited	£0	Property management company

The property management company is held as a non-profit-making entity to manage shared costs. Other than English Partnerships (LP) Limited, all of the remaining investment holding companies are dormant.

Homes England’s subsidiary undertakings as listed are exempt from the requirements of the Companies Act 2006 relating to audit of individual financial statements by virtue of Section 479A of the Act.

b) Associated undertakings and joint ventures— Group and Agency

The aggregated movements in the Group’s share of net assets of associates and joint ventures are as follows:

Cost or valuation	Note	Group 2023 and 2024 (£’000)	Group 2022 and 2023 (£’000)	Agency 2023 and 2024 (£’000)	Agency 2022 and 2023 (£’000)
At 1 April	—	61,932	55,123	20,615	20,615
Investments in the year	—	15,325	10,405	19	—
Redemptions	—	(12,637)	(6,905)	(6,450)	—
Share of profits of associates and joint ventures	10	(5,317)	3,309	—	—
At 31 March	—	59,303	61,932	14,184	20,615

In 2023 and 2024, £9.7 million (2022 and 2023 — £2.7 million) was received in dividends from group companies and treated as redemptions under the equity method per International Accounting Standard 28 — Investments in Associates and Joint Ventures.

In January 2024, the Agency committed an additional £50m of funding to English Cities Fund, via the subsidiary English Partnerships (LP) Ltd. This included an additional capital payment of £5,000. The agency is committed to the English Cities Fund up to December 2036. In 2023 and 2024, £15.3 million (2022 and 2023 — £10.4 million) of committed funding was invested by English Partnerships (LP) Ltd, our wholly owned subsidiary, into English Cities Fund. This comprises new funding of £15.3 million (2022 and 2023 — £10.4 million) and nil (2022 and 2023 — nil) of amounts previously repaid to the Group. There have been £2.9 million (2022 and 2023: £4.2 million) of repayments of funding made during the year.

The aggregated amounts of the Group’s share of net assets and liabilities of associates and JVs are as follows:

Share type	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Group share of net assets of associates	40,786	35,756
Group share of net assets of joint ventures	18,517	26,176
Group share of net assets of associates and joint ventures	59,303	61,932

During the year, the Group had interests in the following associated undertakings and joint ventures, all of which are registered or resident in England and Wales:

Name of undertaking	Group or Agency	Interest	Nature of business
English Cities Fund Limited Partnership	Group	48%	Property development
Countryside Maritime Limited [^]	Agency	50%	Development of land
Tilia Community Living LLP [^]	Agency	26%	Property development
Temple Quay Management Limited	Agency	24%	Property management company
Kings Waterfront (Estates) Limited	Agency	50%	Property management company
Pride in Camp Hill	Agency	33%	Regeneration of Camp Hill area of Nuneaton
Newton Development Partners LLP [^]	Agency	25%	Property development
Bristol Temple Quarter LLP [^][*]	Agency	33%	Regeneration of Bristol Temple Quarter

[^] Joint venture

[*] During the year, the Agency entered into a partnership agreement to invest equity funding in a joint venture, Bristol Temple Quarter LLP. At the year-end the joint venture had been established, but no funds had been invested by the agency.

The Agency’s interest in English Cities Fund Limited Partnership (ECF) represents the partner profit share arrangements. Previously these entitled the Agency to a 45.78% share of the net profits or losses of the Partnership. As part of the additional commitment and investment in January 2024, the owners’ shares were revised and the Agency is now entitled to a 47.94% share. The Agency’s Chief Investments Officer represents the Agency’s interest on the Board of ECF.

c) Commitments for associated undertakings and joint ventures — Group and Agency

The Agency has made a £5 million (2022 and 2023 — £5 million) working capital facility available to Countryside Maritime Limited, of which nil (2022 and 2023 — £3.7 million) was drawn at 31 March 2024.

In 2023 and 2024, the group committed to invest a further £50 million into English Cities Fund. During 2023 and 2024, £15.3 million (2022 and 2023 — £10.4 million) has been drawn down from the total commitment. As a result of the net drawdowns and repayments at 31 March 2024, there is a balance of £38.1 million available to be drawn.

In 2022 and 2023, the agency committed £50m of funding to Newton Development Partners LLP. At 31 March 2024 £19,000 (2022 and 2023 — nil) had been drawn.

12 Financial assets

Asset type	Note	2023 and 2024 — Fair value (£’000)	2023 and 2024 — Amortised cost (£’000)	2023 and 2024 — Total (£’000)	2022 and 2023 — Fair value (£’000)	2022 and 2023 — Amortised cost (£’000)	2022 and 2023 — Total (£’000)
Cash and cash equivalents	a)	—	166,687	166,687	—	217,485	217,485
Trade and other receivables	b)	254,906	172,157	427,063	281,970	263,110	545,080
Financial asset investments	c)	18,204,988	1,187,074	19,392,062	19,732,347	1,417,545	21,149,892
Total	—	18,459,894	1,525,918	19,985,812	20,014,317	1,898,140	21,912,457

a) Cash and cash equivalents — Group and Agency

Cash type	2023 and 2024 (£’000)	2021 and 2023 (£’000)
Cash held with Government Banking Service	74,388	149,595
Cash held with commercial banks	93	5,317
Cash held with third parties	92,206	62,573
Total	166,687	217,485

The Agency draws Grant in Aid from MHCLG on a monthly basis which is received on the 8th working day. At 31 March, the Agency therefore held cash balances as shown above to enable it to meet its short term cash requirements until receipt of the next instalment of Grant in Aid.

The cash figure takes account of BACS payments initiated by 31 March 2024 to settle short-term liabilities, but not cleared by 31 March 2024. These payments totalled £ 87.9 million (2022 and 2023 — £45.5 million) and cleared the bank in early April 2024. There were no cash equivalents at any of the reporting dates shown.

Cash held with third parties covers amounts retained by external legal firms and the Agency’s mortgage administrator for home equity investments. Cash is held to Homes England’s order.

b) Trade and other receivables — Group and Agency

Gross balances	2023 and 2024 Fair value (£’000)	2023 and 2024 Amortised cost (£’000)	2023 and 2024 Total (£’000)	2022 and 2023 Fair value (£’000)	2022 and 2023 Amortised cost (£’000)	2022 and 2023 Total (£’000)
Land sale receivables	241,356	4,787	246,143	269,791	7,336	277,127
Direct commissioning	—	59,585	59,585	—	155,788	155,788
Taxes and social security	—	2,624	2,624	—	—	—
Other receivables and prepayments	13,550	105,616	119,166	12,179	100,407	112,586
Total	254,906	172,612	427,518	281,970	263,531	545,501
Expected Credit Loss allowances	—	(455)	(455)	—	(421)	(421)
Net balances	254,906	172,157	427,063	281,970	263,110	545,080
Of which:
Non-current assets	132,405	8,369	140,774	160,515	16,265	176,780
Current assets	122,501	163,788	286,289	121,455	246,845	368,300
Total	254,906	172,157	427,063	281,970	263,110	545,080
Of which:
Balances with Private Sector counterparties	254,513	106,383	360,896	281,577	206,036	487,613
Balances with Public Sector counterparties	393	65,774	66,167	393	57,074	57,467
Total	254,906	172,157	427,063	281,970	263,110	545,080

Land sale receivables

Land sale receivables are measured with reference to the underlying agreement. In the majority of cases the inclusion of an overage clause within the land sale agreement requires the receivable to be measured at FVTPL. Where the contractual terms give rise to cash flows that are solely payments of the principal amount these are measured at amortised cost.

Direct commissioning

Direct commissioning receivables represent amounts due from unit sales and accrued income due under contracts to develop multi-unit properties from projects managed under the direct commissioning programme. They are measured at amortised cost.

Other receivables and prepayments

Other receivables held at FVTPL relate to home equity management fees and interest. The remainder of other receivables are held at amortised cost and include amounts due from MHCLG for programmes delivered on their behalf, utility prepayments, trade receivables and other smaller balances.

Credit risk of receivables classified to FVTPL

The Agency is exposed to credit risk in relation to receivables measured at FVTPL. The credit risk exposure at the year-end is £267.8 million (2022 and 2023 — £297.4 million).

c) Financial asset investments — Group and Agency

Asset	Fair value hierarchy (where relevant)	2023 and 2024 Fair value (£’000)	2023 and 2024 Amortised cost (£’000)	2023 and 2024 Total (£’000)	2022 and 2023 Fair value (£’000)	2022 and 2023 Amortised cost (£’000)	2022 and 2023 Total (£’000)
PRS REIT	Level 1	23,754	—	24,754	24,172	—	24,172
Help to Buy Equity Loans	Level 2	17,441,103	—	117,441,103	18,934,182	—	18,934,182
Other Legacy Equity Loans	Level 2	183,804	—	183,804	195,791	—	195,791
Infrastructure Loans	Level 3	269,234	664,196	933,430	289,341	845,630	1,134,971
Development Loans	Level 3	41,184	402,081	443,265	46,373	477,354	523,727
Other Loans	Level 3	7,984	120,797	128,781	9,073	94,561	103,634
Development and Infrastructure Equity	Level 3	123,012	—	123,012	119,351	—	119,351
Managed Funds	Level 3	77,450	—	77,450	66,140	—	66,140
City Growth Deals	Level 3	30,029	—	30,029	29,536	—	29,536
Other Equity	Level 3	2,436	—	2,436	10,151	—	10,151
Overage	Level 3	4,998	—	4,998	8,237	—	8,237
Total	—	18,204,988	1,187,074	19,392,062	19,732,347	1,417,545	21,149,892
Of which:
Non-current assets	—	18,097,486	832,731	18,930,217	19,622,677	846,979	20,469,656
Current assets	—	107,502	354,343	461,845	109,670	570,566	680,236
Total	—	19,732,347	1,417,545	21,149,892	19,372,785	1,411,607	20,784,392
Of which:
Balances with private sector counterparties	—	18,139,052	1,181,338	19,320,390	19,657,286	1,411,897	21,069,183
Balances with public sector counterparties	—	65,936	5,736	71,672	75,061	5,648	80,709
Total	—	18,204,988	1,187,074	19,392,062	19,732,347	1,417,545	21,149,892

Investments measured at fair value

Financial assets measured at FVTPL are stated at fair value in accordance with IFRS 13 and relate to the following:

• PRS REIT: An investment in shares issued by the PRS REIT plc, supporting the launch of the first quoted Real Estate Investment Trust to focus purely on the private rented sector

• Help to Buy and Other Legacy Equity Loans: The Agency’s entitlement to future income arising from financial assistance provided to homebuyers to enable them to buy homes, the majority of which arises from the Help to Buy scheme. Other Legacy Equity Loans consist of amounts due from homebuyers in relation to the following legacy equity schemes:

Scheme	Currently	2022 and 2023
FirstBuy	£41.7 million	£45 million
Home Buy Direct and Kickstart Home Buy Direct	£81.1 million	£86.3 million
First Time Buyers’ Initiative	£58.2 million	£61.8 million
Amounts due in relation to deferred land charges	£2.8 million	£2.7 million

• Infrastructure, development, and other loans — There are a number of loans which are measured on a fair value basis under the level 3 hierarchy as they do not clearly meet the requirements under IFRS 9 to be described as basic lending arrangements. Development Loans have been made to private sector developers in order to bring forward the development of housing under the Home Building Fund. Infrastructure Loans have been made to private sector developers and local authorities in order to fund infrastructure on stalled sites, or to unlock potential development sites under the Home Building Fund. Other Loans mainly relate to commercial non-site specific loans, such as corporate type facilities

• Development and Infrastructure Equity, City Growth Deals and Other Equity — Investments in development and infrastructure projects under which the Agency benefits from variable returns based on income generated by the project funding, including projects with both the private sector and local authorities, some of which have arisen under City Growth Deals entered into to support the Government’s aim of promoting localism. The Agency has also invested capital into funds and has invested as a minority shareholder, and will receive returns from these investments based on the performance of the underlying investments or vehicle

• Managed Funds — Investments in Housing Growth Partnership, operated by Lloyds Banking Group

• Overage — Future receipts due from the disposal of land to third parties, where the Agency includes contractual provisions in line with Managing Public Money to protect the public interest by requiring additional overage payments to be made where developments are more profitable than envisaged when the initial disposal consideration was agreed

Assets measured at FVTPL are carried at fair value, using the valuation methods described in note 13. Following initial recognition, all movements in the fair value of these assets are recognised in net expenditure. On disposal of the related assets, the net difference between proceeds and the carrying value of the asset is recognised in net expenditure.

Investments measured at amortised cost

These assets are measured at amortised cost where they meet the criteria of Solely Payments of Principal and Interest (SPPI) and therefore meet the requirement to be described as a basic lending arrangement under IFRS 9.

Development loans have been made to private sector developers in order to bring forward the development of housing under the Agency’s programmes, including the Home Building Fund, the Levelling Up Home Building Fund, Get Britain Building, Builder’s Finance Fund and Build to Rent. These loans are repayable during periods ranging up to 2033. Infrastructure Loans have been made to private sector developers and local authorities in order to fund infrastructure on stalled sites, or to unlock potential development sites. These loans are repayable during periods ranging up to 2032. Other loans include £23.9m of loans made to utility companies (2022 and 2023 — £24.7 million) in respect of water infrastructure for new town developments (due for redemption by 2053), £4.3 million loans made to local authorities (2022 and 2023 — £4.3 million) which are repayable during periods ranging up to 2036. Other loans also include amounts due to the Agency in relation to loans provided under the Home Building Fund and the Levelling Up Home Building Fund totalling £94.4m (2022 and 2023 — £64.4 million) and mainly relate to commercial non-site specific loans, such as corporate type facilities. These loans are due over periods up to 2033.

d) Movements in financial asset investments measured at fair value — Group and Agency

Movement type	Shares held in The PRS REIT plc (£’000) (Level 1)	Help to Buy Equity Loans (£’000) (Level 2)	Other Legacy Equity Loans £’000 (Level 2)	Loans at FVTPL [*] (£’000) (Level 3)	Other Investments (£’000) (Level 3)	Total (£’000) (Level 3)
Balances as at 1 April 2022	32,120	18,428,202	211,871	467,786	232,806	19,372,785
Additions	—	2,224,473	—	51,069	28,954	2,304,496
Disposals	—	(2,211,609)	(21,554)	(58,647)	(40,691)	(2,332,501)
Increase or (reversal of increase) in fair value above initial cost	(2,119)	615,229	5,452	10,945	12,472	641,979
(Decrease) or reversal of decrease in fair value below initial cost	(5,829)	(122,113)	22	(126,366)	(126)	(254,412)
Balances as at 31 March 2023	24,172	18,934,182	195,791	344,787	233,415	19,732,347
Additions	—	9,731	—	41,088	23,256	74,075
Disposals	—	(1,318,848)	(10,956)	(36,154)	(30,434)	(1,396,392)
Increase or (reversal of increase) in fair value above initial cost	—	(51,628)	(1,039)	17,661	14,769	(20,237)
(Decrease) or reversal of increase in fair value above initial cost	(418)	(132,334)	8	(48,980)	(3,083)	(184,807)
Balances as at 31 March 2024	23,754	17,441,103	183,804	318,402	237,923	18,204,986

[*] Loans measured at FVTPL because the contractual terms of the loan do not give rise to cash flows on specified dates which are solely payments of principal and interest on the principal amount outstanding. This category includes Development, Infrastructure and Other Loans, the nature of which is described in note 12c.

Other Investments include Development and Infrastructure Equity, Overage and Other Equity, the nature of which is defined within note 12c.

Movements in fair value on Help to Buy equity loans are mainly a result of the fall in house prices observed since March 2023. For more recent asset additions, the fall in house prices has resulted in assets being valued less than at inception. This has driven the £132.3m movement in fair value below cost. For more longstanding assets, while the cumulative impact of prior increases in house prices means that they are they are still valued higher than at inception, the recent fall in house prices has resulted in £51.6m of previously recognised fair value increases being reversed.

Sensitivity of the valuation of assets held at fair value under the level 2 and level 3 hierarchy

The valuation of the Agency’s equity-loan mortgage portfolio is highly sensitive to changes in assumptions, in particular about market prices. Analysis showing the sensitivity of the portfolio valuation of these assets to market prices is shown in note 15a. The sensitivity of the Help to Buy valuation to the Agency’s modelling assumptions is analysed in note 15a. As described in note 12c, the investments categorised under the level 3 fair value hierarchy are not homogeneous in nature, therefore the underlying inputs used within the calculation of fair value vary depending on the nature of the asset. This category of assets is therefore sensitive to a range of underlying inputs which are not necessarily common across the level 3 portfolio. A sensitivity analysis has been performed in note 14a to demonstrate the impact of an increase or decrease in development returns.

Using economic scenarios produced by the Agency which account for the key economic risks and macro-economic uncertainty facing the Agency, further analysis has been undertaken in the Performance report section of the Annual Report in relation to the impact of these scenarios on the valuation of the Agency’s assets which are held at fair value under the level 2 and level 3 hierarchy.

Credit risk of loans classified to FVTPL

The Agency is exposed to credit risk in relation to loans classified to FVTPL. The credit-risk exposure at 31 March 2024 in relation to these investments is £574.8 million (2022 and 2023 — £522.2 million).

e) Movements in financial asset investments measured at amortised cost — Group and Agency

	Development Loans (£’000)	Infrastructure Loans (£’000)	Other Loans (£’000)	Total (£’000)
Gross balances as at 1 April 2022 [*]	522,473	848,011	78,306	1,448,790
Additions	249,511	74,292	44,559	368,362
Repayments	(298,607)	(122,584)	(27,492)	(448,683)
Interest added to loans	28,706	45,669	1,909	76,284
Amounts (written-off) or written-back, including modification gains and losses	(1,838)	38,199	—	36,361
Gross balances as at 31 March 2023 [*]	500,245	883,587	97,282	1,481,114
Interest accrued but not yet added to loans at 31 March 2022 [**]	1,312	3,732	389	5,443
Expected credit loss allowances	(24,203)	(41,689)	(3,110)	(69,002)
Net balances as at 31 March 2023 [*]	477,354	845,630	94,561	1,417,545

	Development Loans (£’000)	Infrastructure Loans (£’000)	Other Loans (£’000)	Total (£’000)
Gross balances as at 1 April 2023 [*]	500,245	883,587	97,282	1,481,114
Additions	170,711	36,463	30,946	238,120
Repayments	(240,613)	(246,871)	(7,027)	(494,511)
Interest added to loans	40,605	44,318	3,054	87,977
Amounts written-off or (written back) including modification gains and losses	(40,801)	(10,501)	(1,589)	(52,891)
Gross balances as at 31 March 2022 [*]	430,147	706,996	122,666	1,259,809
Interest accrued but not yet added to loans at 31 March 2022 [**]	1,596	4,087	415	6,098
Expected Credit Loss Allowances	(29,662)	(46,887)	(2,284)	(78,833)
Net balances as at 31 March 2023 [*]	402,081	664,196	120,797	1,187,074

[*] Gross balances exclude expected credit loss allowances and interest accrued but not yet added to loans, but include the effect of amounts which have been considered to have been written-off as irrecoverable or which have been recognised as modification gains or losses where an agreement has been varied. Net balances include the effect of applying expected credit loss allowances.

[**] Interest accrued but not yet capitalised of nil was written off during 2023 and 2024 (2022 and 2023 – nil)

It is a requirement of IFRS 7 that for each class of financial instruments the fair value of these assets is disclosed. For assets held at amortised cost, it is considered that the amortised cost carrying value after adding back the Expected Credit Loss allowance is an appropriate proxy for fair value. This value was £1,266 million at 31 March 2024 (£1,486 million at 31 March 2023).

Sensitivity of expected credit losses to modelling assumptions

IFRS 9 requires an expected credit loss allowance calculation to be performed with reference to the level of credit risk and performance of each investment. The determination of the risk associated with each asset is a key judgement by management as the result determines whether a 12-month loss allowance or a lifetime loss allowance is calculated for that asset.

The expected credit losses are calculated by comparing the estimated balance at the time of default against moderated security values (calculated by applying Modified Security Value percentages (MSVs) to gross security values to estimate the likely value which might be realised from a sale of security in distressed circumstances). A minimum loss on default value of 35% is applied (see accounting policies – loss given default (LGD) floor). This is then multiplied against an associated probability of default percentage value (PD) for the relevant loss calculation period. The PD value applied is determined based on the credit risk rating of the associated asset using industry metrics for default.

In addition to calculating either 12-month or lifetime loss allowances, IFRS 9 also requires consideration of how the calculation would vary under alternative economic scenarios. The Agency achieves this by varying the application of PD assumptions to the same base loan data. In addition, the Agency varies the MSVs applied to the ECL allowance calculation performed under each economic scenario, to reflect the relative expected discount on gross security values in a distressed situation for each economic scenario. The results calculated for each scenario are then used to calculate an unbiased, weighted-average loss allowance. This is done by using the relative likelihood of each scenario, based on the Agency’s view of their relative probability.

The expected credit loss model is highly sensitive to the modelling assumptions noted above, which are therefore considered to be a key judgement of management. To analyse the impact of the key assumptions applied at 31 March 2024, a sensitivity analysis has been performed in note 15b, which also provides an overview of the key modelling assumptions and how they are applied.

f) Summary of movements recognised in consolidated net expenditure in relation to financial assets

Movement type	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Movements in net expenditure in relation to assets held at fair value
Increase or (reversal of increase) in fair value above initial cost on financial investments held at FVTPL	12d	(20,237)	641,979
Increase in fair value above initial cost on receivables held at FVTPL	—	4,643	4,836
Decrease in fair value below initial cost on financial asset investments held at FVTPL	12d	(184,807)	(254,412)
Decrease in fair value below initial cost on receivables held at FVTPL)	—	(3,095)	(378)
Gain on disposal against fair value	—	36,735	41,191
Monthly fees recognised on Help to Buy equity loans	—	81,778	53,333
Monthly fees recognised on other legacy equity loans	—	5,801	4,288
Movements in net expenditure in relation to assets held at amortised cost
Interest on loans	—	117,799	95,861
Interest on receivables	—	333	387
Credit impairment loss reversals or (charges), including modification (losses) or gains	—	(63,645)	7,309
Net income recognised in consolidated net expenditure	—	(24,695)	594,394

There have been reversals of previous valuation uplifts and movements in fair value below cost for financial assets measured at FVTPL.

The movements in fair value below cost of financial assets held at FVTPL is primarily caused by movements in fair value below cost on the Help to Buy portfolio which have been impacted by a reduction in house prices in 2023 and 2024, as well as cases where it has been determined that there is no realistic prospect of full recovery of the contractual amounts due on loans measured at FVTPL.

Gain or (loss) on disposal of financial asset investments

2023 and 2024	Help to Buy equity loans (£’000)	Other legacy equity loans (£’000)	Loans at FVTPL (£’000)	Other Investments (£’000)	Total (£’000)
Proceeds from disposals	1,355,373	11,166	36,154	30,434	1,433,127
Fair value of assets disposed	1,318,848	10,956	36,154	30,434	1,396,392
Gain or (loss) on disposal against fair value	36,525	210	—	—	36.735

2022 and 2023	Help to Buy equity loans (£’000)	Other legacy equity loans (£’000)	Loans at FVTPL (£’000)	Other Investments (£’000)	Total (£’000)
Proceeds from disposals	2,253,035	21,319	58,647	40,691	2,373,692
Fair value of assets disposed	2,211,609	21,554	58,647	40,691	2,332,501
Gain or (loss) on disposal against fair value	41,426	(235)	—	—	41,191

Credit impairment loss charges to net expenditure in relation to assets held at amortised cost

Credit impairment loss charge	2023 and 2024 (£’000)	2022 and 2023 £’000
Net movements in expected credit loss allowances	9,865	28,925
Amounts written-off or (written-back) loan balances	49,663	36,354
Modification losses or (gains)	3,228	(7)
Amounts written-off on receivables	889	127
Total credit impairment loss charges or (credits)	63,645	(7,309)

g) Write-offs at the reporting date

Movement in write-off allowances during 2023 and 2024

Movement	Allowances at 1 April 2023 (£’000)	Recognised (£’000)	Written-back (£’000)	Utilised (£’000)	Allowances at 31 March 2024 (£’000)
Financial asset investments at amortised cost	37,485	58,814	(9,151)	(2,071)	85,077
Trade and other receivables	668	889	—	(70)	1,487
Total	38,153	59,703	(9,151)	(2,141)	86,564

Further details of how the Agency identifies assets for which a write-off is required are disclosed in the Parliamentary Accountability section of the Annual Report. This also includes details of loan balances over £300,000 which have been considered to be irrecoverable and which are written-off in accordance with IFRS 9, or where the Agency has received authorisation from HM Treasury during the current year to cease pursuing the debt.

Movement in write-off allowances during 2022 and 2023

Movement	Allowances at 1 April 2022 (£’000)	Recognised (£’000)	Written-back (£’000)	Utilised (£’000)	Allowances at 31 March 2023 (£’000)
Financial asset investments at amortised cost	73,908	3,698	(39,992)	(69)	37,485
Trade and other receivables	561	135	(8)	(20)	668
Total	74,469	3,773	(40,000)	(89)	38,153

h) Movement in ECL allowances during the reporting period

Movement	Stage 1 (£’000)	Stage 2 (£’000)	Stage 3 (£’000)	Simplified approach (£’000)	Total (£’000)
Position as at 1 April 2022	36,598	2,928	812	160	40,498
New credit-risk exposures in the reporting period	5,637	1,595	—	—	7,232
Movements from Stage 1 to Stage 2 [***]	(10,572)	20,158	—	—	9,586
Movements from Stage 1 to Stage 3 [***]	(544)	—	544	—	—
Movements from Stage 2 to Stage 1 [***]	71	(71)	—	—	—
Movements from Stage 2 to Stage 3	—	(21)	21	—	—
Movements from Stage 3 to Stage 1	—	—	—	—	—
Movements from Stage 3 to Stage 2	—	—	—	—	—
ECL utilised when written-off [*]	(276)	—	—	—	(276)
Movements as a result of modifications [*]	—	—	—	—	—
Released on repayment	(2,778)	(1,139)	—	—	(3,917)
Changes in risk parameters and risk models [**]	5,804	(5,603)	16,034	65	16,300
Net movements in expected credit loss allowances	(2,382)	14,643	16,599	65	28,925
Expected credit loss allowance as at 31 March 2022	34,216	17,571	17,411	225	69,423

Movement	Stage 1 (£’000)	Stage 2 (£’000)	Stage 3 (£’000)	Simplified approach (£’000)	Total (£’000)
Position as at 1 April 2023	34,216	17,571	17,411	225	69,423
New credit-risk exposures in the reporting period	6,501	274	—	—	6,775
Movements from Stage 1 to Stage 2 [***]	(5,621)	8,306	—	—	2,685
Movements from Stage 1 to Stage 3 [***]	(490)	—	757	—	267
Movements from Stage 2 to Stage 1***	—	—	—	—	—
Movements from Stage 2 to Stage 3	—	—	—	—	—
Movements from Stage 3 to Stage 1	—	—	—	—	—
Movements from Stage 3 to Stage 2	—	—	—	—	—
ECL utilised when written-off [*]	(1,591)	(2,215)	(16,524)	—	(20,330)
Movements as a result of modifications [*]	—	(2)	—	—	(2)
Released on repayment	(1,820)	(9,996)	—	—	(11,816)
Changes in risk parameters and risk models [**]	(13,571)	(44,602)	(1,030)	225	32,286
Net movements in expected credit loss allowances	(16,592)	40,969	(14,737)	225	9,865
Expected credit loss allowance as at 31 March 2024	17,624	58,540	2,674	450	79,288

[*] Where amounts are considered to be irrecoverable, they are written-off (or expensed as modification losses where this arises as the result of changes to contractual terms) and the associated ECL is released. As a result, the charge to net expenditure at this time is limited to the difference between the actual amount written-off and the ECL allowance carried at the point of write-off.

[**] For reasons of practicality and efficiency, all movements in the ECL allowance for short-term receivables (which are calculated by applying a simplified approach based on historic losses observed in the population, as allowed under IFRS 9) are disclosed in a single line. For all other investments, the following input and assumption changes are reflected within this line: credit risk rating (CRR) inputs; changes in loss given default assumptions (including movements in existing asset security balances and exposures); and changes in modelling assumptions including probability of defaults (PDs), economic scenario weightings, moderated security value (MSV) rates and the profile of forecast expenditure and receipts across each year.

[***] The movements in the ECL between stages are determined firstly by removing the prior year ECL from the column associated with the prior year allocated stage. The opening ECL position is then recalculated using the stage allocated in the closing position. This is then added to the column associated with the new stage. The differences noted in the total column are therefore the difference between these 2 positions.

Expected credit loss allowance analysed for disclosure against loan categories

2023 and 2024	Stage 1 (£’000)	Stage 2 (£’000)	Stage 3 (£’000)	Simplified approach (£’000)	Total (£’000)
Development loans	8,393	18,595	2,674	—	29,662
Infrastructure loans	6,942	39,945	—	—	46,887
Other loans	2,284	—	—	—	2,284
Trade and other receivables	5	—	—	450	455
Total ECL allowances at 31 March 2024	17,624	58,540	2,674	450	79,288

2022 and 2023	Stage 1 (£’000)	Stage 2 (£’000)	Stage 3 (£’000)	Simplified approach (£’000)	Total (£’000)
Development loans	15,965	7,351	887	—	24,203
Infrastructure loans	14,945	10,220	16,524	—	41,689
Other loans	3,110	—	—	—	3,110
Trade and other receivables	196	—	—	225	421
Total ECL allowances at 31 March 2023	34,216	17,571	17,411	225	69,423

During 2023 and 2024, the economic scenarios, weightings and probability of default values applied in the Agency’s expected credit loss model were revised with reference to current market conditions and future expectations. The change in assumptions, including probability of default values, economic scenario weightings, MSVs, and cash flow profiles has resulted in a decrease in the expected credit loss allowance of £19.31 million during the year (2022 and 2023 — increase of £14.31 million). Details of the assumptions adopted are set out in the Performance Report section of the Annual Report.

13 Financial assets and financial liabilities: fair value and amortised cost.

The fair values of financial assets are assessed at least annually to meet the reporting requirements of IFRS 9 and are determined as follows:

Level 1 — The fair value of the Agency’s shareholding in the PRS REIT plc is calculated with reference to prices quoted on the London Stock Exchange and is therefore categorised as level 1 in the fair value hierarchy as defined by IFRS 13.

Level 2 — The fair values of assets held at fair value through profit or loss relating to the Agency’s equity-loan mortgage portfolio are calculated with reference to movements in the Office for National Statistics (ONS) house price index (HPI) at a regional level, being the most relevant available observable market data. This is supplemented by adjustments for experience of actual disposals which have occurred in the final 3 months of 2023 and 2024 which consider geography, age and property type. These experience adjustments are observable as they are developed using publicly available market and transaction data. Therefore, these fair values are categorised as level 2 in the fair value hierarchy as defined by IFRS 13.

Level 3 — The fair values of assets held at fair value through profit or loss relating to managed funds, equity investments in development and, or, infrastructure projects and overage follow the income approach under IFRS 13. The fair value of level 3 assets are calculated using project-level cash flow forecasts, discounted at rates set by HM Treasury, or the effective interest rate of the underlying loan agreement for loans at FVTPL if higher. This approach is as prescribed by the Government Financial Reporting Manual, issued by HM Treasury. This reflects the valuation methodology which would be employed by market participants when pricing the assets and, since the inputs which inform the calculation of fair value are unobservable to users of the accounts, the assets are categorised as level 3 in the fair value hierarchy as defined by IFRS 13.

The nature of the investments disclosed within this category vary in nature, as the Agency tailors the type of support or funding available to the individual situation. The nature of investments categorised within the level 3 category is summarised in note 12c. In addition, the mechanism by which the Agency obtains returns on these investments are specific to the asset. For example, the Agency may be due a share of returns from a development project, or the Agency may be due a share of profit which is determined based on the underlying performance of an investment. As a result of this, the inputs used to determine the fair value of each individual asset vary in nature. Input data can include project-level cash flows which are either provided by counterparties and moderated by the Agency’s project managers or are obtained via independent valuation or monitoring reports from professional advisers (for individually significant assets).

The fair value of other financial instruments (including liabilities, where significant and long-term) are similar in nature to other level 3 assets and are calculated by discounting their future cash flows using discount rates set by HM Treasury, or the rate intrinsic to the financial instrument if higher. For financial assets, this results in classification as level 3 in the fair value hierarchy as defined by IFRS 13

No financial assets have moved between categories during 2023 and 2024 (2022 and 2023 — None).

Measuring fair value on recognition

Where differences between the fair value at initial recognition, as calculated using the methods described above, and the price paid by the Agency to acquire the instrument are considered to be significant they are either:

• recognised as grant expenditure where fair value is considered to be below cost, in accordance with International Accounting Standard 20 government grants

• deferred and released over the expected life of the instrument in accordance with IFRS 9

Changes in aggregate gains yet to be recognised in net expenditure are as follows:

Group and Agency	2023 and 2024 (£’000)	2022 and 2023 (£’000)
At 1 April	—	1,961
Gain recognised on recognition	—	—
Released	—	(1,961)
At 31 March	—	—

Comparison of cost and carrying value (Group and Agency)

The original cost and carrying values of the Agency’s financial assets, by classification, are as follows:

Cost or value	Note	2023 and 2024 Original cost (£’000)	2023 and 2024 Carrying value (£’000)	2022 and 2023 Original cost (£’000)	2022 and 2023 Carrying value (£’000)
Assets measured at amortised cost
Cash and cash equivalents	12a	166,687	166,687	217,485	217,485
Trade and other receivables	—	157,886	155,944	248,818	247,729
Financial asset investments	12c	1,350,984	1,187,074	1,524,032	1,417,545
Assets measured at fair value
Trade and other receivables	—	258,683	254,906	294,125	281,970
Financial asset investments	12c	17,257,636	18,204,988	18,423,343	19,732,347
Total financial assets	—	19,191,876	19,969,599	20,707,803	21,897,076

Prepayments, tax and social security balances are excluded from the table above as these are non-financial assets.

There are no differences between the carrying values and fair values of the Agency’s financial liabilities, which are as follows:

Cost or value	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Other financial liabilities
Trade and other payables	17	506,809	559,581
Total financial liabilities	—	506,809	559,581

Deferred income, tax, social security and certain provisions are excluded from the table as these are non-financial liabilities.

14 Financial risk management

The Group and Agency’s financial assets and liabilities are detailed in Notes 12 and 17. The statements in this Note apply to both the Agency itself and the Group, except where indicated.

The exposure to financial risk arising from financial assets is a key focus for management. In order to mitigate this risk, the Agency adopts the following approach to transactions with developers:

• potential exposure to credit risk is subject to a level of analysis which would be seen in UK financial institutions, which includes the consideration of aggregated exposures where applicable

• for existing recoverable investments, cash flows are managed monthly based on client’s agreed cash flows for drawdowns

• when selling property, the Agency is normally secured by use of a building lease giving the right to retake possession of the disposed property in the event of a default by the buyer

• loan and equity agreements are generally backed by a charge on land, parent company guarantees or other available security as appropriate to the individual circumstances — these are subject to individual review and structuring

a) Market price risk

The Agency’s results and equity are dependent upon the prevailing conditions of the UK economy, especially UK house prices, which significantly affect the valuation of the Agency’s assets.

In particular, the Agency is exposed to significant market price risk in its equity-loan mortgage portfolio and land portfolio. Any market price movements are reflected in net expenditure for the period.

The Agency accepts market price risk as an inherent feature of its operation of Help to Buy and other home equity schemes. It therefore does not attempt to directly mitigate this risk, for example via hedging, but monitors the exposure at a strategic level using a range of scenario analysis techniques such as that described here.

The Agency has performed a sensitivity analysis that measures the change in fair value of the financial assets held for hypothetical changes in market prices. The sensitivity analysis is based on a proportional change to all prices applied to the relevant financial instrument balances existing at the year-end. Stress-testing is performed which looks at exposure to adverse scenarios to ensure that the financial risks are understood.

Home equity portfolio

The table shows the effect on net expenditure arising from movements in the fair value of these portfolios at 31 March 2024, before the effects of tax, if UK house prices had varied by the amounts shown and all other variables were held constant. This illustrates the impact of the mortgage providers’ first charge, which disproportionately affects the estimated fair value when house prices reduce.

Modelled change in house prices (%)	Estimated portfolio value (£ million)	Incremental change in fair value recognised in net expenditure (£ million)	% Incremental change in fair value (recognised in net expenditure)
20%	21,164.9	3,539.9	20.1%
10%	19,398	1,773	10.1%
0%	17,625	—	0%
- 5%	16,716.7	(908.3)	-5.2%
-10%	15,742.7	(1882.3)	-10.7%
-20%	13,435.8	(4,189.2)	-23.8%
-30%	10.311.8	(7,313.2)	-41.5%

Private sector developments, overage and infrastructure

At 31 March 2024, if development returns had been 10% higher or lower and all other variables were held constant, the effect on the Agency’s net expenditure arising from movements in investments in private sector developments and infrastructure projects, before the effects of tax, would have been an increase or decrease of £26.2 million from that stated.

Land portfolio

The table here shows the effect on net expenditure at 31 March 2023, before the effects of tax, if at 31 March 2023 average land and property prices had varied by the amounts shown and all other variables were held constant. This illustrates the lower of cost and net realisable value principle whereby impairments will only be recognised when an asset falls below its cost base and impairment reversals will only be recognised to the extent the asset has previously been impaired.

Modelled change in land and property values (%)	Estimated portfolio value (£ million)	Incremental change in land and property impairments recognised in net expenditure (£ million)	% Incremental change in land and property value (recognised in net expenditure)
20%	1,179.9	(115.3)	10.8%
10%	1,125.8	(61.2)	5.7%
0%	1,064.6	—	0%
-5%	1,031.6	33	-3.1%
-10	993.9	70.7	-6.6%
-20%	903.7	160.9	-15.1%
-30%	807.4	257.2	-24.2%

b) Interest rate risk

The Agency’s income is exposed to interest rate risk on its financial assets classified as loans and receivables, where these pay interest at a variable rate. For the majority of the Agency’s loan portfolio, the variable element is the EC Reference Rate, which was 5.65% as at 31 March 2024 (3.52% as at 31 March 2023).

The going concern of the Agency is not affected by a reduction in interest income in the event of a reduction in variable interest rates and the Agency does not undertake any specific measures to mitigate against the risk of changes in variable interest rates.

If interest rates on the Agency’s variable rate loans had been 1% higher or lower throughout the year ended 31 March 2024, the Agency’s net expenditure for the year, before the effect of tax, would have been £12.7 million higher or lower.

c) Liquidity risk

Liquidity risk is the risk that the Agency will be unable to meet its liabilities as they fall due.

To the extent that the Agency’s liabilities cannot be met from its own sources of income, they may be met by future grants or Grant in Aid from the Agency’s sponsoring department, MHCLG. Such grants are paid on a monthly basis to fund net liabilities as they are expected to fall due. Short term liquidity is managed through the investment of any cash surpluses with the Government Banking Service.

The Agency does not allow the use of more complex financial instruments, which could result in increased financial liabilities, such as derivatives.

Substantially all of the Agency’s financial liabilities (as described in note 17) are contractually due within 1 year of the reporting date.

d) Currency risk

The Agency’s dealings are almost entirely Sterling denominated, and therefore the Agency has no material exposure to currency risk.

e) Credit risk

Credit risk is the risk of financial loss where counterparties are not able to meet their obligations. The Agency’s maximum exposure to credit risk, without taking into account any security held, is the same as the carrying amount of financial assets recorded in the Financial Statements, as disclosed in note 12.

The nature and concentration of the credit risk arising from the Agency’s most significant financial assets is demonstrated in the tables here.

Financial asset investments measured at fair value relate mainly to amounts receivable individually from proceeds generated when the equity-loan mortgage portfolio properties are sold or staircased, or amounts receivable from various private sector developers, resulting in a broad spread of credit risk for these assets. Amounts receivable from the owners of homes are secured by a second charge over their property.

Analysis of total loan exposure by counterparty at 31 March 2024	Exposure (£’000)	Percentage of total loans
Counterparty 1	210,513	11.4%
Counterparty 2	181,700	9.8%
Counterparty 3	115,314	6.2%
Counterparty 4	88,363	4.8%
Counterparty 5	88,363	4.8%
Counterparty 6	73,507	4%
Counterparty 7	53,253	2.9%
Counterparty 8	52,031	2.8%
Counterparty 9	41,896	2.3%
Counterparty 10	37,881	2%
Total exposure of top 10 counterparties at 31 Mar 2024	942,821	51%
Total Loans Balance at 31 Mar 2024 [*]	1,848,107	—

Analysis of infrastructure loan exposure by counterparty at 31 March 2024	Exposure (£’000)	Percentage of total infrastructure loans
Counterparty 1	210,513	18.7%
Counterparty 2	181,700	16.1%
Counterparty 3	115,314	10.2%
Counterparty 4	88,363	7.8%
Counterparty 5	88,363	7.8%
Counterparty 6	73,507	6.5%
Counterparty 7	37,881	3.4%
Counterparty 8	37,881	3.4%
Counterparty 9	37,881	3.4%
Counterparty 10	30,807	2.7%
Total Exposure of Top 10 counterparties at 31 Mar 2024	902,210	80%
Total Infrastructure loans balance at 31 March 2024 [*]	1,127,249	—

Analysis of development loan exposure by counterparty at 31 March 2024	Exposure £’000	Percentage of Total Development Loans
Counterparty 1	29,747	5.7%
Counterparty 2	28.122	5.4%
Counterparty 3	26,896	5.2%
Counterparty 4	25,011	4.8%
Counterparty 5	24,183	4.6%
Counterparty 6	22,925	4.4%
Counterparty 7	20,868	4%
Counterparty 8	17,583	3.4%
Counterparty 9	17,583	3.4%
Counterparty 10	15,579	3%
Total Exposure of Top 10 counterparties at 31 Mar 2023	228,497	43.9%
Total Development Loans Balance at 31 Mar 2023 [*]	520,031	—

Analysis of other loan exposure by counterparty at 31 March 2024	Exposure (£’000)	Percentage of total other loans
Counterparty 1	53,253	26.6%
Counterparty 2	52,031	25.9%
Counterparty 3	23,872	11.9%
Counterparty 4	18,726	9.3%
Counterparty 5	15,000	7.5%
Counterparty 6	13,696	6.8%
Counterparty 7	11,634	5.8%
Counterparty 8	7,984	4%
Counterparty 9	2,205	1.1%
Counterparty 10	1,288	0.6%
Total Exposure of Top 10 counterparties at 31 Mar 2023	199,689	99.5%
Total Other Loans Balance at 31 Mar 2024 [*]	200,556	—

[*] The balances analysed above for development loans, infrastructure loans and Other Loans include both loans measured at amortised cost and loans measured on a fair value basis. The exposures are before the application of the expected credit loss allowance. The balances do not include capitalised fees and the effects of unwinding deferred income in relation to fees recharged to developers, with a net effect of £15.6 million (2022 and 2023 — £16 million).

Analysis of Disposal of Land and Property Exposure by counterparty at 31 March 2024	Exposure (£’000)	Percentage of Total Land and Property Receivables
Counterparty 1	73,735	30.5%
Counterparty 2	39,894	16.5%
Counterparty 3	26,547	11%
Counterparty 4	18,503	7.6%
Counterparty 5	17,124	7.1%
Counterparty 6	12,607	5.2%
Counterparty 7	12,533	5.2%
Counterparty 8	11,748	4.9%
Counterparty 9	10,191	4.2%
Counterparty 10	6,631	2.7%
Total exposure of top 10 counterparties at 31 Mar 2024	229,513	94.8%
Total receivables due from disposal of land and property balance at 31 Mar 2024	241,913	—

The Agency’s cash is generally held with the Government Banking Service, except where commercial reasons necessitate otherwise, for example when cash is held by solicitors around completion of property sales or purchases or by the Agency’s mortgage administrator pending allocation to accounts.

There are no significant concentrations of credit risk in the Agency’s other financial instruments.

For all financial assets excluding cash, the maximum exposure to a single counterparty at 31 March 2024 was £210.5 million (2022 and 2023 — £197.3 million), and the 5 largest counterparties accounted for 3.5% of the total financial assets balance of £19,803 million (2022 and 2023 — 3.2% of £21,680 million).

Credit policies

Credit policies are developed which set the context of the appetite for risk, requirements for risk assessment (both at the outset and through the cycle of facilities provided) and the operational aspects of managing the overall risk profile. Details are provided in the Agency’s accounting policies (note 1).

Assessment of significant increases in credit risk

Individual loans are actively managed by dedicated project managers and are subject to ongoing review, enabling the Agency to react to early warning signs and to continually assess the relevant IFRS 9 stage for ECL allowances. This enables the Agency to consider the need for more intensive management to protect the exposure or if needed undertake a structure review to consider whether a write-off allowance is required. Forbearance is considered as part of any assessment and review of the customer risk rating during the term of facilities. This ensures that data which informs the ECL allowance calculation appropriately reflects current credit risk characteristics of the portfolio of investments.

All assessments and approvals are operated within a structured approval delegation matrix from HM Treasury and HM Treasury and MHCLG.

Where term loans are issued, it is often sensible to apply an assumption that any missed monthly repayments which are not remedied within a 30-day timeframe are indicative of a significant increase in credit risk. However, because the Agency does not issue term loans with monthly repayment terms and loans are usually repayable either on development milestones or in full at a contractual long-stop date, the 30-day measure is not considered to be helpful as an indicator of significant increases in credit risk for the Agency’s loan portfolio.

Credit profile of investments

Of the total gross amortised loans cost exposures of £1,244 million in 2023 and 2024 (2022 and 2023 — £1,465 million) excluding capitalised fees and the effects of unwinding deferred income, with the net effect of £15.6 million (2022 and 2023 — £16 million), £458 million (2022 and 2023 — £533 million) were categorised with a credit risk rating (CRR) between 1 to 4 (low risk), with £502 million (2022 and 2023 — £664 million) of exposures being categorised as CRR 5 to CRR 6 (medium risk). £284m (2022 and 2023 — £268 million) of loan exposures were categorised as CRR 7 or above (high risk or in default).

Risk	Gross amortised cost (£ million) 31 March 2024	Gross amortised cost (£ million) 31 March 2023
CRR 1 to 4 (low risk)	458.2	532.6
CRR 5 to 6 (medium risk)	501.9	664.7
CRR 7 to 10 (high risk or in default)	284.1	267.8

Collateral held as security for financial asset investments

Collateral is usually obtained as security against default. The primary sources of collateral are often land which is being developed with the aid of the investment finance, but they can be other land assets within the control of our counterparties or their parent group. Parent company guarantees are also employed. For the expected credit loss calculation, only land and property security values have a MSV value, with an average base MSV adjustment of 55% for land and property applied to reflect reduced values which might reasonably be expected in a distressed sale. Because security values often relate to land under development, security values are modelled based on up-to-date information to take account of factors such as site expenditure and realised sales.

The Agency held gross collateral values against loans totalling £4,575 million in 2023 and 2024 (2022 and 2023 — £7,900 million), the majority of which related to security over land and property assets held by third parties of £4,352 million (2022 and 2023 — £7,529 million). The modified value of this security value after applying MSV adjustments under the central economic scenario was £2,441 million in 2023 and 2024 (2022 and 2023 — £3,608 million).

Of the total exposures relating to loans measured at amortised cost (excluding accounting write-offs) of £1,329 million (2022 and 2023 — £1,503 million), £1,088 million (2022 and 2023 — £1,231 million), 79.4% of agreements (2022 and 2023 — 79.9%), were fully covered by gross land and property security values held in relation to those investments. There were 27 exposures (2022 and 2023 — 33 exposures), 20.6% of agreements (2022 and 2023 — 20.1%), totalling £242 million (2022 and 2023 — £272 million) where gross security values held were less than the unimpaired exposure at that date.

The total gross security values held for these investments was £101 million (2022 and 2023 — £136 million). This is £51 million after applying MSV adjustments under the central economic scenario (2022 and 2023 — £59 million). Of these 27 investments, there were 12 investments (2022 and 2023 — 21 investments), 9.2% of agreements (2022 and 2023 — 12.8%), with a gross exposure value of £105 million (2022 and 2023 — £105 million) where no security is held.

The total gross value (after adding back accounting write-offs) of loans measured at amortised cost which were credit impaired was £110.8million (2022 and 2023 — £43.3 million). The Agency held gross land and property security values of £100 million (2022 and 2023 — £86.9 million) against these 14 assets at 31 March 2024 (2022 and 2023 — 11 assets). This is £55.3 million (2022 and 2023 — £43.2 million) of net security values after applying MSV adjustments under the central economic scenario. Of the 12 investments where no security is held, 4 of these are credit impaired investments (2022 and 2023 — 6 assets) with a gross pre-write-off exposure value of £4.5 million (2022 and 2023 — £6.7 million).

The Agency held total gross land and property security values of £673.4 million (2022 and 2023 — £763 million) against loan assets measured at fair value at 31 March 2024. This is £398.3 million (2022 and 2023 — £412.4 million) of net security values after applying MSV under the central economic scenario.

15 Sensitivity of Significant Valuation Modelling Assumptions

a) Help to Buy

Homes England models the fair value of Help to Buy on the basis of the estimated proceeds that would be achieved were all homeowners to redeem their equity loans on the reporting date. Homes England considers these estimated proceeds to be a significant accounting estimate, because the fair value of the portfolio is highly sensitive to market price risk as set out in note 14. In addition, the estimate is sensitive to significant assumptions that Homes England makes within the valuation model. We have disclosed here the individual impact of the assumptions that currently have a material impact on the estimates. Other assumptions within the valuation model, including estimated rates of first charge mortgage arrears and discount to sales on repossession, do not have a material impact at present, but could do if there was a significant decrease in house prices.

Assumptions of market adjustments

Office for National Statistics House Price Indices – which are used by Homes England to estimate the effect of house price inflation over time – are based on all market activity. Help to Buy is only available on new-build properties purchased with a mortgage, and redemptions can occur via staircasing as well as by sale. This means that the market price of the property on redemption may differ from that estimated by HPI alone. Homes England therefore makes regional market adjustments using its accumulated experience of gains and losses on disposals across different redemption transaction types to allow for these differences. These assumptions have a significant effect on the fair value because they modify the expected market price of properties from which Homes England’s percentage share is calculated.

The table considers how the portfolio valuation would vary with 1% changes in the adjustments applied

Adjustment	Fair value (£ million)	Movement from base assumption (£ million)	Movement from base assumption (%)
2% increase in market adjustment (decrease in house prices)	17,062.2	(378.9)	-2.2%
1% increase in market adjustment (decrease in house prices)	17,252	(189.1)	-1.1%
Base assumption	17,441.1	—	0%
1% decrease in market adjustment (increase in house prices)	17,629.8	188.7	1.1%
2% decrease in market adjustment (increase in house prices)	17,817.5	376.4	2.2%

Assumptions of expected proportions of transaction types

Help to Buy is redeemed at the earlier of the sale of the property, or when the homeowner staircases the equity loan with a payment equivalent to Homes England’s share of the current estimated value of the property (as determined by a Chartered Surveyor). Homes England applies regional assumptions based on its accumulated experience to estimate the proportion of its portfolio that will be redeemed by each of these 2 redemption types. These assumptions have a significant effect on the estimated fair value because the proceeds recovered via a sale may be reduced by the balance due to the first charge mortgage lender and because different transaction types are observed to generate differing returns (as reflected in the regional market adjustments applied).

The table considers how the portfolio valuation would vary with changes in the expected proportions of transaction types

Adjustment	Fair value (£ million)	Movement from base assumption (£ million)	Movement from base assumption (%)
All redemptions are staircasing transactions	17,207.9	(233.2)	-1.3%
10% increase in the rate of staircasing	17,400.6	(40.5)	-0.2%
Base assumption (a blend of sales and staircasing)	17,441.1	—	0%
10% increase in the rate of sales	17,481.6	40.5	0.2%
All redemptions are sales	17,612.7	171.6	1%

Combined impact of assumptions

The graph illustrates a potential spread of fair value from the combined impact of assumptions at different market prices. The upper and lower bounds correspond to assumptions within the following ranges:

• market adjustments between 2% lower and 2% higher than the base assumptions

• proportion of transaction types between 100% sales and 100% staircasing

• mortgage arrears rates ranging from no arrears to a 7.5% increase on the base assumption

• discounts on repossession between 15% lower and 15% higher than the base assumption

For example, the lower bound corresponds with a 2% increase in market adjustment, a 7.5% increase in accounts in arrears, and 15% increase in discount on repossession. Each bound has been calculated by selecting the value which is furthest from the base assumption for each of the 100% sales and 100% staircasing scenarios.

The combined impact of assumptions generates a spread in estimated fair value of £1.4 billion at current market prices. This spread would increase in a falling market, reaching approximately £5.1 billion should market prices fall by 30%. The combined impact of assumptions is therefore more sensitive in a falling market. This is primarily due to the impact of the mortgage providers’ first charge, which disproportionately affects the estimated fair value when house prices reduce.

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b) Expected credit loss allowance

Following the requirements of IFRS 9, the Agency is required to calculate an expected credit loss allowance for financial assets measured at amortised cost. A summary of the calculation is provided in note 12e. Due to the complex nature of the Expected Credit Loss methodology, the calculation is highly sensitive to some key judgements and assumptions.

The impact of the assumptions applied in the expected credit loss calculation has been considered and the different assumptions have a varying impact on the results of the calculation.

There are 2 assumptions which have a trivial impact on the expected credit loss allowance which are summarised as follows:

• Timing of default events — The calculation of the expected Loss Allowance at 31 March 2024 assumes that default events would occur at a mid-point of the year for each future calculation date, to build in an unbiased assumption that a default could happen at any point during a future year. This creates variation in the estimate because of the effect of discounting, which will be greater for losses modelled at a later point in the year. If a default event were assumed to occur at the beginning or end of a year, this would increase or decrease the loss allowance by £3.5 million (4.5%) or £3.4 million (4.3%) respectively.

• Profile of forecast expenditure and receipts within years — Forecast loan balances must be calculated into the future to determine the LGD of each asset (calculated as exposure at default less modified security values). Expenditure and receipts data is available at an annual level for future years within the Agency’s systems, whereas future balances are calculated at quarterly intervals. As a result, an assumption has been applied within the model to apportion spend and receipts over all future quarters using historic data on actual expenditure and receipt profiles. If it had been assumed expenditure and receipts were to be profiled equally over the year, this would have decreased the loss allowance by £278,000 (0.4%) at 31 March 2024.

Estimates of the impact of key assumptions on the expected credit loss allowance calculation at 31 March 2024 are provided below.

Economic scenarios and scenario weighting assumptions

IFRS 9 requires the Agency to consider alternative economic scenarios in the calculation of the Expected Credit Loss allowance. For each identified economic scenario, variations are made to the Probability of Default values applied based on an individual investment’s Credit Risk Rating. Weightings are applied to the Expected Credit Loss calculation for each scenario, determined in relation to the probability of each scenario occurring, with reference to current market and credit risk expectations. At 31 March 2024, the Agency applied 3 economic scenarios — a base case central scenario, a downside scenario and an upside scenario. Further details in relation to these scenarios are summarised in note 1. At 31 March 2024, a 60% weighting was applied to the base case scenario, a weighting of 10% to the downside scenario and a 30% weighting to the upside scenario calculation. The impact of varying these weightings is analysed here:

The table considers how the Expected Credit Loss allowance would vary with alternative scenario weightings applied:

Weighting	Expected Credit Loss £’000	Movement from base assumption (£’000)	Movement from base assumption %
Weighting of 55% —5% — 40% applied	75,227	(3,611)	-4.6%
Weighting of 60% — 5% — 35% applied	76,706	(2,132)	-2.7%
Base assumption of 60% — 10% — 30% applied	78,838	—	0%
Weighting of 60% — 20% — 20% applied	83,101	4,263	5.4%
Weighting of 65% — 25% — 10% applied	86,712	7,874	10%

Probability of Default (PD) assumptions

PD values are determined with reference to current economic conditions; however for alternative scenarios the PD values are migrated to adjust the PD % values against each credit risk rating (CRR). The PD values are applied to each asset in relation to their CRR. The PD values applied to alternative scenarios have a significant impact on the calculation of the expected credit loss allowance. To illustrate the sensitivity of the estimate to this data, the impact of a 1 level downgrade or upgrade in PD values assigned to each credit risk rating value across each of the scenarios is analysed here:

The table considers how the expected Credit Loss allowance would vary with a change to the probability of default assumptions

Assumption	Expected Credit Loss (£’000)	Movement from base assumption (£’000)	Movement from base assumption (%)
PD values downgraded 1 level	112,661	33,823	42.9%
Base assumption	78,838	—	0%
PD values upgraded 1 level	27,054	(51,784)	-65.7%

Moderated security value (MSV) assumption

To reflect the expected value which might reasonably be realised from the sale of security in the event of default, MSV percentages are applied to gross security values to determine a measure of loss given default (when compared against the estimated exposure on default). The MSVs are varied depending on the type of security held. A lower MSV percentage results in a higher discount applied to the determined security values. The analysis here illustrates the sensitivity of the estimate to a decrease or increase in MSV values determined for each economic scenario by 10%. At present, this only has a limited impact on the ECL due to the effect of the loss floor assumption applied in the Agency’s modelling methodology.

The table considers how expected credit loss allowance would vary with changes to the MSV values

MSV change	Expected credit loss (£’000)	Movement from base assumption (£’000)	Movement from base assumption (%)
MSV percentages decreased by 10%	83,726	4,888	6.2%
Base assumption	78,838	—	0%
MSV percentages increased by 10%	75,728	(3,110)	-3.9%

Loss floor

A minimum percentage value has been applied to the LGD calculation with reference to individual investments (read accounting policies — loss given default (LGD) floor). At 31 March 2022 and 31 March 2023 the LGD floor applied was 35%. In order to demonstrate the sensitivity of the calculation of Expected Credit Loss allowances to the LGD floor assumption, alternative floors of 0%, 50% and 75% have been applied to the calculations with results summarised here.

The table considers how the expected credit loss allowance would vary with a change in the loss floor

Loss Floor change	Expected credit loss (£’000)	Movement from base assumption £’000	Movement from base assumption %
Increase in loss floor to 75%	154,594	75,756	96.1%
Increase in loss floor to 50%	104,446	25,608	32.5%
Base assumption of 35%	78,838	—	0%
Reduction in loss floor to 0%	27,502	(51,336)	-65.1%

Combined impact of assumptions

The sensitivity analysis performed has focused on changing 1 assumption in turn, with all other metrics remaining in line with the assumptions applied in determining the expected credit loss allowance as at 31 March 2024.

However, to consider the impact of several assumptions changing, an analysis has been performed to establish the impact if the key assumptions above (excluding scenario weightings) were changed within reasonable limits to consider the highest and lowest possible expected credit loss allowance. The upper and lower bounds correspond to assumptions within the following ranges:

• PDs downgraded by 1 level (upper bound) and upgraded by 1level (lower bound)

• MSVs decreased by 10% (upper bound) and increased by 10% (lower bound) across all 3 scenarios

• increase in loss floor to 75% (upper bound) and decrease in loss floor to 0% (lower bound)

• assuming default events occur at the beginning of the year (upper bound) and at the end of the year (lower bound)

• assuming all spend occurs at the beginning of the year and all receipts at the end of the year (upper bound) and assuming all spend occurs at the end of the year and all receipts at the beginning of the year (lower bound)

A variation has then been applied to the scenario weightings against the highest and lowest Expected Credit Loss positions in order to consider the impact of these variations in combination with all other assumptions changing.

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16 Land and property assets — Group and Agency

Asset	Note	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Net book value at 1 April	—	1,069,359	1,168,657
Additions	—	202,273	182,429
Disposals	5	(72,757)	(174,803)
Impairments	—	(134,242)	(106,924)
Net book value at 31 March	—	1,064,633	1,069,359

This includes land and property assets with a net book value of £2.3 million (2022 and 2023 — £7.7 million), managed under the Direct Commissioning programme where the Agency acts as a developer. Under this arrangement, external contractors manage build and sales on behalf of the Agency.

The net book value at 31 March 2024 includes land and property assets expected to be realised in more than 1 year of £859.6 million (2022 and 2023 — £829.5 million).

Impairment of land and property assets

Impairments include charges of £161 million (2022 and 2023 — £136 million) and reversals of £27m (2022 and 2023— £29 million).

Homes England’s land and property portfolio is complex and comprises many different assets with different features and challenges. Assets may have specific challenges in terms of access, topography and profile, remediation of polluted land or the rectification of the negative impact of prior uses. The Agency may therefore need to incur expenditure in relation to the construction of roads, bridges or other significant infrastructure and this may extend to regeneration of the land asset area. During the year, the Agency spent £55 million (2022 and 2023 — £21 million) in relation to assets in need of significant regenerative capital expenditure, as described above, and recognised £47 million (2022 and 2023 — £22 million) of impairment charges in relation to these assets. Whilst impairment charges arise for a variety of different reasons, common themes relevant to the net impairment charge include:

• increases in build and infrastructure costs combined with relatively flat sales expectations

• increases in the scope of development costs and in the cost of finance

• other regulatory impacts such as continuing implementation of the Future Homes Standard and the mandated minimum requirements for biodiversity net gain

Following the determination of net realisable value at the reporting period, each asset is individually assessed in order to calculate an impairment or reversal of impairment. The valuation applied reflects the specific intentions Homes England has for the site and its particular disposal strategy as at the reporting date. As the portfolio includes many assets which may be deemed unviable without the intervention of Homes England, it is not unusual for assets to be impaired. Some assets may require significant investment which may not readily translate to increased value, at least in the short-term. Valuations are highly sensitive to changes in input assumptions —especially the larger schemes to be delivered over long timescales — some of which are subjective in nature and small changes can therefore lead to impairments or reversals. Impairments may be temporary in nature and values may increase in following years, resulting in impairment reversals

Valuation

Land and property assets had a combined net realisable value of £1,448 million (2022 and 2023 — £1,382 million).

As described in note 1k the estimated valuation at the reporting period of the portfolio of land and property assets is obtained in accordance with the current edition of RICS Valuation — Professional Standards published by the Royal Institution of Chartered Surveyors. The information provided to the valuers, and the assumptions and valuation models used by the valuers are reviewed internally in accordance with the Agency’s ALVVE (Annual Land Validation and Valuation Exercise) guidance.

The valuation models used by the external valuers will vary depending on the Agency’s objectives and conditions for each asset. However, they will typically include a mixture of the following:

• Residual method - the residual method is based on the concept that the value of land or property with development potential is derived from the value of the land or property after development minus the cost of undertaking that development, including a profit for the developer

• Market approach - the market approach uses comparable evidence of similar assets, normally in a similar type of location or geographical area

• Where disposal processes are well advanced e.g. bids received, preferred bidder identified or conditional agreements entered into, the valuer would be expected to have regard to these. The valuer will make a judgement as to the appropriate weight to apply on a case by case basis depending on how advanced the process is and the considered likelihood of the transaction completing as currently structured.

In all cases further allowances for risk will be applied as appropriate, for example planning risk.

The net realisable value of each asset includes a deduction for expected disposal costs, such as estimated marketing and legal costs. The net book value is the lower of cost and net realisable value.

 Sensitivity of the valuation of land and property assets

As described in note 1k, the land and property asset portfolio is not homogeneous in nature as the valuation methodology reflects the Agency’s objectives and conditions for each individual asset. Therefore, the underlying inputs used within the calculation for the net realisable value of each asset will vary depending on the nature of the asset, the Agency’s objectives in respect of the asset and the conditions of the asset. This category is therefore sensitive to a range of underlying inputs which are not necessarily common across the land and property assets portfolio. A sensitivity analysis has been performed in note 14a to provide an indication of the potential effect of a range of variations in land and property prices on the financial statements.

Market uncertainty

During the year, there have been inflationary pressures (but easing substantially from prior years) and increases in base rates. These impact on both developers, via build and finance costs, and homeowners and buyers, via higher mortgage rates and increased cost of living. Together, these factors have contributed to flat sales values and lower than average demand for new build homes and has led to developers being more cautious in terms of build out rates and new land purchases. This market context has contributed to a downward pressure on the values of some assets which has in turn contributed to this year’s impairment charge.

17 Trade and other payables — Group and Agency

Type	Group 2023 and 2024 (£’000)	Group 2022 and 2023 (£’000)	Agency 2023 and 2024 (£’000)	Agency 2022 and 2023 (£’000)
Trade payables	424,268	380,410	424,268	380,410
Direct commissioning	54,738	144,545	54,738	144,545
Deferred income	8,811	10,206	8,811	10,206
Taxes and social security	—	10,990	—	10,990
Due to subsidiary	—	—	56,323	15,717
Other	27,803	34,626	27,803	34,626
Balance at 31 March	515,620	580,777	571,943	596,494
Of which:
Current liabilities	495,425	555,453	551,748	571,170
Non-current liabilities	20,195	25,324	20,195	25,324
Balance at 31 March	515,620	580,777	571,943	596,494

18 Pension arrangements and liabilities — Group and Agency

During the year, the Agency’s employees were able to participate in 1 of the following contributory pension schemes:

• The Homes and Communities Agency Pension Scheme

• The City of Westminster Pension Fund

• The West Sussex County Council Pension Fund

All 3 schemes are multi-employer defined benefit schemes as described in paragraph 7 of IAS 19 Employee Benefits. The Homes and Communities Agency Pension Scheme is the only scheme open to new employees. The Scheme was originally established as a final salary scheme, however it will change to career average for benefits accruing from 1 April 2024. From 1 September 2019, new members accrue benefits on a career average basis. The other schemes are Local Government schemes which changed from a final salary to career average basis for benefits accruing from 1 April 2014. Further information on the funding arrangements for the schemes is contained within note (k).

Valuations of the Agency’s assets and liabilities in each scheme as at 31 March 2024 have been prepared in accordance with IAS 19 and the results are disclosed in note (a). Note (b) shows the weighted average of the key assumptions used by each of the scheme actuaries in preparing the valuations, weighted according to each scheme’s liabilities. Other information below is shown on a consolidated basis for all 3 schemes.

a) Pension assets and (liabilities)

Asset or liability	HCA Pension Scheme (£’000)	Westminster (£’000)	West Sussex (£’000)	Total (£’000)
2023 and 2024
Fair value of employer assets	400,139	448,881	85,710	934,730
Present value of funded liabilities	(364,356)	(205,941)	(45,973)	(616,270)
Net funded scheme assets or (liabilities)	35,783	242,940	39,737	318,460
Present value of unfunded liabilities	(876)	—	(2,347)	(3,223)
Adjusted net scheme assets or (liabilities)	34,907	242,940	37,390	315,237
Total of net pension assets	—	—	—	318,460
Total of net pension liabilities	—	—	—	(3,223)
2022 and 2023
Fair value of employer assets	377,734	404,767	82,581	865,082
Present value of funded liabilities	(380,287)	(206,858)	(47,264)	(634,409)
Net funded scheme assets or (liabilities)	(2,553)	197,909	35,317	230,673
Present value of unfunded liabilities	(850)	—	(2,455)	(3,305)
Adjusted net scheme assets or (liabilities)	(3,403)	197,909	32,862	227,368
Total of net pension assets	—	—	—	233,226
Total of net pension liabilities	—	—	—	(5,858)

Funded schemes with net assets, as shown, are disclosed within non-current assets in the Statement of Financial Position. Unfunded schemes with net liabilities, as shown, are disclosed within non-current liabilities in the Statement of Financial Position.

As principal employer of the HCA Pension Scheme, the Agency continues to monitor the scheme and has a good working relationship with the Trustees. The Trustees review the Scheme’s investment portfolio on a regular basis. At present, 30% (2022 and 2023 — 35%) of the Scheme’s investments are held within liability driven investments which aim to better match the Scheme’s liabilities and partially hedge the Scheme against rises in inflation and interest rates. A further 20% (2022 and 2023 — 20%) of assets are held in Corporate Bonds. The liability hedging is managed through Insight Investment (1 of the HCA Pension Scheme’s investment managers) bespoke pooled fund, established as a Qualifying Investor Alternative Investment Fund (QIAIF), which allows Insight to invest in gilts, index-linked gilts, gilt repurchase agreements, reverse gilt repurchase agreements, guilt and index-linked gilt Total Return Swaps, interest rate and inflation swaps and various cash instruments. As at 31 March 2024, the Scheme had an interest rate hedge ratio of 65% (2022 and 2023 — 59%) and an inflation hedge ratio of 64% (2022 and 2023 — 59%) relative to the gilts-flat liabilities.

b) Actuarial assumptions

The weighted average of the key assumptions used by the actuaries of the pension schemes are as follows:

i) Financial assumptions

Assumption	2023 and 2024	2022 and 2023
Inflation and pension increases rate (Consumer Price Index)	2.8%	2.9%
Salary increases	3.5%	3.7%
Discount rate	4.9%	4.8%

ii) Mortality assumptions

Based on actuarial mortality tables, the average future life expectancies at age 65 are summarised below:

Assumption	2023 and 2024	2022 and 2023
Male — current pensioners	22.1	22.6
Male — future pensioners	23.2	24
Female — current pensioners	24	24.5
Female — future pensioners	25.6	25.9

c) Fair value of employer assets

Asset	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Equities — quoted	405,404	411,215
Equities — unquoted	2,595	2,386
Bonds —quoted	230,662	232,705
Bonds — unquoted	—	—
Property	59,447	61,082
Other assets — quoted (including cash)	147,892	106,717
Other assets — unquoted	88,730	50,977
Total	934,730	865,082
Actual return or(loss) on employer assets	70,810	(144,770)

Some of the funds in which the Agency’s pension assets are invested permit the use of derivatives for the purposes of achieving their investment aims. In all cases, funds are managed by professional investment managers.

d) Charge to net expenditure

Charge	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Amounts charged to Net Operating Expenditure
Current service costs	18,563	29,424
Past service costs and losses on curtailments and settlements	7	—
Expenses	2,575	2,147
Total	21,145	31,571
Amounts charged to finance costs
Interest charged on liabilities	29,944	22,881
Expected return on assets	(41,259)	(27,767)
Interest on asset ceiling	—	—
Total	(11,315)	(4,886)
Total recognised in Statement of Comprehensive Net Expenditure	9,830	26,685

The total expected employer contributions to these schemes in the year ending 31 March 2025 are £11.2 million.

e) Amounts recognised in income and expenditure reserve

Type	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Actuarial gains	77,037	63,767

The cumulative amount of actuarial gains recognised in other comprehensive expenditure since the adoption of IAS 19 is £290.4 million (2021 and 2022 — £226.6 million).

f) Reconciliation of fair value of employer assets

Asset	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Opening fair value of employer assets	865,082	1,018,110
Expected return on assets	41,259	27,767
Contributions by members	4,689	4,255
Contributions by the employer	20,430	18,932
Contributions in respect of unfunded benefits	232	217
Actuarial (losses) or gains	29,551	(172,537)
Expenses	(2,717)	(2,469)
Unfunded benefits paid	(232)	(217)
Benefits paid	(23,564)	(28,976)
Closing fair value of employer assets	934,564	865,082

g) Reconciliation of defined benefit obligation

Obligation	2023 and 2024 (£’000)	2022 and 2023 (£’000)
Opening defined benefit obligation	637,714	846,973
Current service cost	18,563	29,424
Interest cost	7	—
Contributions by members	4,689	4,255
Actuarial (gains) or losses — demographic	(27,055)	(5,556)
Actuarial (gains) or losses — financial	(13,489)	(283,441)
Actuarial (gains) or losses — other	(6,942)	52,693
Expenses	(142)	(322)
Unfunded benefits paid	(232)	(217)
Benefits paid	(23,564)	(28,976)
Closing defined benefit obligation	619,493	637,714

h) 5-year history

Criteria	2023 and 2024 (£’000)	2022 and 2023 (£’000)	2021 and 2022 (£’000)	2020 and 2021 (£’000)	2019 and 2020 (£’000)
Present value of defined benefit obligations	(619,493)	(637,714)	(846,973)	(869,669)	(725,868)
Fair value of employer assets	934,730	865,082	1,018,110	988,679	812,828
Impact of asset ceiling	—	—	—	—	—
Surplus in the schemes	315,237	227,368	171,137	119,010	86,960
Experience gains or (losses) on scheme liabilities	6,942	(52,693)	1,108	(6,390)	14,145
Experience gains or (losses) on employer assets	29,551	(172,537)	5,216	147,691	(50,939)

i) Sensitivity analysis

The primary assumptions used in calculating the defined benefit obligation are: discount rate, salary increases, inflation and pension increases and mortality expectations. The assumptions used are specified in note 18(b). The assumptions are determined by independent professional actuaries whose work is compliant with Technical Accounting Standard 100 — Principles for Technical Actuarial Work as issued by the Financial Reporting Council. IAS 19 sets out the principal underlying the setting of assumptions, that they should be based on the best estimate of future experience, and also gives a clear direction on the basis for calculating the discount rate. Assumptions should also reflect market conditions at the reporting date, including demographic assumptions and the mix of membership of Homes England’s schemes.

The key assumptions are considered to be the discount rate and the rate of future inflation. The discount rate is important in determining the value of liabilities and is based on high quality corporate bonds at the year-end. The rate is in line with the AA corporate bond yield curve at the year-end. Inflation expectations inform the rate at which current and future pensioner’s benefits accrue. It is based on CPI at the year-end with an inbuilt allowance for an insurance risk premium. Demographic assumptions, including mortality expectations can also have a bearing on the valuation of liabilities, as can the specific membership mix of our schemes.

To assess the defined benefit obligation, assumptions are used in a forward-looking financial and demographic model to present a single scenario, using financial assumptions that comply with IAS19. The valuation of the obligation at 31 March 2024 is a snapshot in time; actual experience over time may differ and the total cost of a scheme will depend on a number of factors including the amount of benefits paid, the number of people who benefits are paid to, scheme expenses and the amount earned on assets. These factors aren’t known for certain at the valuation date. The calculation of liabilities is sensitive to movements in assumptions and even small changes to individual assumptions can have significant impacts. If they were to change, the impact would be as follows:

Adjustment to discount rate	+0.25% (£’000)	Current (£’000)	-0.25% (£’000)
Present value of total obligation	597,604	619,493	642,290
Movement	(21,889)	—	22,797

Adjustment to inflation	+0.25% (£’000)	Current (£’000)	-0.25% (£’000)
Present value of total obligation	641,212	619,493	598,426
Movement	21,729	—	(21,067)

Adjustment to life expectancy	+1 year (£’000)	Current (£’000)	-1 year (£’000)
Present value of total obligation	638,125	619,493	600,861
Movement	18,632	—	(18,632)

j) Maturity profile of the defined benefit obligation

The weighted average duration of the defined benefit obligation of the pension schemes is 16 years.

Pension benefits, including insurance premiums, are expected to be paid over time as follows:

Years	£’000
Within 5 years	128,767
5 to 10 years	146,686
After 10 years	344,040
Total defined benefit obligation	619,493

k) Funding arrangements

Contribution rates for each of the 3 schemes are reviewed at least every 3 years following a full actuarial valuation. The funding strategy in each case is set to target a fully funded position, except for those liabilities which are intentionally unfunded within each of the schemes. Any underfunding is restored to a fully funded position via additional contributions over an appropriate period of time. The estimate of contributions to 31 March 2025 is £11.2 million.

The HCA scheme is a multi-employer scheme that does not operate on a segregated basis. Therefore the assets and liabilities are not separately identified for individual participating employers. Benefit obligations are estimated using the Projected Unit Credit Method.

Both Homes England and the Regulator of Social Housing (RSH) are members of the HCA Pension Scheme although Homes England is the only significant contributing employer and accounts for the vast majority of the HCA scheme’s liabilities. Based on actuarial data at 31 March 2024, the share of the HCA scheme’s assets and liabilities attributed to RSH is approximately 5% (2022 and 2023 —5%) with the remainder attributed to Homes England. All assets are pooled and a single employer contribution rate is determined as part of the actuarial valuation for the whole scheme. This contribution rate applies for the principal employer, Homes England, along with any other participating employers, including RSH.

Homes England and RSH record the cost of employer contributions in their own Financial Statements and account for their proportionate share of the Scheme’s asset and liabilities separately. The assets and liabilities disclosed in Homes England’s Financial Statements relates only to its share of the Scheme’s assets and liabilities and not to the assets and liabilities of the entire Scheme.

There are no formal arrangements in place for the allocation of a deficit or surplus on the wind-up of the HCA Pension Scheme or the Agency’s withdrawal from the scheme. Under both scenarios, exit debts would become payable under Section 75 of the Pensions Act 1995.

The Westminster and West Sussex schemes are members of the Local Government Pension Scheme (LGPS). Assets and liabilities for all employers in LGPS funds are identifiable on an individual employer basis. There are no minimum funding requirements or winding up provisions in the LGPS. Any deficit on withdrawal is required to be paid by the withdrawing employer and any surplus is retained by the fund.

l) McCloud judgement

In December 2018, the Court of Appeal ruled against the government in 2 cases: Sargeant and others v London Fire and Emergency Planning Authority [2018] UKEAT/0116/17/LA and McCloud and others v Ministry of Justice [2018] UKEAT/0071/17/LA. The cases related to the Firefighters’ Pension Scheme (Sargeant) and to the Judicial Pensions Scheme (McCloud). For the purposes of the LGPS, these cases are known together as ‘McCloud’. The court held that transitional protections, afforded to older members when the reformed schemes were introduced in 2015, constituted unlawful age discrimination. On 27 June 2019 the Supreme Court denied the Government’s request for an appeal, and on 15 July 2019 the Government released a statement to confirm that it expects to have to amend all public service schemes, including the LGPS. The additional liabilities created are estimated to be from around 0.1% of total liabilities based on the 2022 scheme valuation. It is not yet clear how this judgement may affect

19 Contingent assets and liabilities

Contingent assets

The Agency has in certain instances disposed of land or made grant payments with certain conditions attached, which if no longer fulfilled will result in a payment to the Agency. Examples include where there is a subsequent change in use of land sold which materially increases the return to the purchaser, or if the conditions of a grant payment are no longer met. The normal term during which this arrangement remains in force is 21 years. For affordable housing and other community related schemes the term is more usually 35 years. By its nature this income is variable and the timing of receipt is uncertain, therefore it is not possible to quantify the likely income which may ultimately be received by the Agency.

Contingent liabilities

a) The West Sussex County Council Pension Fund — At 31 March 2023, the Agency had 11 employees (31 March 2022 — 11 employees) who were active members of the West Sussex County Council Pension Fund. When the Agency’s last active member leaves the scheme, the obligation to pay an exit debt will be crystallised. The timing and value of any exit debt due in the future is not yet known.

b) Other contingent liabilities — The Agency is potentially liable for miscellaneous claims by developers, suppliers, contractors and individuals in respect of costs and claims not allowed for in development agreements, construction contracts, grants and claims such as Compulsory Purchase Orders. Payment, if any, against these claims may depend on lengthy and complex litigation and potential final settlements cannot be determined with any certainty at this time. As claims reach a more advanced stage they are considered in detail and specific provisions are made in respect of those liabilities to the extent that payment is considered probable.

20 Financial commitments

Commitment	2023 and 2024 (£ million)	2022 and 2023 (£ million)
Not later than 1 year	3,619	3,523
Later than 1 year and not later than 5 years	2,733	4,792
Later than 5 years	62	76
Total commitments at 31 March	6,414	8,391

The Agency has made financial commitments in relation to programmes for investments in loan and equity assets, and infrastructure grants, which had become unconditional at the reporting date, but which had yet to be drawn down by that date. The value of these commitments, excluding those disclosed in note 11(c), was £2,885 million at 31 March 2024 (31 March 2023 — £3,608 million). The profiling of the commitments reflects the Agency’s best estimate of when cashflows will arise, however the actual timing may vary based on factors not wholly within the Agency’s control.

The Agency has entered into financial commitments in relation to affordable housing grant programmes totalling £3,391 million at 31 March 2024 (31 March 2023 —£4,557 million). 1 of these grants is individually material. An amount of £211 million is payable before 31 March 2026 to a strategic partner under the Affordable Homes Programme 2021 to 2026.

The Help to Buy scheme ended in the year. As a result there is no commitment included in the year in relation to conditional approvals (31 March 2023 — £20 million).

In addition to this, the Agency has entered into financial commitments in relation to land development and building leases totalling £136 million and £2 million respectively at 31 March 2024 (31 March 2023 — £205 million and £1 million).

21 Related party transactions

The Agency is a non-departmental public body sponsored by MHCLG. Therefore any other bodies sponsored by MHCLG are considered to be related parties. During the year, the Agency has had a significant number of material transactions with MHCLG.

The Agency has had a number of transactions with other government departments and other government bodies, including various local authorities, the Department of Health and Social Care, the Ministry of Justice and the departmental body formerly known as the Department for Business, Energy and Industrial Strategy. The Agency has also had a number of transactions with its associated undertakings, joint ventures and other related parties as follows:

2023 and 2024	Capital invested in or (redeemed from) entity (£’000)	Grants and other payments (£’000)	Loans or equity advanced or (repaid) (£’000)	Loan interest or dividends received (£’000)
Payments out
English Cities Fund Limited Partnership	15,306	—	—	—
Home Group Limited	—	594	—	—
Hyde Housing Association	—	26,500	—	—
Midland Heart Housing Limited	—	7,313	—	—
Newton Development Partners LLP	19	—	—	—
Receipts in
English Cities Fund Limited Partnership	(2,913)	—	—	(3,274)
Tilia Community Living	—	—	(8,432)	—
Countryside Maritime Limited	—	—	(3,725)	(6,450)
Home Group Limited	—	—	(8,770)	—

2022 and 2023	Capital invested in or (redeemed from) entity (£’000)	Grants and other payments (£’000)	Loans or equity advanced or (repaid) (£’000)	Loan interest or dividends received (£’000)
Payments out
English Cities Fund Limited Partnership	10,405	—	—	—	—
Sigma PRS Property Investments	—	—	6,041	—
Home Group Limited	—	2,273	—	—
Hyde Housing Association	—	22,027	—	—
Countryside Maritime Limited	—	—	2,500	—
Receipts in
English Cities Fund Limited Partnership	(4,162)	—	—	(2,744)
Tilia Community Living	—	—	(2,501)	—

In addition to the above, the Agency holds £56.3 million (2022 and 2023: £15.7 million) on behalf of English Partnerships (LP) Ltd, the Agency’s wholly owned subsidiary.

The transactions with joint ventures Tilia Community Living, Countryside Maritime Limited and Newton Development Partners LLP relate to loan funding provided under the Short Term Fund, Single Land Programme and Levelling Up Housing Building fund. The balance of the loan to Tilia Community Living at 31 March 2024 was £10.7 million (2022 and 2023 — £19.1 million). This will be settled in cash and is secured by a debenture and a second charge over land and property assets of the company. Countryside Maritime Limited repaid its loan in the year and so had a balance of nil at 31 March 2024 (2022 and 2023 — £3.7 million). Newton Development Partners LLP started to drawdown funding in the year, and had a balance owed of £19,000 at 31 March 2024.

The related party relationship with Home Group Limited is due to 1 member of the Agency’s Board also being a Director of the entity. The transactions in the year relate to grants and other payments provided by the Agency.

The related party relationship with Hyde Housing Association (HHA) is due to a close relationship between a member of the senior leadership team at the Agency and a member of the senior leadership team at HHA. The transactions relate to grant funding provided by the Agency. The Agency senior leadership team member left in the year, and the payments shown in the table represent payments until their leave date.

1 of the Agency’s Board members served as a member of the board of Midland Heart Housing Limited in the year. Transactions with Midland Heart Housing Limited during this period are grant payments and are disclosed in the table above.

1 of the Agency’s Board members became a non-executive director of NatWest plc in the year. The Agency uses NatWest for some of its banking services. These relationships pre-date the Board member joining the NatWest plc board, and are on arm’s length terms.

In the prior year the Agency had a related party relationship with Sigma PRS Property Investments as a member of the Agency’s Board was a Director of Sigma Capital Group PLC, the parent company of Sigma PRS Property Investments. The Board member resigned from this role before the start of the financial year and so transactions with the Sigma Capital Group PLC are no longer considered related party transactions.

The Agency’s internal approval procedures are established so that members of staff nominated to act as Directors or Officers of associated undertakings and joint ventures do not have delegated authority with regard to the relevant undertaking.

There were no other material transactions in which related parties had a direct or indirect financial interest other than those disclosed above.

None of the senior managers or related parties has undertaken any material transactions with the Agency during the year.

For details of compensation paid to management read section 3.2, Remuneration and staff report.

22 Events after the reporting period

The Agency’s sponsor department was renamed on 9 July 2024, from the Department for Levelling Up, Housing and Communities to the Ministry of Housing, Communities and Local Government.

The Agency’s Financial Statements are laid before the Houses of Parliament by the Secretary of State for Housing, Communities and Local Government. IAS 10 Events After the Reporting Period requires the Agency to disclose the date on which the accounts are authorised for issue. The certified accounts were authorised for issue by the Chairman and the Chief Executive and Accounting Officer on the same date as the Certificate and Report of the Comptroller and Auditor General.

Contact us

Tel: 0300 1234 500

enquiries@homesengland.gov.uk

@HomesEngland

Our offices

Bristol

2 Rivergate, Temple Quay, Bristol, BS1 6EH

Coventry

One Friargate, Coventry, CV1 2GN

Guildford

Bridge House, Guildford, GU1 4LZ

Leeds

2nd Floor, 7 and 8 Wellington Place, Wellington Street, Leeds, LS1 4AP

Liverpool

11th Floor, No.1 Mann Island, Liverpool, L3 1BP

London

50 Victoria Street, Westminster, London, SW1H 0TL

Manchester

3 New Bailey, New Bailey Street, Salford, M3 5AX

Newcastle

The Lumen, 2nd Floor, St James Boulevard, Newcastle Helix, Newcastle-upon-Tyne, NE4 5BZ

Northstowe

Northstowe House, Rampton Road, Longstanton, CB24 3EN