Insider Media Limited

A mass property sell-off has helped affordable housing supplier Longhurst Group gain a £3.3m surplus. However, the Lincolnshire company said it expects the coming years to be "the most challenging yet" after it was turned down in a request for major funding.

The Boston, Lincolnshire-based company recorded a surplus of £3.3m after suffering a £1.2m deficit the previous year.

Not-for-profit organisation Longhurst Group, which provides housing across the Midlands, said the profit was recorded after selling 160 properties as part of a stock rationalisation programme.

It also attributed the boost to £8m generated in design and build fees by its subsidiary Keystone Developments.

Along with a profit hike, the company said it reached a "record" turnover at the year ending 31 March 2011. Sales grew from £70.7m in 2010 to £82.6m.

The group comprises four subsidiary organisations; East Northamptonshire Housing (later known as Spire Homes); Keystone Developments; Friendship Care and Housing and Longhurst and Havelok Homes.

But despite the increase in turnover, the company said it expects the next few years "to be the most challenging yet".

Having received a large grant in 2010, the company said it was "extremely disappointed" to discover its bid for Homes and Communities Agency (HCA) funding had not been successful for the coming year. It was refused its four-year social housing allocation from the organisation on 14 July.

The company had bid to create 1,500 new homes under L&H Homes, Spire Homes and Friendship Care Housing.

In 2010/11, the company received a social housing grant worth £12.5m.

Longhurst said it was now assessing how much development activity it could take on without the need for a social housing grant.

Over the last year, Longhurst achieved a construction programme of £30.4m against is original target of £27.1m. It completed 372 homes over the 12 months.

Longhurst & Havelok Homes also secured a £30m loan facility.

Over the coming years, the company said it expected "changes in planning processes to create uncertainty and which may well create delays in the process of scheme development".

However, it implied that it could be given more construction opportunities as it expects the number of people retiring to the East Midlands to increase.

The company concluded: "Overall, we face challenging times in our sector, as do many others, but the team at Longhurst Group are as dedicated as ever to providing good quality services no matter how challenging the circumstances."