Two of the UK's largest housing associations are planning merger discussions to create one of Europe's largest housing associations.
Affinity Sutton and Circle Housing are discussing the aim of joining together to create a 127,000 home landlord in the most significant merger deal ever seen by the housing sector.
George Osborne’s recent budget cut rents within the social housing sector and ordered housing associations to lower them. Osborne’s Office For Budget Responsibility said the new policy would reduce the building of affordable housing by approximately 14,000 properties over the next few years.
“The recent Budget announcements provide a further catalyst for the sector to work more efficiently and consider consolidation as organisations seek ways to manage the impact of government reforms,” the organisations said in a joint statement to Inside Housing.
If the talks progress, the new landlord will own five per cent of homes in the housing association sector, house 500,000 and turnover £650 million annually - producing a surplus of £120 million, according to the most recent accounts published.
A combined document which lays out the new organisation’s ‘vision’ said they could potentially build 20,000 new homes in a period of five years.
“Together Circle and Affinity Sutton could lead the transformation of the (housing) association market and fundamentally change the lives of many,” the document reads.
The document expressed goals to merge both organisations into a new structure with a ‘holding company’ above separate subsidiaries for commercial activity, housing management and charitable work.
However, it is understood these plans came into being at a very early stage in the discussions, and will need to be reviewed against the government’s many policy changes announced since, including the rent reduction and Right to Buy extension to housing associations.