industry news
Mega mergers move forward while sector splits over code
could significantly change the look of the HA sector for years to come. Responding to pressure from government
T
ministers and the Homes & Communities Agency (for HAs to improve efficiency and build more homes), the sector’s trade body, the NHF, drew up a voluntary merger code to guide its members through the process. But just like its actions over the voluntary deal on extending Right to Buy to HA tenants, the NHF’s members appear to be split on whether a good job has been done or not. A survey of 107 HA chief executives by Inside
Housing is showing: • 30 per cent of HAs are very likely to sign up to the code;
• 27 per cent of HAs are likely to sign up to the code;
• 35 per cent of HAs are unlikely to sign up to
he social housing sector is in at least two minds about the new merger code, while a number of big deals are proceeding which
the code; and
• 8 per cent of HAs are very unlikely to sign up to the code.
The National Housing Federation claims they are neutral on the issue, but a sizeable number of organisations appear to think their trade body is actually in favour of mergers. Claims and counter-claims made on both sides are making this a heated debate. It is unclear how the government and HCA will respond if the merger code is rejected by a big minority of HAs. While this debate goes on, several actual merger
deals are taking shape and the potential size of the resulting businesses will see them dwarf many of the current big landlords. They could also see the new combined associations challenging the big volume house builders as developers.
Mega deals
Publicly known deals affecting several hundred thousand homes include:
8% 30% 35% 27%
Very likely Likely Unlikely Very unlikely
Percentage of HAs likely to sign up to the merger code
The biggest potential deal is between Affinity
Sutton and Circle. If it proceeds it will create a new HA with 127,000 homes, a combined turnover of £750 million a year and plans to build 5,000 new homes a year. It has recently been announced that Keith Exford would be chief executive of the new landlord, with Mark Rogers as his deputy. Mr Exford said: “The merger of Affinity Sutton
and Circle provides a unique opportunity to create a truly national housing organisation with increased capacity to respond to the housing crisis and build more homes; contribute to the regeneration agenda and deliver major projects, at the same time as enhancing the lives of our residents and delivering excellent services.” Also in merger talks to create a 56,000 home
landlord and the largest social housing provider in the South West are Sovereign and Spectrum Housing Group. Sovereign has 38,000 homes while Spectrum Housing Group owns 18,000 homes and manages a further 45,000 homes through its maintenance company. The two HAs have been exploring the merger
since last year, after talks about stock swaps. It said that the “challenging policy landscape” meant it made sense to look at a merger. If both boards approve the move, the merger is expected to take place by the end of the year. Just behind them in size terms would be the new
47,000 home HA to emerge from combining Genesis and Thames Valley. The merged organisation will build 3,000 new homes per year. Both boards have accepted the initial business case for the proposed merger and they are moving to the due diligence stage and looking at how to integrate the two organisations. Neil Hadden, Chief Executive at Genesis, said:
“We now move onto the next phase. Our focus must be and remains building more homes to address the housing crisis. That is the reason for this proposed merger.” The merger trend is also having an impact north
of the border with tenants of 300 home landlord Barony, voting in favour of joining the very large Wheatley Housing Group, whose members provide homes for over 200,000 people and several members of Sanctuary Scotland are merging to form a single HA with almost 6,000 homes.
Under-occupation rates fall in rented housing
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he proportion of renting households who are under-occupying their homes has fallen to the lowest level on record.
Figures from the English Housing Survey show
that 8.6 per cent of social housing households were under-occupying their homes by two bedrooms or more in 2014/15. This is roughly 338,000 households and is the lowest level since 1995/96 when the survey statistics were first collected. In the private rented sector under-occupation
levels have also fallen, but not by so much and they stood at 13.1 per cent, which is still equivalent to over 550,000 households. But these welcome falls are not being replicated
by private homeowners, where more than half of owner-occupiers are under-occupying their homes at a level of 50.7 per cent – the highest figure on record. The proportion of all households that are
overcrowded remains at 3 per cent, the same level it has been for last three years. It is too early to say whether changes in welfare
benefit policies such as the bedroom tax, are having an effect on the figures. It could be that under-occupying rates are falling because more adult children are staying at home with their parents for longer because they cannot afford to move out.
www.housingmmonline.co.uk | HMM March 2016 | 17
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