Industry News

HA merger activity hots up again

Paul Crawford, Chief Executive of DCH said

“It makes every sense for DCH and Knightstone to consider the benefits of an alliance. We have a shared heritage and a uniquely complementary geography in the South West. We also share a desire both to maximise our contribution to the development of more affordable homes and to deliver even better quality and value for money services to our residents.”

property sales and stock rationalisation as the hot topic, a number of deals have hit the news headlines. While not in the same league as the


formation of Clarion or the expansion of L&Q, the recently announced mergers could change the face of social housing in the south and midlands, while at the same time increasing the sector’s capacity for building new homes. Responding to the challenge to ramp up

their development programmes, associations are scaling up in size so they can deliver savings through economies of scale while also using their larger property bases to secure bigger loans to finance the building activity.

South west Two of the south west’s largest housing associations have confirmed they are well advanced in merger talks to form the region’s largest social landlord, providing homes to 70,000 people. DCH and Knightstone told their tenants the

merger has been agreed in principle by the two boards, but a final decision will not take place until a consultation exercise has been completed this Autumn along with a due diligence assessment. If formed, the new organisation will own

and manage 35,000 homes across the whole peninsula, stretching from the Isles of Scilly up to Gloucestershire. Their combined turnover will be in the region of £250m and they plan to build another 15,000 homes over the next decade. The new association could be up

and running by summer 2018. No details have been provided on the structures of the boards and executive teams, nor on the new landlord’s name. It will be one quarter the size of Clarion Housing Group, the largest HA in the country with 125,000 homes following the merger of Affinity Sutton and Circle Housing.

fter a brief lull during which time commentators speculated that HA mergers were being replaced by

South east Over in the south east, Amicus Horizon and Viridian have completed their merger, setting up Optivo, a new combined landlord with 44,000-homes, 90,000 tenants and an annual turnover of £306m. The new HA has ambitions to build at

least 1,500 homes every year from 2021. Optivo said it would raise £1.5bn of new finance to support its growth programme. The association aims to build 85 per cent affordable homes, of which 60 per cent would be below market rent and 40 per cent shared ownership. Paul Hackett, chief executive of Optivo, said

“This is the start of an exciting new journey. We’re now ‘one team’ and will be able to build more new homes than we could have done as separate organisations.” His deputy Nick Apetroaie, said the merger

was about much more than increasing its development capacity. “We’re passionate about increasing people’s life opportunities and showing we care about their futures. We’ll do all we can to help them flourish by providing access to education and employment support, along with supporting their health and wellbeing.”

Midlands Meanwhile the Longhurst Group and Axiom have agreed a merger that will see them own just over 21,000 homes, with plans for 700 new homes a year across the Midlands and stretching into East Anglia, around Cambridge and Peterborough. The merger is expected to complete on 3

July. It follows a strategic review by Axiom which determined they would need to merge in order to continue providing all its services over the long term. Julie Doyle, chief executive of Longhurst

Group, said “From a Longhurst point of view we have not been out actually trying to court people, but certainly are keen to go where it’s helpful to both organisations and also to the customers.” Other recent deals have seen mergers

completed at Paragon Asra with more than 24,000 homes in central and southern England and Vivid, formed by First Wessex and Sentinel, with 30,000 homes in 20 council areas, mainly in Hampshire.

Letting agents charging tenants up to £800 in fees

Campaigning group Generation Rent have found PRS tenants in England are charged fees of up to £813 when moving into a new home and an average of £404 every time they move. With a proposed ban on letting fees just

consulted on, the group found instances of agents abusing tenants with a series of charges. Generation Rent is calling for the Government to apply a blanket ban on fees without exemptions for “in-tenancy” services and create a system of compensation for tenants charged illegal fees. Among the worst examples of ‘unjustified

fees’ they found:

• Tenancy renewals at an average price of £117 every six or 12 months;

• Check-out fees at the end of a tenancy charged at £120;

• References for the next tenancy average £60 for two people;

• An extra £62 charged for moving in on a Saturday; and

• Tenants on low incomes and needing rent guarantors charged an average of £152.

Thirteen agents had charged tenants, who accidentally overpaid their rent, an average of £25, the campaign group said. The highest fee found by Generation Rent was at an agency in Wokingham, but they also found agents in Bristol and in Waltham Forest, east London, not charging tenants any fees.

Stress Dan Wilson Craw, director of Generation Rent,

said “No one moves house for fun, and letting fees make an already stressful situation worse. Landlords appoint their agents, so should pay their costs. “As the range of fees being charged

demonstrates, some letting agents are squeezing as much from tenants as they can. That’s why we need a blanket ban with no loopholes.” But David Cox, chief executive of the

Association of Residential Letting Agents, said that if a ban is enforced, rents would rise and tenants will end up paying more. “Research commissioned by ARLA Propertymark carried out by Capital Economics demonstrated that if a full ban comes into force, then tenants will end up paying an extra £206 per year in rent.” Generation Rent said that Government

measures to force letting agents to publish their fees had not been wholly successful. They found that one agent in eight were still not publishing fees on their website two years after the law had been changed. | HMM July 2017 | 15

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