A total of 14 mergers between housing associations were completed in the last year* as the sector continues its consolidation, says New Street Consulting Group, the leadership and people solutions consultancy.
The UK still has more than 1,600 social housing providers**, suggesting that there is significant scope for the sector to further consolidate and cut costs.
By becoming a bigger organisation, housing associations can increase their ‘borrowing power’ enabling them to build more homes which is critical due to the continued housing crisis.
Two other key drivers for mergers in the coming years are likely to include the costs of complying with the 2019-20 Building Safety Bill, which involves improving fire safety standards and employing building safety officers, as well as the costs of making property portfolios carbon neutral by 2050.
There is also an opportunity for housing associations to increase their overall efficiency once they have merged through economies of scale. Those administrative savings can then be reinvested into frontline services for vulnerable customers in need, as well as, better digital services such as allowing customers to pay their rent online.
Sarah Stevenson, Director at New Street Consulting Group, said: “Housing associations have continued to merge at a steady pace through the pandemic and there are likely even more to come in 2021.
“Merging housing associations can create very large organisations and as a result, their operations are much more complex. A key part of optimising the potential gains of a large social housing provider through mergers is investing in an expanded range of skills in the leadership team. Demand for senior executives with digital, customer and governance experience is very high at present.”
Once a merger takes place, housing associations often require additional skills and experience at non-executive board level to enable them to effectively run the new larger organisation. This is particularly true if they are changing their product or customer offer to become more commercial, which may increase the organisation’s risk profile.
Examples of housing associations mergers that look place in 2020 include:
- Windsor and District Housing Association merged to become part of Yarlington Housing Group in April 2020, which was previously involved in a merger with Radian Group in November 2019, one of South England’s largest housing associations
- Great Places Housing Group, established in April 2020 as a result of the merger between Great Places and Equity Housing Group, which manages over 24,000 homes
* Year end December 31 2020. Source: Regulator of Social Housing
** Includes local authorities. Source: Regulator of Social Housing
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