RSLs are warned against urge to merge

2 Jun 05
Housing associations have been warned not to rush into mergers solely to win grants to build new homes.

03 June 2005

Housing associations have been warned not to rush into mergers solely to win grants to build new homes.

The Housing Corporation, which approves mergers of registered social landlords, is afraid that some are planning to merge to increase their prospects of inclusion in development programmes, which are being concentrated on larger associations.

Although merger activity has been relatively modest in the past few years, more RSLs are now considering group structures – partly to improve efficiency in line with the Gershon review.

One of the largest could involve Amicus and Horizon housing groups, both already among the corporation's preferred development partners, linking up to form a new RSL with more than 28,000 homes in the Southeast.

In a letter sent to the 600 largest RSLs on May 25, Housing Corporation chair Peter Dixon said associations must demonstrate that any merger would improve services, provide efficiency savings and lead to simple and straightforward governance.

'We do not have a preferred size or style of organisation, but we do have clear expectations about the outcomes of merger activity and in particular about the effect on organisational efficiency,' he said.

'Boards need to take a leadership role, ensure that [their] management's plans stand up and are going to lead to better services for tenants and greater organisational effectiveness.'

The corporation is responsible for regulating more than 2,000 RSLs, some of which own only a few properties. Last year, 70 associations won the lion's share of its £3.3bn approved development programme.

Ministers have been arguing for rationalisation for the past five years, mainly on efficiency grounds. Liverpool-based Arena Housing Group, created in 2001 following a merger between the Liver and Grosvenor housing associations, has saved about £2m in reduced administration and other central costs.

A National Housing Federation spokesman said the government should not encourage further consolidation in the sector simply for the sake of increasing efficiency.

'Mergers and other partnering arrangements have a vital role in helping many housing associations to work more efficiently,' he said. 'But there is a role and need for all types of associations to serve different sections of the community.'

PFjun2005

Did you enjoy this article?

AddToAny

Top