Inside Housing – Insight – Housing Week: the desire to merge

Hello.

When the COVID-19 pandemic hit the UK in March 2020, for most associations it was a matter of battening down the hatches and hoping they could ride out the storm. The idea of ​​mergers has taken a back seat.

But with the country slowly emerging from the pandemic era (fingers crossed) and lockdowns a thing of the past (fingers crossed), mergers are back on the cards. Specifically, the mega-merger is back on the cards.

And this week the latest was revealed, with news that Southern and Optivo had entered merger talks to create a 77,000-unit landlord.

And these talks do not seem to be in their infancy. The two organizations have already defined what the senior team will look like in the new expanded organization, with Paul Hackett taking the place of chief executive. It could end as early as December.

This is one of many mega-mergers, or quasi-deals, that have taken place in recent months. The merger between Peabody and Catalyst is the largest, with the expanded organization owning 104,000 homes.

Southern was also nearly embroiled in the most mega-merger of all mega-mergers last year when it considered partnering with Sanctuary to create a 120,000-home landlord, which would have been the largest. The talks eventually broke down, but all of these agreements point to a consolidation of the social housing sector.

Whether it’s because larger balance sheets give organizations a better chance of weathering financial storms, or because these huge associations generally believe they can provide better customer service as behemoths, it’s a trend that could continue.

This week also brought us the spring declaration. With events in Ukraine dominating the news cycle, there were very few details on what to expect, and almost nothing on housing. And the Chancellor’s statement was probably more meaningful to the sector in terms of what it didn’t say than what it did.

Of all the announcements, only two were really about housing. From now on, VAT will be reduced for homeowners on all materials used to renovate homes, and there will be an extra £500m for councils to go towards the Household Support Fund, taking it to £1bn books.

However, despite the stark reality that benefits will rise by 3.1% next year, alongside inflation of 8%, there was very little help in there for the country’s poorest people. The Local Housing Allowance remains frozen, the Universal Credit does not increase, while energy bills and the cost of living will increase. All of this is well covered in this blog by our columnist Jules Birch.

The Office for Budget Responsibility has said Britain will see the biggest drop in living standards since the 1950s and tenants of social housing could be hit the hardest.

And many are already facing an abrupt end, as Lucie Heath’s extensive investigation into temporary accommodation conditions shows.

Not only did she find that one in five B&Bs in London used for temporary accommodation have Category 1 risks, but this is backed up by some truly heartbreaking testimonials. Well worth a read.

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