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New social housing association seeks contractors

Genesis and Thames Valley Housing (TVH) will form new partnerships with contractors as they look to scale up as a merged organisation, the TVH chief executive has said.

Geeta Nanda said the new organisation would need “new as well as existing partnerships” in order to deliver an uptick in housing delivery.

The new company has committed to building 3,000 new homes a year from 2019; 600 more than Genesis and TVH would have delivered as standalone companies.

“One of the first things we will be doing is looking at where and what we will be building and how we are going to be doing that,” Ms Nanda said.

“We will be looking at what we can do through existing frameworks and what new partnerships we will need to have in order to deliver that, because we will need new as well as existing partnerships.

“We’ve got what’s right for what we are currently doing, but if we are scaling it up we are going to have to have some new partners.”

Genesis chief executive Neil Hadden added that the new company’s target of 3,000 homes would be reviewed periodically.

An outline business case has been agreed by the two boards, with the deal subject to the approval of a full business case, to be produced over the next three months.

Genesis surprised the housing association sector earlier this year when it announced it would no longer build housing for affordable or social rent.

At the time, it said this was in response to measures introduced by George Osborne’s post-election budget, including a 1% reduction in social rent.

Mr Haddden said Genesis was still committed to “some affordable and social rent schemes”, but added that both companies had a long history of delivering shared ownership and market-rent schemes and as such “will be able to build on that success”.

Out of the 3,000 new homes promised, 1,800 will be classed as affordable, which will include 1,200 shared-ownership properties and 600 homes for affordable rent.

On the decision to merge, Mr Hadden said that despite being in talks prior to the Chancellor’s budget announcement, the policy changes were an “important backdrop” to the discussions.

Ms Nanda added: “Each time every [policy] change came along it made more and more sense [to merge].

“It’s going to get tougher and organisations need to be more efficient; the ability to have a grant is diminishing so it became a stronger case.”

London First head of housing Jonathan Seager said the move was an “inevitable outcome of the environment impacting [housing associations’] business models”.

He said the government’s more “intrusive view” on certain regulations, including its extension of Right to Buy, meant housing associations were being forced to think about how they could deliver more homes efficiently.

“If housing associations are being forced to try and deliver more new homes, and they are facing a complex and uncertain regulatory environment as well as 1% cuts in rents, then you can see the reasons that are pushing people to think about mergers.”

Policy Exchange head of housing, planning and urban policy Chris Walker and said “tens of thousands” of new homes could be delivered if more housing associations merged.

He added: “We want to see more mergers and consolidation in the sector [because] it’s absolutely pivotal in driving more efficiencies there, particularly in driving down cost and helping the sector to asset manage more effectively across the piece.”

The move comes after the Office for National Statistics reclassified housing associations as public bodies, adding £60bn of debt to the government’s balance sheet.

Mr Walker said the government will move “fairly swiftly” to get it back off their book, through deregulation.