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'No link between large landlords and efficiency'

There is no clear link between the size of housing associations and lower running costs, a major report by the English social housing regulator has said.

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The Homes and Communities Agency (HCA) yesterday published a report examining the differences in operating costs between the 350 largest landlords in the English housing association sector.

Its report Delivering better value for money: understanding differences in unit costs, found “there was no significant evidence of a clear relationship between scale of a provider and lower costs”.

The HCA’s finding comes amid unprecedented merger activity in the housing sector, with landlords looking to combine operations in order to gain efficiencies.

On Tuesday, Sanctuary Group and Housing & Care 21 announced they are planning to merge, and combine all of their elderly-specialist housing operations into one 32,000-home subsidiary. They said the efficiencies gained would allow them to double development1 combined 800 affordable rent homes for older people a year.

The HCA found several other factors that affect housing associations’ costs per home.

Levels of supported housing, regional wages, the extra costs associated with stock transfers and older people’s housing were highlighted as factors that could drastically increase housing associations’ costs.

According to the report, just 50% of housing associations’ differences in costs could be explained by factors including the level of supported housing. However, around half of the cost differences were left unexplained.

Julian Ashby, chair of the regulation committee at the HCA, said in a letter to chairs yesterday this level of unexplained variation must “at least in part” be due to differences in efficiency.

Other factors, such as involvement in non-social housing activity and geographical dispersal of stock, had no statistically significant effect on landlords’ costs.

The HCA said median average costs per unit had fallen slightly to £3,550 over five years. It found the lower quartile cost was £3,200, while the upper quartile cost was £4,300. A minority of landlords – mostly Supporting People providers – had costs of more than £10,000.

Fiona McGregor, executive director of regulation at the HCA, said in January: “The sector has got some serious questions ask itself about just dismissing mergers out of hand.”

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