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HCA seeks big players to rescue strugglers
The English social housing regulator is seeking out associations which would be willing and able to take over other landlords if they struggle due to the Budget changes.
The Homes and Communities Agency (HCA) is involved in discussions with a number of landlords about how recent policies, particularly the 1% annual reduction in social rents, will affect their finances and development plans.
As part of these discussions, the HCA is asking providers if they could in principle step in to take over a provider in trouble. It is also going back to associations which have previously indicated they could help to see if they are still able to do so.
The HCA initially estimated, based on financial returns and accounts, that around one in three of the largest 250 housing associations in England may run into difficulties due to the Budget changes. Inside Housing understands this has been revised to a smaller number following reassurances given by landlords to the HCA.
Jonathan Walters, deputy director of strategy and performance at the HCA, said: “We want to talk to providers who may be willing to step in.”
If an association looks likely to get into trouble – by, for example, running short of liquidity, or is in danger of breaching lending agreements – it is up to associations in the first instance to find a solution, including a rescue partner if necessary.
The HCA can, however, help organisations informally to find merger partners and does have statutory powers to force mergers in some specific circumstances.
The HCA last month set all 255 associations with 1,000 homes or more an October deadline to submit fresh information about their finances to the regulator in the wake of the government’s rent reduction announcement.
Julian Ashby, chair of the HCA regulation committee, last Friday also wrote to all landlords owning fewer than 1,000 homes each, warning them to tell the regulator immediately if they think they cannot cope. Mr Ashby said some landlords “may conclude that an independent future is no longer possible and seek a merger partner”.
Bjorn Howard, chief executive of Aster Group, said Aster would be in the group of organisations prepared to look at takeovers, but said it would not agree to any deal that would be a “drain on Aster’s business plan”.
