Three of the North-East’s leading social landlords have announced plans to merge together to form one region-wide organisation with more than 23,000 homes.
Isos Housing, based in Newcastle, and group partner Cestria Community Housing, are finalising a merger with Derwentside Homes, based in Stanley, County Durham.
Having secured conditional approval from their regulator, the Homes & Communities Agency (HCA), the landlords will start trading as one organisation this April.
The partners plan to leverage their combined scale to ramp up their already sizeable development capacity to build more homes of all tenures for the North East.
The new group would become one of the top three housing associations in the North East, and one of the largest businesses of any kind in the region.
In total, the three landlords already own and manage over 23,500 homes across the North East and together they would generate turnover of over £114m per annum.
Combining the recent HCA grant allocations for Isos, Cestria and Derwentside would mean the enlarged group was managing one of the largest allocations of any landlord nationwide.
This would add up to more than £42m of HCA funding, to enable the building of more than 1,350 homes in the next five years.
To reflect that a new organisation is being formed to own and manage all three landlords’ homes and services, a new name is being chosen and will be announced within weeks.
The partners say they are keen to benefit from working more closely together, and to explore new ideas for improving and delivering their services.
The merger talks have taken place over several months, followed by a period of consultation with all the landlords’ residents.
All parties have made rigorous legal and financial checks before confirming their commitment to the merger process. Each association also needs to hold a Special General Meeting before the end of February, to seek the formal approval of their shareholders.
They will also be consulting with their lenders, to seek approval of the arrangements for the new landlord, and then requesting final approval from the Homes and Communities Agency.
They calculate that the proposed merger, under one organisation with a new brand, would deliver minimum net savings of £3m per annum from the fourth year of the new organisation operating.
The partners are confident that the larger organisation would deliver significant benefits for customers and staff while providing stability for all the constituent partners in a turbulent period for the housing association sector.
Paul Fiddaman, group chief executive of Isos Housing Group, said:
“We believe that this move will establish us as a strong regional organisation, positioning us as a natural partner for delivering housing solutions for the North East region.
“This is a hugely exciting opportunity. It is clear that we are like-minded organisations, with a great deal in common and many complementary strengths.
“Coming together will further raise our presence and profile, building on the successful partnership between Isos and Cestria.”
Isos Housing Group has always been ambitious to grow larger, to maximise efficiencies, and growth forms a key aspect of the group’s Strategic Plan, to enable Isos to position itself for success in the fast changing economic and political environment. The new landlord will remain ambitious to grow further, as opportunities arise.
Geraldine Kay, chief executive of Derwentside Homes, said: “Derwentside Homes were keen to select a partner that shared our ambitions to co-create a new and exciting future. Together with Isos Housing Group, we will be much stronger to not only weather the many challenges ahead but to seize new opportunities so that we continue to deliver innovative housing solutions and services and build on our collective success.”
The partners are keen for the new organisation to harness the success of Derwentside Homes in developing innovative market rent products through its commercial arm called Prince Bishops Homes.
There is also a great appetite to benefit from Isos’ expertise in a range of corporate services, and from the opportunities presented by Isos Complete Support, the group’s innovative cost sharing vehicle.
The next stage of the proposed merger involves the partners working up their new structure and appointing the new organisation’s executive team.