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Why we merged with a larger housing association

Kevin Hodder, chief executive of
‚ÄčEast Boro Housing Trust recently spoke to Inside Housing to discuss the value of our mutual partnership and why it’s been essential during the pandemic.

 

 

 

 

"I can understand the nervousness that some will feel over the prospect of losing their own identity and voice. But to make merging a success, small and larger acquisitive associations need to remember that partnerships work best when they are equal.

To make merging a success, small and larger acquisitive associations need to remember that partnerships work best when they are equal.

 

"It’s often the case in times of economic hardship that smaller businesses suffer first and most acutely. This is just as likely to be true for the social housing sector during the coronavirus pandemic as it has been for any industry at any other time. On the face of it, social housing is in a better position than the rest of the housing industry to weather the storm. Operating multiple tenures means we can pivot more easily – reducing a reliance on open-market sale if that part of the market stalls, for example. The need for our services inevitably increases during a downturn as well. But this resilience is far less applicable when you consider the hundreds of housing associations across the UK that own and manage less than 1,000 properties. While they still face the same economic challenges as their larger peers, they don’t necessarily have the resources, and therefore the versatility and flexibility to absorb the financial and operational impact.

 

"Due to their size, it’s easy for smaller housing associations to go under the radar, but together they add up to a huge number of affordable homes and an even larger number of tenants in vital need of continued housing support. As housing minister Christopher Pincher pointed out at a recent conference for smaller registered providers, small and medium-sized housing associations are “fundamental to making the recovery a success”. I couldn’t agree more. Not only do small associations make up a huge proportion of the UK’s affordable housing provision, they also bring a very different experience to the table than the industry’s larger players.

 

"The nation’s housing need is actually a huge collection of very different, very specific local requirements – be it higher demand for later-life care in a small village with an ageing population or the need of more Starter Homes in a London-adjacent commuter town. Smaller housing associations are often better placed to understand and respond quickly to these needs, rather than larger associations, which have tens or even hundreds of thousands of tenants across the country, because they have a closer, more direct relationship with their customers. It’s this tighter bond with customers and communities that has, I believe, made the expertise of smaller organisations vital during the pandemic. This is because the challenges created by COVID-19 have required far more regular and tailored communication and co-operation between housing associations and the people living in their homes.

 

"By sheer coincidence, the start of the first lockdown in March last year coincided with the completion of East Boro’s partnership agreement with 32,000-home Aster Group. The partnership, planning for which started in early 2019, is intended to increase both organisations’ capacity to deliver new homes and to expand and enhance the services offered through pooling skills, resources and expertise. With the support of the group structure, East Boro’s modest development programme, which used to deliver 10 to 15 homes a year, will now build almost 250 over the next five years. The identity of both Aster and east Boro will be essential to the overall group’s growth after the pandemic, in responding to shifting customer demand and in offereing a broader range of services in the long term.Enabling growth was a big incentive for the partnership, for both parties. Just by refinancing with Aster’s terms, East Boro will be able to deliver more than 40 additional homes over the next 12 to 15 months without incurring any extra interest costs. This is a huge boost to the future business plan as well as providing desperately needed new homes for customers.

 

"Is that not what we as housing associations, irrespective of our size, are here to do? Likewise, East Boro has taken forward smaller projects that the larger group would not have been able to and delivered supported housing projects that previously sat outside Aster’s areas of expertise. Added to this is the local knowledge and relationships with regional government, landowners and contractors that will help Aster deliver on its ambitions for growth.

 

"While these synergies alone have demonstrated the value of partnership, the relationship has really come into its own in a different way during the pandemic. The financial stability that comes with being part of a larger group is an obvious point, but there are also mutual benefits when it comes to sharing risk, security and access to central services. For example, all of East Boro’s employees receive a range of health and well-being benefits which have been essential to managing the mental and physical stresses of the pandemic. An enhanced digital offer, which would not have been cost-effective for a small association to deploy, offers customers easier and more numerous ways to talk to their housing provider.

 

"Additional maintenance, housing and communications support from the group have also all been vital to delivering essential services safely and in line with regularly changing government advice. East Boro’s specialisms in care and support meant we were arguably better suited to delivering services in more challenging conditions, making our input into how the group supports its customers extremely beneficial. As we move forward, and look to life once the virus becomes more manageable, the identity of both Aster and East Boro will be essential to the overall group’s growth after the pandemic, in responding to shifting customer demand and in offering a broader range of services in the long term.

 

"Our partnership with Aster is working because both parties have a say in how it moves forward. We both retain our identity, history and ethos (East Boro has a 60-year legacy in Dorset so keeping our brand is vital) while crafting a formal relationship that benefits both organisations. As a result, we are now far better placed to meet the challenges ahead and improve our offering to customers without all of our development capital being consumed by investment in our existing homes and services.

 

"Today’s environment is hard for small associations. With huge challenges right across the board, including evolving customer and colleague expectations, zero-carbon requirements and increased regulation, the economic impact of the pandemic will only add to this and, consequently, joining a larger group may well be on the mind of many smaller registered providers. I can understand the nervousness that some will feel over the prospect of losing their own identity and voice. What I would say to all small and larger acquisitive associations is that partnerships work best when they are equal. We have done it, and because of the way the agreement is constructed, we have lost nothing but gained a huge amount."

 

Kevin Hodder, chief executive, East Boro

 

Date Posted: Monday 8th March 2021 @ 10:48