Circle and Affinity Sutton to create a 127,000 homes association

Affinity Sutton and Circle Housing are discussing joining forces to create the largest housing association in Europe, which could ‘set the agenda’ for change in the sector.

In a joint statement to Inside Housing, the organisations said the cut to social rents in the recent budget had provided a ‘catalyst’ for organisations to consider consolidation.

The new landlord would own 5% of homes in the housing association sector, house 500,000 people and turnover £650m annually producing a surplus of £120m, based on the most recent published accounts.

A joint document setting out the ‘vision’ for the new organisation, says the new organisation could have capacity to build 20,000 new homes in just five years.It set out plans to ‘roll out an investment programme in all major cities’.

However, the plans outlined in this document, are understood to have come at a very early stage in the discussions, and will have to be reviewed in the light of the many policy changes announced by the government since, including the rent reduction and Right to Buy extension to housing associations.

The document said the new organisation could consolidate by selling off stock in 100 local authority areas where it owns fewer than 500 homes to other social landlords.

This would raise an estimated £1bn, which would help kick-off the ambitious development programme, it said. The document said: ‘Only the initiative of individual associations will drive better value, greater capacity and enhanced output.’ It said regulatory action ‘has had barely any impact’ on consolidation in the sector.

Keith Exford, chief executive of 57,000-home Affinity Sutton, added: ‘[Following the budget] both organisations are reviewing their business plans. As part of this we are also jointly exploring if we could raise significantly more capital together, allowing us to fund a far greater building programme than we could if we stay apart.’