OREANDA-NEWS. July 23, 2015. Two of the UK's largest housing associations, Circle Housing and Affinity Sutton, are in the very early stages of discussions about the potential to merge.  These two organisations are currently examining if consolidation would enable them to create a stronger business model, which would enable more new homes to be built and a greater investment in local communities.

If the discussions were to proceed further, this could potentially form one of Europe's largest housing associations with almost 127,000 properties which would be home to almost 500,000 people across England. 

The news comes in the context of an acute shortage of new housing in the UK. The country needs at least 200,000 new homes a year, and yet only 140,000 are being built. Furthermore, the recent Budget announcements provide a further catalyst for the sector to work more efficiently and consider consolidation as organisations seek ways to manage the impact of government reforms. 

In light of the significant reduction in Housing Association's rental income announced in the recent Budget, both organisations are now currently reviewing their business plans.  As part of this, the two organisations are jointly exploring if significantly more capital could be raised together, funding a greater building programme than would be possible through either individual organisation.

These discussions remain in very early stages and pre-date the repairs and governance issues raised by the HCA in their Regulatory Judgement dated 2 April 2015 which Circle Housing has been focussing on addressing.

Circle Housing's lenders and investors play a key role in the continued financial strength and security of the organisation, as well as any future growth plans, and will continue to be key partners for Circle Housing whether or not these initial discussions progress further.