Business

Peabody and Family Mosaic housing associations to merge

Aerial view of new Peabody site Image copyright Peabody Trust
Image caption Peabody is building new homes on this site at Archway, north London

Housing associations Peabody Trust and Family Mosaic are to merge in a deal giving them combined assets worth £6bn.

The merged group, to be called Peabody, will be caretaker for more than 55,000 homes across London and the South East.

Peabody chief executive Stephen Howlett will retire, with Family Mosaic's Brendan Sarsfield taking the helm.

Lord Kerslake, Peabody's chairman who will remain in-post, said the combined group will be able to achieve more "together than we could achieve alone".

Housing associations are non-profit organisations providing social housing, with any surplus money used for maintenance of properties.

The sector is undergoing a transformation after the government launched a voluntary right-to-buy scheme for housing association tenants. The first sales under the policy took place in September.

The scheme builds on a policy introduced by the Tories in the 1980s, which allowed council house tenants to buy their homes. This proved hugely popular, but has been blamed for contributing to the lack of affordable housing.

Ministers have promised that each house sold under the new system will be replaced on a one-for-one basis, although there are still question marks over how the policy will be refunded and properties replaced.

Image copyright Getty Images

The government has also imposed annual rental cuts of 1% a year on housing association tenants. A larger, merged group should have better access to financing and resources to build more homes. Peabody is involved in big regeneration plans for Thamesmead in east London.

Last week Affinity Sutton and Circle Housing Group merged to become the largest housing association in the UK, and one of the largest housebuilders. It aims to build 50,000 new homes in the next 10 years.

Sir Robin Young, chairman of Clarion Housing, said that by "combining forces" it was rising to the government's challenge that housing associations "deliver more for less".

Also on Wednesday, the L&Q and East Thames associations announced the completion of their merger and details of a £2.6bn financing package to fund the building of new homes.

More mergers between the UK's 1,500 housing associations look likely.

Due to be completed in July 2017, the latest deal will bring together London-based Family Mosaic's portfolio of 26,000 homes across London, Essex and the South East with Peabody's 29,000 homes in London. The new Peabody will have 111,000 residents.

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