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An alternative to the merger code

Posted by Zosia Katnik, on 05 May 2016

When considering how we would interpret the Merger Code, there were two significant areas that we hoped to see shine through, which would be vital to community-based housing associations such as ours. There was the expectation that it would deliver what customers want, and also how a merger would align with our purpose. These are the fundamental issues for us as a recent stock transfer that was voted for because of the unique offer we made to making a difference locally. Knowing your numbers is essential – we know that the size of an organisation doesn’t dictate how efficient and cost effective you are, but understanding that enables you to assess the real and deliverable financial benefits of a merger and how this translates into customer benefit.

We weren’t alone in thinking that something was missing and that capturing this approach to local need and individual social conscience would be essential in giving us flexibility to suit our individual purpose. To that end, Red Kite decided to work together with other locally based Housing Associations and Tpas to commission the guide. It’s reassuring to work in partnership with those who are as passionate about their customers and social purpose as we are. It is an acknowledgement that being true to your purpose is more than a commercial assessment of alternative proposals. Our intentions are based on charitable principles that are not about taking all decisions to maximise profit but are rooted firmly in the local community. We will not follow some in the sector that have abandoned these principles and values, and we need to make sure that recent changes to Government housing policy are not detrimental to our social purpose, but sympathetic and deliverable alongside what we see as our core reason for being. We are determined that Government policy change that refocuses spending on their own priority areas doesn’t deter us from focusing our efforts to help those who need truly affordable housing. We are willing to be creative to deliver the best outcomes for our customers and the objectives of the sector, and as an independent business we must be allowed to operate as such, as does the rest of the charitable sector.

Merging for the sake of giving leverage to another widely geographically spread organisation that is not able to borrow against its own assets, to develop outside of our community is neither attractive, nor does it advance our objectives of providing affordable homes that our community needs. Likewise, only developing homes that achieve a high rate of return, does not meet the needs of those on the lowest incomes, who need a subsidised rent. Redeveloping areas in a way that drives out local people, is not regeneration, but it might generate a greater financial return that some seem to value over their communities. We are here because our customers voted for something different and we are delivering it, regardless of the challenges we face.

We believe in standing up and being counted in line with our values and mission. There are better ways of radically changing our sector for the better, and our sincere hope is that the Government focuses more on what could be achieved by allowing people to choose their landlord, who they connect with and who helps them to reach their potential.

Doing so would allow well run and community-focused organisations to compete against the large and increasingly faceless national providers for customers based on good old fashioned service, cost and trust. For many of our customers, it is not just about themselves, but they are also worried about where future generations live and therefore, their community and the availability of affordable housing options are really important. We are a young organisation but our brand is growing stronger day by day as our community sees and values our purpose. Mergers have their place, absolutely, but for an organisation such as ours which exists for local people, they can only truly work if they further the aspirations and needs of our shareholding members, customers and our local communities.

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Red Kite Community Housing, Windsor Court, Kingsmead Business Park, High Wycombe, HP11 1JU

Red Kite Community Housing is a charitable registered society which operates for the benefit of the community under the Cooperative and Community Benefit Societies Act 2014. VAT registration number 123147939.