The significance of the merger between Trafford Housing Trust and London & Quadrant should not be underestimated, writes Victoria Jardine
FOLLOWING a three-year courtship, the deal – which sees Trafford Housing Trust (THT) become a wholly owned subsidiary of London & Quadrant (L&Q) – will drive increased investment and create 20,000 new homes across the North West.
The merger arrives at a critical time for the region, with major cities such as Manchester experiencing rising rents and house prices. Recent data from the Royal Society of Arts, Manufactures & Commerce, commissioned by One Manchester, revealed that house prices in Manchester have quadrupled over the past 20 years – hitting unattainable levels.
Responsible for pioneering an approach centred on attracting city-centre investment, Manchester City Council has brought forward a number of regeneration projects. However, this focus has compounded a drop in the supply and quality of affordable homes, a problem replicated across the North West, with only 14,000 affordable homes built between 2015 and the beginning of 2019, compared to the 42,600 forecasted as needed.
One reason for the current challenges in the North West is the historic levels of underfunding for social housing development. While absorbing most of the media attention for its housing shortages, the South East and London continue to receive the highest levels of spending, causing regional imbalances.
A turning point for bringing investment out of the capital, the merger between L&Q and Trafford will unlock £4 billion for the development of market-rate and social housing in the North West. This will bolster the delivery of new homes and support upgrading existing premises.
L&Q has committed to working with Trafford to improve the quality of Trafford’s housing stock to meet its Home Standard – including an initiative launched for vacant properties to improve the condition of homes before tenants move in.
However, while the headline benefits of the merger are clear, further analysis is needed to understand what makes this deal more than a shot in the arm for housing in the North West.
At the centre of the debate is the fact that the merger is the result of an existing relationship. Rather than rapid expansion, it will see L&Q and Trafford build on the success of their North West joint venture, which has already facilitated 679 housing starts, with an additional 1,493 on the way.
The joint-venture model has allowed L&Q and Trafford to meet their social purpose commitments by creating new homes, at the same time as building the trust needed to sustain a more long-term relationship.
A natural evolution, the merger is due to a strong cultural fit, with both associations bringing valuable skills to the partnership. Trafford boasts an unrivalled knowledge of the region’s market, which is crucial for L&Q as it could not hope to replicate its South-East housing model in the North West.
The opportunity to tap into L&Q’s financial strength will be an equally valuable return for Trafford. When combined, this will allow both organisations to scale development, bringing much needed new homes to the region. For the merger to be truly successful though, it must not only deliver volume but a variety of housing types.
Trafford’s ties to the region’s existing communities mean that it is well placed to guide the build strategy to meet local needs. This includes creating mixed-tenure developments, providing a range of affordable and market-rate housing.
Trafford is known for maintaining close relationships with its landlords and tenants, which will be key in sustainably cultivating neighbourhoods – boosting resident satisfaction and stable revenue streams.
As well as new development and investment in existing stock, community investment will also see a significant boost from the merger, with L&Q matching Trafford’s £2 million annual investment to take it to £4 million. This will be used to fund projects that bring significant benefits to Trafford’s, now L&Q’s, communities in the North West.
An example of this is Trafford’s commitment to opening an academy, based on one operated by L&Q, offering its customers and staff training and employment opportunities.
While becoming a subsidiary of L&Q, Trafford will retain autonomy in key areas. The appointment of Trafford’s chairman, Edna Robinson, to L&Q’s group board indicates the important role the North West organisation will play in shaping future strategy.
By embracing collaboration and showing willingness to learn from each other, both L&Q and Trafford are poised to have a transformational impact in the North West.
This is not to say that alone the merger will solve the region’s housing crisis, but it will add to the impetus already shown by partnerships such as the Greater Manchester Housing Providers – a group of housing associations and arm’s-length management organisations uniting to increase the housing supply across Manchester.
As the market continues to feel the impact of political and economic uncertainty, now is the time for other social housing providers to recognise the power of collaborative working.
Whether achieved through a merger, joint venture or informal arrangement, partnerships represent an effective way to access new land, skills or finances.
These are key factors that in the long term will allow providers to maintain growth and meet their social purpose commitments, providing quality homes for people not only in the North West, but across the UK.
Victoria Jardine is a partner at Anthony Collins Solicitors. She acted for Trafford Housing Trust on its merger with L&Q