Merger could be the only way out for troubled housing association

Two housing associations are in talks to merge.

Arklet and Hanover Scotland say they have agreed to enter into detailed discussions about a partnership between the two organisations.

Merger talks come as Arklet continues under “high engagement” by the Scottish Housing Regulator which has appointed a manager and board members until the end of December 2018.

Intervention at the association began in February 2017 when the regulator used its statutory powers to “address serious weaknesses” in Arklet’s governance and financial management and that of its advice and support subsidiary Kol-Care.

The Renfrewshire-based group has developments in South Lanarkshire and Glasgow, owning and managing around 390 homes and factoring 41 properties with 13 staff.

Hanover, based in Edinburgh, manages more than 5,000 homes on more than 200 housing developments and employs over 500 staff.

Both will now begin the formal process of negotiation and due diligence before agreement is reached.

Mike Martin, chair of Hanover Scotland, said: “We are at the very beginning of this process but discussions to date have shown that the organisations share common aspirations and I am confident that together we can improve and grow.

“There is a lot of detailed work and due diligence to be done to ensure any partnership that does emerge is robust and sustainable.”

Iain Wallace, chair of Arklet Housing Association, said: “We are delighted that we have now entered formal discussions with Hanover Scotland regarding a possible partnership which will improve the range and value of services for our tenants.

"We are particularly grateful to the members of our tenants’ forum who have participated in the selection process and have represented the feelings of their fellow residents in a highly effective and constructive manner.”