By Alistair McIntosh, HQN CEO

It’s no surprise that some housing associations are looking to merge. They find themselves stuck in a pincer movement with costs rising while income is falling. You can read all about the details in our briefing paper. In any situation like this some organisations are in a better position than others. Inevitably, the weaker associations are asking the stronger ones to take over. But the two parties can’t just shake on it in a boardroom. It takes tenants to tango.

The regulator says you must consult tenants and listen to their views before signing on the dotted line. What’s more, the regulator is beefing up its standards here. Now they are telling associations to start talking to tenants at a “formative stage”. What does that mean? Let’s open up the dictionary. The word formative is about having a profound and lasting influence. So, the regulator is setting the bar high here.

What sort of questions should tenants ask? Here are a few of the points I would raise with the board if I was in their shoes.

Why are you asking us to say yes to a merger? What’s wrong with our association? Why does it have no future? Did the board make any mistakes that led us to this? Is there any other solution to the problem?

How did you pick the association for us to join? Are their tenants happy? Can we see their latest data for satisfaction? Do they comply fully with all the rules on safety? Do they meet all the regulatory standards? How do you know?  What’s their track record of ombudsman decisions? Can we see the due diligence reports on service quality?

Are we going to go through all this again in a few years? How strong are the finances of the association you’ve chosen? Are you certain nothing will come out to jeopardise the deal down the line? Can we see the financial due diligence reports?

The ombudsman has been critical of the treatment of tenants after the disruption of a merger. Can you guarantee that this won’t happen here?

Is there an independent advisor to help the tenants make sense of the deal? Who chose them and why? Did tenants have a say in who got the job? What mergers has the advisor worked on? Are services for tenants better? Do the satisfaction rates and ombudsman decisions bear this out? How independent is the advisor? Do they work for a firm that plays any other role in the merger?

What are the pros and cons of the merger on the table? The regulator’s new standards expect landlords to “set out actual or potential advantages and disadvantages (including costs) to tenants in the immediate and longer term”. What’s the track record of other local mergers?

The government wants to boost standards of service in social housing. That’s why they are bringing in Ofsted-style inspections. Will the newly merged association pass such an inspection? What happens if it doesn’t? Do we need to look for yet another merger partner to get us out of the woods?

I’m not coming at this from an ivory tower. Yes, I’ve worked on controversial mergers when there was no other way out of the problems. But we must treat tenants like adults. Tenants need to go into mergers with their eyes wide open. Let’s give them the facts they need to judge the case on its merits. Any reasonable person in any walk of life will be sceptical if a deal seems too good to be true. So, my advice to the advisors is to be open about the risks and take the time to think through plausible safeguards.