Announcement of merger between Flagship Group and Bromford
Following an extensive consultation process with customers from both Flagship Group and Bromford, as well as careful consideration of the invaluable feedback, we are pleased to announce that the Boards of the two organisations have made the decision to proceed with the merger.
This decision comes after comprehensive due diligence was conducted, ensuring that the merger aligns with our shared vision, values, and commitment to delivering outstanding services. The process involved a thorough review of financial, operational, and strategic considerations, enabling both organisations to confirm that this partnership will result in a stronger, more resilient organisation, better equipped to meet the evolving needs of our customers.
Collectively we received responses from 1,396 customers. The feedback has helped the boards to understand what’s important to you, our customers and in turn shape the priorities for the new organisation.
Results of the consultation
Overall sentiment
Overall sentiment was 64% positive or neutral and 36% negative. Where results showed neutral sentiment, the comments focused on ensuring service was not impacted in a negative way rather than any strong negative feeling about the merger itself. The negative feedback largely reflected dissatisfaction with current services as opposed to the actual merger.
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Service/investment priorities
Maintaining and repairing homes emerged as the top priority, with 37% of respondents highlighting its importance. Investing in more kitchens, bathrooms and windows came next (19%) followed by building more homes (16%) and regeneration (12%). Energy efficiency was also important to some (9%), with several respondents viewing the merger as an opportunity to improve and create long-term savings and environmental benefits.
Themes
All the feedback from the customer consultation plays an important part in the plans that we put in place to move the organisation forward. We have categorised the feedback we received into themes and set out an action plan to ensure these are addressed.
Repairs and maintenance
Feedback raised the need for faster, better quality, first time fix repairs with better supporting communication.
We will maintain a focus on process efficiency and right first time performance to drive continuous improvement in repair services.
Communicating with customers
Respondents highlighted the need to make it easier to speak to someone to resolve issues, and improved communications with customers in every aspect - from service provisions, call answer times and listening to customer feedback and acting on it.
Initially we will focus on ensuring we have the right systems and processes in place, then we will look to enhance the end-to-end journey to ensure we improve the areas where our customers have told us are important to them. In addition, we will develop a seamless multi-channel experience, enabling you to contact us when and how they choose.
Acting on feedback
The responses in the customer consultation told us that you would like more involvement in decisions that impact you.
We will continue to include our customers in our service design and improvements and look at developing this further involving you in planning and managing your environment, providing opportunities for social interactions and community building as well as opportunities for paid and volunteer work.
Rent increases/ affordability
Some concerns were raised about rents increasing
Our rent increases will continue to follow government guidance. We want to provide truly affordable tenures combined with homes that are cost-effective to run.
Size and local feel
Some respondents felt that becoming a bigger organisation would create the impact of customers not being supported by the same colleagues they are today, losing the local feeling.
The Place Standard aims to improve local services and customise how they work with people. Customers and communities will still be able to connect with the same colleagues they know today.
Investing more in homes
Respondents expressed an importance in investing more in our homes
The merger will enable us to access more funding, enabling us to invest more in improving homes and ensuring they are energy efficient.
About the merger
A merger does not mean there's anything wrong. We both have strong ratings from the Regulator of Social Housing. This merger would enable both organisations to do even more. Working together we could attract better funding for vital services, combine our resources, and respond to the needs of our customers and communities.
Costs of the merger
The merger will involve colleague time and external advisor costs, however you will not incur a direct cost as a result of the merger. Any costs associated will be offset by the benefits of the merger.
The anticipated short-term costs of integration primarily include rebranding, potential systems integration, and alignment of operational processes. These are standard expenses in mergers but are not expected to significantly impact the financial standing of the new organisation.
Who are the external advisors?
The three main external advisors that have supported the pre-merger work are:
- Phillip Callan Associates, who are well-regarded advisors in the sector and have advised on the merger,
- Devonshires, who are a well-known legal firm and have provided advice on legal matters, and
- Centrus, who are a well-established treasury advisory and have advised on treasury and funding aspects.
We have also used other specialist advisors where required, for example, ISIO, who are a specialist pensions advisory firm and have provided pensions advice to support the pensions due diligence.
Voting on the merger decision
There will not be a formal customer vote held for the merger but your feedback has been incorporated into the business plan and was presented to both Boards before they made the final decision to approve the merger. The Regulator of Social Housing has also endorsed the merger.
When the merger will happen
The new group structure, which would be formed as part of the merger, will come into effect on 28 February.
Benefits of merging
Merging two strong organisations will give us better opportunities to access funding – an extra £1.9 billion over the next 15 years will be available to us through borrowing. That’s over £100 million invested each year in improving your homes, repairs and customer service, in ensuring existing homes are energy efficient, safe, and warm, and in regeneration and building new homes. It will give us the opportunity to become one of the largest developers of affordable homes in the UK.
We could deliver up to 2,000 homes a year for the next 30 years, half of which will be for social rent, delivering homes for those who need them most.
Bromford Flagship’s increased capacity would also provide the opportunity to create a new Homes, Place and Community Standard. Together, we would be able to focus on the what is needed for our neighbourhoods to be places where people want to live, and where you and your community can thrive.
The two main areas of financial saving both relate to the increased scale of the merged businesses and come from lower funding costs and savings from new-build and existing homes maintenance procurement.
Potential disadvantages of merging
Understandably the work involved in progressing a merger is time consuming and involves lots of our colleagues undertaking this additional work. This can risk other projects being delayed for a short period. However, we can assure you that we will try our best to keep disruption to a bare minimum.
You may have concerns about us becoming a larger landlord. We want to assure you that the merger would not affect our commitment to local accountability either. Our services will continue to be delivered in the same way and we will continue to listen to your views and reflect these in our future plans.
There will be a short-term immediate cost to integration, however this will unlock the ability to access additional spending in the longer term, this far exceeds the cost of integration.
We chose Bromford as a potential merger partner, in part, because they are committed to more locally responsive and accountable services. Newtide, Samphire, Victory and Flagship Homes customers will continue to receive a local service and have a voice on local matters.
Minimising the impact
The Housing Ombudsman has previously been critical of how other organisations treated customers after the disruption of a merger.
You are at the heart of our decision making. As we continue merger discussions, there will be no changes to the services you receive. The priority for both associations is to deliver great services and homes, and to keep improving this. Whilst we acknowledge there could be a small amount of disruption, we will continue to deliver the services you need throughout the merger process.
Regulation
The new group structure will be regulated by the Regulator of Social Housing. You would continue to have the right to raise complaints to the Housing Ombudsman and be protected by the standards set by the Regulator of Social Housing.
About Bromford
Bromford is a housing association with over 47,000 homes in Central and South West England, with their head office in Tewksbury. They employ over 1,800 colleagues, have a V1/G1 rating from the Regulator of Social Housing, a credit rating of A2 from Moody's and A+ from S&P.
Why we are considering a merger with Bromford
Here are some of the key things that make Bromford the right organisation for us to merge with:
• Bromford has a strong financial position. A merger will mean our combined position is even stronger.
• Bromford has a strong portfolio of affordable homes.
• Bromford’s purpose focuses on customers and place, just like us.
Through the financial assessment of the proposed merger, due diligence was done by both sides on the business model and financial position, which did not highlight any significant issues needing to be addressed before the merger takes place.
How Bromford’s customers rate them
You can find out more about the Bromford Tenant Satisfaction Measures on their website:
How the merger affects you
Your landlord
Your landlord will not change.
As a long-term business, we think and act long-term, and our financial planning reflects this. We do long-term planning every year, completing a 30-year business plan, as do all registered Housing Associations, as this is a regulatory requirement.
Your rent or service charge
Your rent and service charge will not change as a direct result of the merger. Your rent and service charge will continue to be reviewed each year in the same way they are now. Where you are a tenant, your current protections over how much your rent can increase by year on year (as set out by the Regulator of Social Housing) will continue.
Your tenancy agreement or lease
The merger will not affect your relationship with us as a customer. You will remain in your existing home and your landlord will not change as a result of the merger – it will just be part of a wider group structure. We will continue to honour the terms of your existing tenancy agreement, or lease. Your rights and the terms of your current agreement will remain the same. If you’re a shared ownership or leasehold customer, you will not be affected, and the terms of your lease and your rights will remain the same.
Repairs and maintenance to your home
You will continue to contact us in the same way. Delivering quality services will continue to be a priority for us and we only expect you to see improvements in how we respond to repairs.
Shared owners and leaseholders will remain responsible for repairing and maintaining their homes unless there are agreements already in place for us to carry these out.
Roles of employees
You will have the same relationships with the same employees and there are no plans to change this. All telephone numbers will initially remain the same and you will continue to be able to contact us in the same way.
As we introduce improvements in the coming years, this may change, but we will make sure you know about any changes in advance.
There will be no adjustments to salaries of colleagues as a direct result of the merger.
If you’re in arrears
If you owe us money at the time the merger goes ahead (rent arrears, court costs, money for damage or a rechargeable repair), then these debts will stay with you, and we will still be able to enforce existing court judgements for these arrears. If you have concerns about arrears, then please contact us on 0808 169 9301
Housing Benefit and Universal Credit
Housing Benefit and Universal Credit claims will remain unchanged. Help and advice will continue to be given to customers or leaseholders about benefit entitlement and support for you if you are experiencing financial difficulties.
The Right to Buy and Right to Acquire
If you have the Right to Buy or Right to Acquire your home, you will continue to have that right. It will not be impacted by the merger.