A shocked anti-merger meeting at Portcullis House on 11th January heard that the proposed Genesis/Notting Hill Housing merger may involve breaking corporate law.
On 16th January, executives of Genesis and Notting Hill Housing will try to force through a merger of the two organisations to form a mega housing association with new governing rules. The proposed rule changes would mean that the merged housing association would downgrade social housing aims, position profit seeking upfront, and give greater power to the board and less power to shareholders.
A bigger organisation – with downgraded social housing aims – would be able to borrow more from the banks to build more market-priced housing. That would be a win-win situation for the merged housing association’s executives (higher salaries, more kudos) and for the banks. Residents, meanwhile, would face less accountable services, more inefficiency and the continued loss of socially rented homes.
But the merger is only half the story. Changing the rules that govern the organization is where the alleged law breaking comes in.
The committee campaigning against the merger have sent a letter before action to both housing associations about the vote on the merger that both housing associations’ shareholders are taking at separate meetings on 16th January. This means that legal proceedings have been started against Genesis and Notting Hill Housing.
In their letter before action under the Pre-Action Protocol for Judicial Review proceedings, residents claim that Genesis and Notting Hill Housing have not carried out consultation with residents fairly or properly, have not made it clear to shareholders how the rules would change, and will be acting ultra vires if the 16th January shareholder meetings try to change the two housing associations’ rules without voting on a number of rule changes on a rule by rule basis, as is required under their current rules.
Ultra vires means acting outside of the legal power an organization has. Genesis and Notting Hill Housing agendas for the 16th January meetings propose a single vote (requiring a two-thirds majority) on a single resolution which includes a number of rule changes. But Notting Hill Housing’s and Genesis’ current rules make it clear that amendments to rules must be notified in advance and changes to some rules require a three quarters majority and other rule changes a two thirds majority.
The CEO-designate of a merged Genesis and NHH, Kate Davies, admitted last week that a merged housing association would have no commitment to end the practice of ‘converting’ socially rented homes (when a tenant leaves, for example) to so-called affordable homes where tenants can be charged up to 80% of market rent. According to the 5 year development plans of the two housing associations, a mere 6% of Genesis new builds will be social rented housing, and 12% of Notting Hill Housing’s. This is not enough, based on past evidence to offset the disposal of existing social rented homes. There is no indication that the any of the 400 additional new builds promised after a merger would be social rented housing.
UK homes have become assets at the high end of the market – or, often, at the low/mortgage end, collateral for getting into ever greater debt – especially in London, especially in super-valuable parts of London like Kensington. So it’s no mystery that Notting Hill Housing, the housing association that’s creaming profits off Southwark’s Aylesbury Estate regeneration, should want to merge with debt-ridden Genesis. Notting Hill Housing appear to be happy to expand their asset base however they can, even though their lenders, RBS and Nationwide, are said to be nervous.
A merged Genesis and NHH, it is claimed, would be the country’s top provider of homes for shared ownership – at £2,000 pm rent and a qualifying income of between £81,000 and £90,000 pa. Truly in the financialised housing world, size matters.