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Can Consolidation Tackle the Affordable Housing Shortage?

We know that Wales faces significant challenges in meeting the demand for affordable housing, leading to long waiting lists and pressure on housing associations and local authorities. In the past two decades, Welsh housing associations have increasingly pursued consolidation as potential solution, hoping this strategy will strengthen their financial position, improve service delivery and address the growing demand for affordable housing. The trend towards consolidation began in 2008, with the transfer of housing stock from local councils to form Bron Afon (from Torfaen Council) and Cartefi Conwy (from Gwynedd), which later transferred stock to form Adra in 2010. The last year has seen a flurry of activity. In April 2024, Pobl Group (itself formed from the 2016 merger of Seren Group and Gwalia Group) merged with Linc Cymru and from 1st January 2026 will be known as Codi Group. In November, Cadwyn Housing Association joined the Cadarn Housing Group, making it a sister organisation to Newydd Housing Association, with both operating as subsidiaries within the wider group. In January this year, Beacon Cymru Group was formed from the merger of Coastal Housing Group and RHA Wales, while in April 2025 Newport City Homes merged with Melin Homes to form Hedyn. Is consolidation a good thing for housing associations and their tenants? Our view is: yes. In particular, mergers between housing associations offer a potential solution by creating larger, more resilient entities that can leverage economies of scale, pool resources, and navigate the complexities of the housing market more effectively. Financial stability One of the main benefits of a merger is the potential for enhanced financial stability. Housing associations often face significant financial pressures, whether from fluctuating income levels, rising construction costs, or changes in government policy. Merging housing associations can share resources, consolidate administrative functions, and reduce operational overheads, ensuring that more of their funding goes directly into housing projects and community development. Larger organisations also have better access to financing through loans or bonds, which can be reinvested into building new homes or improving existing properties. Improved service delivery and innovation The merger process also enables housing associations to pool their expertise and best practices, harmonising approaches, streamlining services, and even innovating to meet residents' needs. Merged organisations can invest in new technologies to improve tenant satisfaction, such as digital platforms for reporting issues or paying rent. They can also better support the health and well-being of residents through integrated services, including mental health support, employment training, or energy-efficient home improvements. Moreover, mergers can enable housing associations to take on more ambitious projects. Instead of focusing on small-scale developments, combined entities can invest in large-scale regeneration projects, revitalising whole neighbourhoods and providing better housing options for local populations. Since the 2020 merger of Tai Ceredigion and Mid-Wales Housing Association to form Barcud, the new entity launched a programme to deliver 350-400 homes built to high energy-efficiency standards and using MMC where feasible by 2025/2026. Many of these homes use renewable energy, such as solar PV, battery storage and heat source pumps. Some of Barcud's schemes are part of an energy pilot, testing battery storage linked to solar and are well placed to share knowledge with other rural RSLs – rural housing comprises a large proportion of Barcud's stock. Barcud is a strong example of how a merger of smaller rural RSLs can foster shared expertise, economies of scale, meaningful progress on decarbonisation and fuel poverty, and deliver new affordable homes in locations that might otherwise be overlooked. Future forward Of course, mergers are not without challenges. They require careful planning, clear communication, and the integration of different organisational cultures. However, when done successfully, they can better equip organisations to face the future. Without pushing mergers as a goal in themselves, the Welsh Government has supported housing association mergers where they strengthen RSL financial viability, protect or improve services of tenants and help deliver national priorities. This extends to financial support through long-term Social Housing Grant funding, and funding streams such as the Innovative Housing Programme and decarbonisation pilots, which can deliver at scale. It also provides regulatory guidance and oversight. Concerns Mergers in the housing sector may initially raise concerns about the loss of local identity, or tenant representation. Organisation integration can be complex, as systems, workforce and cultures align, and effective consultation with tenants is essential to maintain the quality of service. However, there is strong long-term potential for stronger, more resilient organisations that are better placed to meet the challenges of affordable housing and contribute to the prosperity of the communities they serve. We believe the trend towards consolidation will continue in future years, and are well positioned, across our full-service Social Housing team, to offer legal support to all considering this route.