Talks of a possible merger between three of London's largest housing associations (HA) are underway, it has been announced.

L&Q, The Hyde Group and East Thames have entered into merger talks with plans to create one of the UK's top four largest house builders.

The move would result in the organisation being capable of building 100,000 new homes across London and the South East over the next 10 years.

The deal would represent an investment of £25 billion and allows each HA to build 35,000 more units than they could have achieved alone.

The organisation would also become the largest provider of 'affordable' homes in the country, with half of the future 100,000 stock being set aside for residents on lower incomes.

The new-build programme is targeting 25,000 'affordable' homes for first time buyers and 25,000 new homes for 'affordable' rent, with the remaining 50,000 new homes for market rent and sale.

In addition, the Group would be worth an estimated £30bn and responsible for managing 135,000 homes.

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Housing Minister Brandon Lewis welcomed news of the proposed merger.

He said: "This shows what can be achieved by combining the strengths of each organisation. It will make a real difference to increase their capacity to build, house and help thousands of people across London and the South East."

The merger will also see the creation of a new training academy to provide nationally accredited apprenticeship schemes.

Overall, each HA predicts the organisation will be able to deliver £50m in efficiency savings within five years through combining back office functions, investment in IT, flexible working, growth through development and combined purchasing power in procurement.

In addition, £250m will be side aside over and above current spending levels for community investment, funding likeminded charities and groups to deliver projects which make London and the South East a better place to live.

David Montague, Chief Executive of L&Q, said: "Our plans will allow us to tackle the housing crisis head on, driving greater efficiency, building more homes, creating beautiful new places and sustainable, independent communities. At the heart of our united mission will be the continued provision of affordable homes for those in need."

Elaine Bailey, Chief Executive of The Hyde Group, added: "The combined strength of all three associations means that we will be able to deliver a house building programme that would have been impossible to achieve for each organisation alone. As well as this, we want to lead the sector in customer service, meeting the service aspirations of all our residents across a range of housing tenures. Put simply, we are stronger together – more financially capable of delivering and managing our stock than we are apart."

(LM)