By Martin Andrews*, THCH tenant
The proposed merger of Tower Hamlets Community Housing (THCH) and Poplar Harca in East London has ignited a firestorm of controversy among residents. While the merger appeared to be the Regulator’s favoured route for THCH, many residents harbour strong reservations. Their preference is for a return to council control with investment in the conditions of homes and provision of services.
The Precarious State of THCH
THCH, a small Housing Association responsible for around 3,200 properties, currently finds itself in a perilous financial situation, burdened with a substantial debt of approximately £90 million. In a damning evaluation in March, the Regulator downgraded THCH to the second-to-lowest rating on both governance and financial performance.
The Regulatory Judgement points out that “THCH’s business plan demonstrates that it is unable to meet the costs of its day-to-day operating activities and repair liabilities from its rental income stream.” Their grades underscore the dire financial straits in which THCH finds itself.
Residents’ Call for Council Control
A substantial number of THCH residents stand firmly against merger, and instead advocate for the return of their properties to the council. This change would provide residents with democratic influence over the management of their homes, a right they feel has gradually eroded over the years.
Moreover, concerns have emerged regarding Poplar Harca’s financial stability and business practices. Poplar Harca carries substantial debts, estimated to be between £250-300 million, and heavily depends on property sales for income. Notably, a significant portion of their housing stock fails to meet the energy compliance standards, necessitating additional investments and measures to address fire safety issues.
Tower Hamlets Community Housing and Poplar Harca are both struggling financially
Given the financial challenges for both Poplar Harca and THCH, together with housing stock that has experienced a decade of decline, a merger of the two is a daunting prospect. Addressing fire safety issues and upgrading THCH’s housing stock to acceptable standards would add around £25-£30 million to the merged landlord’s financial burden.
Tenants and residents have appealed to the Regulator of Social Housing to halt the merger between THCH and Poplar Harca
A recent petition initiated by THCH residents on five estates has gathered over 1,200 signatures opposing the merger. It is clear that the Regulator needs to reconsider the best course of action for THCH and, more importantly, its residents.
Residents express confidence that the Regulator can work towards a solution that would be acceptable, whether it means returning to council control or starting anew with different management and board members. Trust and faith in the current THCH leadership collapsed a long time ago. Negotiations that fully take into account the views of tenants and residents need to start as soon as possible.
Council’s Response and Resident Discontent
During a recent council meeting, Labour councillors Mark Francis and Asma Islam introduced a motion for the council to embark on a feasibility study regarding the financial implications of reclaiming THCH’s housing stock for council control.
The motion also aimed to represent residents’ concerns to the regulator. Regrettably, the council declined the motion, citing concerns about the significant debt burden and the absence of a legal mandate for taking back the housing stock. This stance has left residents feeling that their needs and wishes are not being adequately addressed.
Tenants and residents have united and campaigned over the merger and previously over high service charges.
While it is true that the council may lack a legal basis for reclaiming the housing stock, this should not deter them from initiating discussions with THCH and the Regulator. The council possesses substantial reserves that could potentially aid more effective debt management than Poplar Harca has demonstrated.
During the debate, Mayor Lutfur Rahman said:
“If the government of the day gives us the power and writes off that debt and gives us money to carry out the work, I would be more than happy to take back stock from THCH.”
This should be noted by the regulator. As it will be almost impossible that Poplar Harca will not receive some sort of financial backing for the transfer.
THCH was tendered out to potential suitors, with Peabody being the sole respondent. However, Peabody withdrew from consideration after scrutinizing the finances. In contrast, Poplar Harca is reported to have failed the regulator’s due diligence processes, yet it appears to be the only party currently at the negotiating table. Has Poplar Harca been selected solely because it is the only candidate, regardless of suitability?
Fighting On
The proposed merger of THCH and Poplar Harca remains a contentious issue within the Tower Hamlets community. Concerns about financial instability and poor decision-making at THCH and Poplar Harca underscores the need for a thorough examination of the potential impact of this merger on the lives of residents. As merger negotiations continue, it is the affected tenants and residents who bear the greatest consequences of this complex and challenging situation.
The fight to be heard and to influence the final decision on the future of our homes continues. We are building a powerful tenant and resident organisation, and are being supported by campaign groups in the wider community, including SHAC.
* Not his real name.
20th October 2023
1. Regulatory Judgement on THCH – March 2023
2. Moody’s Rating following downgrade of Poplar Harca. January 2023
3. Fitch Ratings report on Poplar Harca
4. Tower Hamlets mayor Lutfur Rahman (council meeting 27 September 2023). Total 1.47.36 min. Full debate starts at 1.13.30.
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