Three cash-rich housing associations have agreed to lend millions of pounds to some of their competitors struggling in the financial crisis that has engulfed the sector.

The Tenant Services Authority, the new regulator for the sector, has extracted promises from the housing associations to make the loans, according to a report in today’s Inside Housing magazine.

The trio – Affinity Sutton, Circle Anglia and L&Q Group – have all agreed in principle. In addition to the agreement, L&Q has said it will provide a separate back-up loan facility of up to £20m to fellow landlord Genesis Housing Group.

David Montague, chief executive of L&Q, said the sector had “never seen economic challenges like we are facing today”.

'We have already seen what impact the financial failure of Ujima [a housing association] had and, if more were to follow, or a larger association were to follow, I think the consequences could be damaging for all of us,' he said.

'We have a responsibility towards the sector to make sure we support each other.'

Financial Times