The Sunderland housing group, which formed a partnership with West of Scotland Housing Association in April 2013, said it needed to save £18m a year for the next four years in the face of UK government reductions in social housing rents and welfare reforms.

Although Gentoo have not said how many of its 2,000 staff will be affected, unions have been notified and the losses are expected to be “significant”.

Peter Walls, Gentoo Group chief executive, said: “The Government’s recent summer Budget announced reductions in social housing rents and other welfare reforms. We are currently analysing the implications of this on our business. Unfortunately, current estimates are showing that we will need to make savings in the region of £18m per year, over four years.

“It is with great regret that a significant proportion of these savings will need to come from our employee costs and this will inevitably result in staff redundancies. Being a responsible business is important to us and our staff are the heart of the Group. We really value our workforce and their input and as such want to inform and involve them in this process as early as possible.

“We are currently working through what the extent of this looks like and over what timeframe. Our final plan needs to be agreed by our Board during October as we are required by our Regulator to submit a revised Group Business Plan to the Homes and Communities Agency (HCA) by 30 October 2015.

“This is a very difficult time, however we will work with staff and our Union colleagues to mitigate the impact of this as much as possible.

“Delivering a quality service to our customers remains our priority and we will ensure Gentoo remains fit for the future and that our service continues to be centred on our customers and their needs.”

Gentoo was formed in 2001, when Sunderland City Council tenants voted to transfer 36,000 homes to the group. It currently has around 70,000 tenants.