Essex-based Swan Housing Association entered discussions with Sanctuary regarding a potential business combination earlier this year.

The merger between 105,000-home landlord Sanctuary and 11,600-home Essex-based Swan was signed off by both boards and had been due to be complete last week.

However, in a stock market announcement, Sanctuary said: “The business combination between Sanctuary and Swan remains subject to obtaining appropriate consents and satisfactorily concluding commercial discussions with third parties.”

Now Swan has told staff that it would not be “financially sustainable” to keep the modular factories open even after its deal with Sanctuary is finalised.

Swan was one of the first housing associations to open its own cross-laminated timber (CLT) factory back in 2017.

The group operates from two sites in Basildon, one producing light gauge steel modular housing and the other CLT volumetric systems.

The email to staff said: “It has not been a decision that we have made easily or lightly.

“However, it is simply not financially sustainable for Swan to continue to construct homes in this modular way, with Swan’s factory having been running at a loss.

“We must take steps to minimise our risk to ensure we can continue to deliver services to our customers and communities.”

Swan is now consulting with factory staff affected by this decision and is looking at whether they can be redeployed.