A GROUP that owns or manages more than 2,600 Hampshire homes looks set to double in size after agreeing a merger with a West Sussex rival.

Southampton-based housing association Hyde South is to merge with Chichester's Martlet Homes in a deal which will see the combined group renamed HydeMartlet.

The deal is expected to generate at least £1m worth of savings and Hampshire tenants of the not-for-profit group are to be asked how they would like to see the money spent.

The move follows a general trend towards consolidation among housing associations and follows last week's merger announcement from First Wessex Housing Group and Portsmouth Housing Association.

That deal establishes First Wessex Housing Group as a major provider of around 16,000 affordable homes across Hampshire - with properties spanning Aldershot, Farnborough, Eastleigh, Southampton, Fareham, Gosport, Havant and Portsmouth. It comes less than two years after First Wessex was born from the merger of Atlantic Housing Group and the Pavilion Housing Association.

Itself a major player in the region's housing development market, Hyde South, part of top ten UK Housing association Hyde Group, has at least £40m to spend on affordable housing developments between 2006 and 2008.

It is also the selected developer for the Hampshire Alliance for Rural Affordable Housing and is set to build around 300 homes in the country in the coming years.

A spokesman for Hyde said the merger could have benefits for customers in its 1,587 rented homes, 471 shared ownership properties, 489 sheltered housing places and 111 managed properties.

"Martlet Homes has a good record for customer service and there are advantages in learning from them," she said. "There are also advantages in terms of economies of scale. The savings that are made are ploughed back into services for customers."

Hyde South, which employs 150 people at its Southampton headquarters and has operated in Hampshire since 1975, has almost half its 6,000 properties in the county, with the remainder spread across Sussex and Surrey.

Following the merger, the combined group will manage around 10,000 homes.

The HydeMartlet executive team will be led by appointed managing director designate Martin Ward, pictured, currently chief executive of Martlet Homes.

He said: "The partnership of Hyde and Martlet will drive through ambitious programmes of service improvement, housing provision and community activity throughout Surrey, Sussex and Hampshire."