My housing association is due to pay the compensation payment of £6.5k shortly.

They are paying by BACS.

Will a large payment like this raise suspicions with the bank? As I’ve never had large payments like this or a balance like this before.

You hear horror stories of banks questioning where money has come from and suspending accounts.

Because it’s coming from a housing association as a BACS it should be fine as they are viewed as a trusted source if it was a cash deposit or a transaction from a dodgy country then it might raise a few flags. You could always call the bank just to let them know what it is wouldn’t take that long and it will mitigate the risk abit.