EDITOR’S COMMENT Is 2024 the year we should finally give up on trying to deliver a mass modular housing industry in the UK?
As yet another modular housing developer prepares to enter administration, another company that investors and players in the real estate sector had gotten excited about and ploughed millions into grinds to a halt, has the time come to stop trying to talk up modular as a solution to the housing problem?
How many millions of pounds of investment needs to be lost before we realise that modular, volumetric or whatever other word you want to use to make prefab sound more palatable just isn’t going to work en masse here in the UK?
The latest administrator’s report for Ilke Homes, which went bust in June last year, shows that of the more than £300m of debt it has, creditors are likely to get back less than £2m; administrators for House by Urban Splash, the Urban Splash/Sekisui jv that folded in May 2022, reckon they’ll rescue about £4m. How much money did pension fund L&G spend on its modular business before deciding that, actually, it should probably shut its modular production facility? Plans for the 550,000 sq ft factory, which employed hundreds of people, were first unveiled in 2017 but, after six years of trying, last spring L&G finally admitted it was unviable.
And the latest victim, Modulous? Here’s a company raved about by some not stupid people – even here in the pages of EG – about being a solution to the global housing crisis, a different type of modular. Definitely not factory-built housing. The firm got £10m of backing in September 2022 from a host of well-known investors – Patrizia, Regal London, Blackhorn Ventures, Goldacre and the venture capital arm of Cemex, to name but a few.
Regal’s Jonathan Seal believed in the business, seeing Modulous as something different, a solution to the capital-intensive and difficult traditional modular approach of building homes in factories. But it turns out Modulous’s approach was also pretty capital-intensive and its race to secure fresh funding was ultimately lost when one funder pulled out of a deal, starting a domino effect.
There are still a few functioning modular companies out there, of course. TopHat, while loss-making, is hanging on in there with the benefit of a committed and deep-pocketed backer in the form of Goldman Sachs. BoKlok (remember them?) is still there and, while also loss-making, is ploughing on forward, with support from Skanksa.
But, if I was to make one prediction for this year or for the UK housebuilding sector going forward for the next 10 years, I’m going to say that modular isn’t going to be a large part of it. Who wants to live in a flatpack home really? Not me. We’ve got enough trouble as there is with build quality in homes across this country, and while I’m a huge supporter of innovation and energy efficiency and all the good stuff we need to be doing, it just doesn’t feel like we’re anywhere close to being able to deliver good homes, en masse, modularly.
Imagine if the tens of millions of pounds, the hundreds of millions of pounds even, and the thousands of hours that have been invested in trying to make modular the solution to the housing crisis had actually been spent on bringing more people into our construction sector, on resourcing our planning departments, etc. Something tells me that if we’d done that – if we can do that going forward – we might actually be able to shift the dial a little bit on our housebuilding issues.
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