Yet again, modular housing hits the skids

It was supposed to be an inventive, forward-thinking solution to help solve Britain’s property crisis. But Legal & General has confirmed it is proposing to reduce business activity and cease new production at its modular housebuilding factory with the loss of up to 450 jobs.

A spokesperson for the FTSE 100 giant told Sky News it was “reviewing and assessing potential strategic options for the business” based in Selby, North Yorkshire, including making the majority of the workforce redundant. L&G blamed long planning delays and the pandemic for the factory’s struggles seven years after launch.

Commenting on the news, Ian Anfield, managing director of Hudson Contract, said: “The upfront costs of modular building do not stack up in a fluctuating market. Add contractual risks and quality and installation issues and the rewards aren’t there. When will investors learn that off-site construction won’t work under the current industry model?”

To illustrate the point, look at the costs involved:

• Invest in a factory
• Design, test, modify and purchase machinery for the factory
• Heat and light the factory
• Fit the factory out with cranes and machines
• Hire and train staff
• Design buildings
• Build test buildings
• Gain accreditations and approvals
• Market to potential clients
• Take some orders
• Buy materials
• Make units
• Deliver to site
• Carry out snagging
• Invoice
• Get paid if client is happy with quality and delivery date and has not gone bust.

Unconfirmed reports suggest Legal & General Modular Homes ran up losses of a staggering £175 million since its launch, whilst within the same period traditional on-site housebuilders recorded record profits.

Ian added: "It’s not hard to see how this has happened. L&G was not the first, and whilst policy makers and so-called industry leaders champion off-site as being the saviour of the industry, they won’t be the last.

"The simple fact is that without top-down restructuring of the industry and a different cashflow model, off-site suppliers will always struggle."