Mortgage lenders to remain 'cautious' on MMC until quality proven, warns Lloyds' housing chief
News, views and more from the modular construction space
Mortgage lenders appear to have long memories.
Cast your mind back to the days of New Labour when John Prescott came up with the idea of building prefabricated homes for £60,000.
In less than a decade though, some of the homes were allegedly “rotting”.
This kind of shadow on the offsite sector appears to hang heavy as the majority of mortgage firms remain cautious about lending on non-traditional homes.
Of course, MMC firms will point to the leaps that have been made to ensure their precision-manufactured properties are a different class to what came before.
Nevertheless, as we report this week, there still appears to be a job to prove to the banks the quality and safety of the current generation of MMC homes.
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*NEWS*
Lloyds Banking Group ‘very positive’ on MMC but warning of caution among lenders
Mortgage firms are likely to remain cautious about lending on MMC properties until their quality is proven and fears about “new technologies” are allayed, a senior executive at Lloyds Banking Group has said.
Speaking at the NHBC’s Building for tomorrow virtual conference yesterday, Andy Mason, the bank’s head of housing development, said: “Lenders, I think, initially will be cautious about quality until things are proven. Why cautious? (Because of) lessons from the past around experiences with modern methods of construction.”
The government has commissioned research into the safety of offsite homes and a separate long-term Homes England study is investigating the MMC sector.
Mason said the current cladding crisis was also adding to concerns for lenders around “new technologies”.
Despite this, Mason said Lloyds Banking Group - which includes Halifax - is “very positive” about MMC.
“It can definitely play an important role in closing the supply gap,” he said. MMC is “really positive” from a sustainability perspective, he added. “There’s a great story with the use of integrated modern technology - for insulation, heating, power generation,” Mason said.
However, he raised the question of whether the MMC sector is doing enough to explain itself to the wider public.
He told the conference: “Do we think more needs to be done to explain what a modern methods of construction property is, how they operate and the benefits of them to create more of that consumer demand?”
Later, Andrew Smith, data and technical insight manager at Savills, said only four major banks currently have a lending policy on MMC. But he added: “That doesn't mean to say other banks and investors won’t lend against it (MMC). More banks will come on board as more stock arrives.”
*OFFCUTS*
POLICY: The Scottish government has vowed to “extend the use of MMC” to boost the delivery of houses in rural areas. The pledge came in a new 77-page ‘Housing to 2040’ route map, published by the Holyrood administration ahead of May’s election.
PEOPLE: Wates, the privately-owned construction giant, has appointed a former Skanska executive to help drive its focus on MMC. Inna Lim, who was previously head of strategic markets at the Swedish-owned firm, is taking the role of strategy and integration director for Wates Integrated Construction Services (WICS) - a newly-formed division of the business. Lim will help establish a new integrated offer for Wates which will “champion emerging technologies, innovation and modern methods of construction”, the firm said.
DEVELOPMENT: Ilke Homes has acquired its biggest site to date with an aim to deliver 225 offsite houses. The Yorkshire-based group has secured a 14.5-acre site in Southend-on-Sea, Essex, and is said to be in talks with a “top 10 national housing association” as a buyer for the homes.
DEVELOPMENT: TopHat has submitted a planning application for 183 more homes at its flagship site in Kent. The proposals include 96 factory-built apartments - the first units of this kind delivered by the Goldman Sachs-backed firm. A total of 302 offsite homes are being delivered across three phases at the 4.8-acre Kitchener Barracks site. Around 100 homes have so far been installed, the group said.
GLOBAL: Panasonic is launching into the modular housing market in Thailand. The Japanese electronics giant is partnering with Siam Steel - a Thai-based steel and building materials group - to offer modular homes. The homes will include air purifying technology that has been developed to help tackle Covid-19, Panasonic said.
GLOBAL: Veev, a California-based modular housebuilder, has raised £100m to ramp up its expansion. The firm raised the money through a listing on TASE UP, a new digital platform in collaboration with the Tel Aviv Stock Exchange, which connects private companies with accredited and institutional investors.
*NUMBER CRUNCH: 15*
The number of 3D printed homes that California-based Mighty Homes is promising will appear at a neighbourhood in the Golden state’s Coachella Valley… complete with swimming pools.
*INSIGHT*
How are the likes of Facebook, Google and Apple helping tackle the US housing crisis?
This in-depth CNBC report explores some of the moves the tech giants are making in modular housing. It features Factory_OS, a California-based start-up that, as we previously reported, has received financial backing from Google and Facebook.
*AND FINALLY…*
Another plug for my piece on MMC and safety for Construction News, available here.
Featuring comments from Mark Farmer, Legal & General, the BRE, the Association of British Insurers and the Fire Protection Association.
Stay safe and see you next time,
James
I’m James Wilmore, a freelance journalist and editor. I cover the built environment and occasionally cycling. This is me here and here
For all enquiries, story ideas and tips, please email: james@modularmonitor.co.uk