L&G to stop making modular homes

Legal & General (L&G) will stop producing modular homes as long planning delays and Covid meant its factory failed to become profitable.

L&G Modular Homes has posted six straight years of losses since its launch, with its latest loss standing at £36.9m for the year to 31 December 2021. L&G said 18 months ago that its modular arm would need several years of upfront investment before becoming profitable.

The asset management firm established Modular Homes in 2016, pumping millions into the business over multiple years to keep it afloat.

But L&G will now “cease new modular production” at its factory in Selby, Yorkshire, after it was unable “to secure the necessary scale of pipeline to make the current model work”, according to a statement released by the firm on Thursday (4 May).

L&G said a “strong and predictable site pipeline” was needed to keep the business successful and sustainable, but the delays meant it was not able to build a business that could sustain the costs of the factory.

It has now begun a consultation with the L&G Modular Homes staff, as it plans to make the majority of the roles redundant, although it said it was “actively exploring” redeployment opportunities for the staff.

The chair of L&G Modular Homes’ board Bill Hughes said: “We recognise this will be a challenging and uncertain period for our staff and we will be actively exploring redeployment opportunities and supporting them during this difficult time.

“Legal & General remains deeply committed to the UK housing sector, where we have delivered 15,000 homes over the last three years, and to our valued industry partners and customers.

“As such, we are continuing to actively explore all options available to us and will retain a select workforce to ensure high-quality delivery and aftercare services for our existing customers, while engaging with each of our partners regarding ongoing modular projects.”

The firm is the latest to face problems in the modular sector, after Urban Splash’s modular spin-off entered administration in May 2022, citing operating issues at its factory in Alfreton. Caledonian Modular, an offsite manufacturing specialist based in the Midlands, also collapsed last March, before being purchased by JRL a few weeks later.