L&G ‘committed’ to housing despite modular U-turn

Insurance giant L&G has said it remains committed to the housing sector despite taking the decision last month to effectively shut its flagship modular housing business.

L&G announced at the start of May that it was ceasing new production at its Sherburn-in-Elmet factory after racking up £174m in losses over the last seven years, and was starting a redundancy consultation with its 475 staff.

However, the insurance giant owns a raft of other housing businesses through its Legal & General Capital (LGC) arm, and Simon Century, managing director of housing at LGC, said the firm remained “absolutely committed to the housing sector in the UK” despite the change of heart on modular.

In a briefing on its housing business, Century said L&G, which owns 3,000 homes-a-year housebuilder Cala Homes as well as build to rent, later living and affordable housing businesses, was now “the country’s leading multi-tenure housing provider”.

He said: “We are passionate believers in the importance of our role in helping to grow housing, the wider sector, across the board, across the country.

“There is nothing I can think of that will throw that off course any time soon. Clearly, we will pivot and amend exactly what means from time to time, but we are big believers in the requirement for the likes of us to be there through time, given the huge disparity between supply and demand, the huge disparity in terms of the size of the funding gap that exists.”

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He said that L&G’s affordable housing business, L&G Affordable Homes, which was set up just five years ago and built 1,600 homes last year, was now a “fully functioning business” with 140 employees and a pipeline of 6,000 homes either complete or in development.

Century added that the redundancy process with L&G Modular staff was ongoing and declined to comment further on the details of the future for the L&G Modular business or the reasons behind the decision to close it.

When L&G announced it was “reducing business activity” at the 550,000 sq ft factory, it said the business would remain open to service existing orders but would be taking on no new orders. It said it expected the majority of staff to be made redundant.

The decision to stop production at the business comes months after L&G’s group chief executive Nigel Wilson, who has championed L&G’s investment in housing and modular housing specifically, announced he will be stepping down from the company when a replacement can be found.

L&G’s statement in May said that given the modular factory’s significant fixed cost base, “a strong and predictable site pipeline” was required to make it a sustainable business.

It added that “long planning delays” and the impact of Covid meant the business had “not been able to secure the necessary scale of pipeline to make the current model work.”