Homes England will look overseas for further partnerships with modular housing developers in order to boost the fledgling UK market after striking a landmark deal with a Japanese firm this week.
Sir Edward Lister, chair of Homes England, told Inside Housing that the government was keen to expand its capability in so-called modern methods of construction and was hoping to sign joint venture deals with overseas firms similar to the one signed with Sekisui House.
“We’ve got to try and get people who really know what they’re doing to come into the market to boost it,” Sir Edward said. “We would do further deals with other people.”
The government announced today that Japan’s biggest house builder is set to move into the UK housebuilding market after striking a multimillion-pound deal with Homes England and UK developer Urban Splash to build thousands of modular homes via Urban Splash’s new ‘House’ development business.
Sir Edward said the joint venture was planning to build a factory in the Midlands or the North of England, and Sekisui House would be bringing its own staff over to advise on construction methods.
As part of the deal, Sekisui has committed £22m of equity in the company for a 35% stake. Urban Splash will be investing £35m, while £30m of equity and debt funding would come from Homes England.
Sir Edward said the decision to include equity funding was a “fairly unusual step” but that government backing had been key to securing the deal with Sekisui.
Sekisui House will own a 35% stake in the business, Urban Splash will hold 55%, and Homes England will own 5% of the business. Noel McKee, owner of We Buy Any Car, will also own 5% in exchange for a £2.5m equity investment.
“[This agreement] is part of a series of things we’ve been doing for a while,” Sir Edward said. “We had been encouraging modern methods of construction without being very specific about what those methods were.”
Homes England’s latest five-year plan, which was released at the end of last year, promised to increase productivity in housing delivery by driving the use of modern methods of construction through its contracts. As a result, both land and investment deals are required to increase use of offsite and modern methods as part of its leasing terms.
This new deal shows the government’s intent, Sir Edward said. “This deals brings a major Japanese manufacturer to the UK and at the moment [modular homes] is an industry in its infancy here, although it is not in Japan,” he added.
He said the government was keen to ship in overseas expertise to help increase the amount of modular homes being built. The method has been praised for being faster than traditional building, allowing new homes to be produced more quickly and at a lower cost.