Legal & General is making a further move into the housing sector with the launch of a house building factory near Leeds.
The insurance and investment company is making a bold push into the house building sector with the launch of its new modular housing business, expected to be the largest in Europe. It has reportedly invested £55m in the venture.
The new business will provide factory assembled homes and has signed a long-term lease with Logicor on a 550,000 sq ft warehouse 15 miles east of Leeds.
Initially employing 400 to 500 local people, it expects to deliver its first houses from the factory in June. According to Inside Housing, it will deliver 3,000 units a year from the factory, each fully fitted down to carpets and curtains.
The move is a response to the chronic housing crisis the UK has continued to struggle with, and is also the latest housing development for L&G, which has been expanding into the UK’s private rented sector.
In January L&G inked a deal with Dutch pension fund manager PGGM to build 3,000 apartments under a £600m plan, while boss Nigel Wilson also said the group planned to build five new towns across Britain over the next 10 years at a cost of up to £5bn.
Speaking to Construction Manager, Shelagh Grant, chief executive of The Housing Forum, said the move made it clear that L&G was committed to making its mark in the housing sector, and expected further expansion in offsite housing capacity to follow.
“It’s the next step in L&G’s strategy and from our point of view it’s a positive way of getting house building at scale,” said Grant.
“There are some similar or smaller factories already in operation and I might expect others to follow, but it would most likely be under the direction from large organisations.”
Grant said she believed the new venture would bring additional capacity, rather than encroach on the markets of existing house builders and SME companies in the sector.
“I can’t see it taking any business away from each other and I think there’s enough work and schemes all over the country, or from housing authorities for example – that it is fine. Also in every sector of the construction industry we are still experiencing labour shortages,” she said.
Speaking about the new modular housing business, Paul Stanworth, managing director of Legal & General Capital, said: “Modern modular housing in the UK has so far been restricted to the top end of the market: the scale of our Sherburn facility will enable many more people to benefit from new, environmentally friendly construction techniques which have already become mainstream in Europe.”
Tom Ground, chief executive of Legal & General Homes, added: “Legal & General Homes aims to deliver a new solution to the problems we face in the UK, addressing the shortage of suitable, affordable and sustainable housing by manufacturing higher quality, energy efficient, lower cost housing.”
