Persimmon Plc and Aviva Plc have made a £70 million ($87 million) bet on factory-built homes, as Britain looks for new ways to tackle its chronic housing and labor shortages.
(Bloomberg) — Persimmon Plc and Aviva Plc have made a £70 million ($87 million) bet on factory-built homes, as Britain looks for new ways to tackle its chronic housing and labor shortages.
The two firms led a fundraising round for TopHat — a modular-house builder that’s majority-owned by Goldman Sachs Group Inc. — in a bid to accelerate the construction process. TopHat is planning to build a modular housing mega-factory in England this year, with the aim of manufacturing as many as 4,000 homes a year.
“This investment provides Persimmon with guaranteed access to very energy-efficient volumetric modular units,” said Dean Finch, chief executive officer at Persimmon. It will help to “manage the growing challenge of labor shortages in key trades,” he added.
Goldman also participated in the latest round.
Modular homes — an umbrella term for properties built mainly off-site — require 50% fewer workers to construct the same number of buildings, according to trade body Make UK Modular. That could drive growth in the housing sector, which has seen a decline in activity triggered by higher borrowing costs and the threat of a drop in house prices.
Chancellor Jeremy Hunt was last month forced to add construction to the labor shortage list following complaints from building firms that they couldn’t hire fast enough. That’s an issue for much of Britain’s labor market, which has seen a rise in unemployment since the pandemic.
Make UK Modular last month warned that the government will fail to deliver its target of 300,000 homes a year by 2025 without pivoting to factory-built houses. That’s because 17,000 new builders would be needed each year to reach the goal, the lobby group said in a report, which is three times more than the current hiring rate.
Still, concerns have been raised about the safety of modular homes. The National Fire Chiefs Council last year called for the government to tighten the rules on testing modern construction methods.
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