A major government-backed modular house builder has paused its operations and is seeking a buyer to "secure its future" and "protect jobs" amid challenging market conditions.
Ilke Homes, which has in the past agreed major deals with housing associations such as Places for People and The Guinness Partnership, today said if it does not secure a buyer its order book of new homes "will not be delivered".
The private equity-owned firm, which secured £30m investment from government delivery agency Homes England as recently as September 2021, has previously recorded large losses in its five-year life.
The news comes weeks after major institutional investor Legal & General announced that it would "cease production" at its giant modular factory, and marks a moment of real crisis for the nascent modular industry in the UK.
It also follows the collapse last year of House by Urban Splash – a joint venture between Manchester developer Urban Splash, Japan's Sekisui House and Homes England.
Housing association Swan also got into severe financial difficulties last year, partly related to losses from its modular housing business.
In an announcement today, Ilke said a sale would allow the company to deliver its 4,200-home pipeline, blaming "volatile macro-economic conditions and issues with the planning system" that had "complicated fundraising and housing delivery".
The company's £1bn order book is predominantly made up of affordable homes, meaning that without a new investor, much-needed housing will not be delivered, the firm said. It said it was pausing operations will a strategic review was ongoing.
Established five years ago, Ilke Homes' client base includes major institutional investors, housing associations, volume house builders and local authorities.
In its statement it said it is "hopeful of securing a future for the business via a sale or investment".
In 2020, it launched a new 'turnkey' development offering, where the company acquires land, secures planning permission and develops the site.
It said this has been "complicated by uncertainty over planning policy and rising build costs".
It said the firm "now requires new investment to meet overheads, achieve further scale and become cash flow positive".
Since its launch in 2016, Ilke has recorded losses of more than £100m as it dealt with significant start-up costs, which are common in the fledgling offsite sector.
But the recent rise in interest rates has cooled demand from buyers and significant planning delays have slowed the rate at which new developments come through.
Ilke signed a £100m joint venture with housing association Places for People in 2019. The Guinness Partnership became an investor in the firm in 2021, purchasing a 4.3% stake in the company for £10m.
It has since joined forces for major schemes, such as a 220-home development in Southend, Essex, announced last November.
A £10m taskforce to accelerate modular housebuilding in the UK was launched by Rishi Sunak in the March 2021 Budget. At the time, the government said it would bring together "world-leading experts from across government and industry" to grow the industry, which remains a relatively minor part of UK housebuilding.
Original source: Inside Housing - News - Homes England-backed modular builder seeks buyer
