Your Housing Group has pulled out of its off-site construction joint venture with a Chinese construction firm – a year after it launched as a multi-billion pound project with ambitions to deliver 25,000 homes per annum.
Your had announced the new company - called Live Verde - with WElink, a renewable energy specialist, in December 2016. They planned to work with Barcelona Housing Systems to offer ’state of the art, energy efficient, modular constructed housing’.
WElink, headquartered in Hong Kong, is affiliated. with China National Building Material Company (CNBM), which intends to invest £2.25bn to support the jv and build six off-site construction factories across the UK, each employing 1,000 people and producing 4,000 homes per year.
The Department for International Trade had help broker the ambitious plans, which fit with the UK government’s push for more modular build as it targets 300,000 homes per year from the mid 2020s.
But in a statement today (2 February 2018), Your and WElink said while they both remain committed to addressing the UK housing crisis and to off-site construction, they have “been unable to unlock projects at agreed commercial terms”. There was no mention of Barcelona Housing Systems.
WElink said it plans to continue its drive into UK housing, including its recently signed memorandum of understanding with Swansea council.
Your, which owns and manages 28,000 homes across the North of England, said it remains committed to delivering 5,700 homes in the next six years.
In a joint statement, the pair said: “Like many organisations that have announced plans to build off-site manufactured homes we have not been able to bring forward our plans as quickly as we had hoped.
“In working to bring our plans to fruition we have to date been unable to unlock projects at agreed commercial terms that would enable us to build off-site manufactured homes in large numbers.”
Both parties said they remain “committed advocates of the benefits of modern methods of construction”, adding that “modular, off-site construction is one of the key elements of solving the housing crisis”.
They said: “While we are unable to find a way forward at this time, we acknowledge that a positive working relationship has been created between the parties and we have not ruled out working together in the future.”
Brian Cronin, chief executive of Your, said: “We are already pressing ahead with our growth strategy to build more than 5,700 homes in the next six years, representing a 20 per cent increase to our current stock.
“Our exciting build programme is unaffected and will continue to deliver high-quality homes by both modern methods and traditional means of construction
“We remain committed to exploring innovative ways to build more new homes across all tenure types, including affordable-rent homes. We passionately believe that modular and other modern methods of construction provide a new way forward for the housing sector.”
Ajmal Rahman, chair of WElink, added: “WElink are disappointed to hear of the YHG board decision to withdraw from the JV, which we learned of on Tuesday 30 January. This was one element of our UK strategy to deliver off-site manufactured, energy-efficient housing in large numbers across all tenures. WElink will take time to consider the implications of this decision and comment further in due course."
"[We] remain committed to helping solve the UK housing crisis and our Chinese partners CNBM / CTIEC have recently reaffirmed their technical and financial support for our business and its partners.
"They have reaffirmed this support directly to the UK Government and to UK Housing, and supported it by signing an MOU for the development of housing with Swansea City Council in December."
He added that as part of its global strategy, they are "continuing to enhance our UK housing team to develop this business and grow our delivery capability".
The jv had intended to use the housing association’s balance sheet capacity to leverage investment, alongside innovative construction methods that drive down costs.
Your’s role included identifying potential projects, buying land and making sites construction-ready, including attaining planning permission. CNBM would invest in the off-site construction of the homes.
The jv intended to build multi-tenure schemes, incorporating YHG’s build to rent business Hive, and its residential care operation, Peachtree. Affordable housing would have sat under the Your brand.
Your had been considering a bond issue in the first half of last year to support the venture.