Legal and General Modular Homes, Just another part of the; Affordable Housing Crisis, Lip Service, Talking Shop 

Legal And General withdraws Umbrella from its Modular Business whose non existent Sales presence led to low expectation of a Sales Approach “Making it Rain”

In more optimistic times this was the general Narrative of Legal and General Modular Homes as told by its CEO.

Housing Today interviews Rosie Toogood, CEO 07 April 2021

Legal & General Modular, a subsidiary of insurance firm Legal & General, has set its sights on revolutionizing the housing industry through the use of modular homes. Led by former Rolls-Royce executive Rosie Toogood, the company aims to provide affordable and sustainable housing solutions to housing associations, councils, and build-to-rent developers. Toogood has set the target of building 3,000 homes a year by 2024, with the company already on track to achieve this goal. Legal & General Modular’s current pipeline includes a 750-home project over the next 18 months, with an additional 2,000 homes in discussion for 2022. The company’s modular homes are in high demand due to their quality, sustainability, and fast delivery times. Legal & General Modular is poised to make significant revenues in 2021 and beyond as it continues to grow its presence in the market.

The Announcement last week that The operation was to close is explained by an analysis of the 2021 full year accounts and 3 Subscription payments for Shares amounting to £49,500,000 presumably to cover the deficit in funding as funded in each of the previous accounting years reported.

31/3/2023 Cash for additional 3 £1 shares £49,500,000

Losses accumulated at 31 Dec 2021 £181,863,551

Total Cash for Shares/covering Losses. £231,363,551

£12m of sales in 2021

Bank Loans £9,000,000

Lease Liabilities £25,000,000

Staff Liabilities. 390 at end of 2021 £20,000,000 pa

Contrasted with the April article on the Companies website there would seem to be a contradiction between the Narrative and the Actualite

While Legal & General Modular is not a speculative housebuilder selling directly to individuals, it is part of a larger group of housebuilding businesses within the insurance firm. Toogood expected ( Some might say took for granted) that  “internal” customers should be a significant part of their delivery pipeline. The company’s current projects include an 185-home development for Bristol council, with 50% of the homes being affordable. Toogood aims to build 3,000 homes a year by 2024 and has already taken on an additional 50 employees this year, with plans to hire 300 more by the end of 2021. The company’s pipeline for the next 18 months includes over 750 homes, with further projects in discussion totaling another 2,000 homes. Toogood attributes the strong demand for modular homes to their quality standard, sustainability credentials, and ease of delivery.

The Employee appraisal site Glassdoor gives a less spun appraisal of what had been going wrong. Legal and General Modular Homes has been facing some challenges, which are reflected in the reviews of its employees. One of the main issues seems to have been the lack of a clear future strategy, which has resulted in a dearth of sales pipeline and necessitated production breaks. This  led to periodic layoffs and low morale among employees. Additionally, the CEO’s micro-management style has not been well-received by the executive team, with multiple resignations over the past few years.

On the positive side,L & G Modular Homes offered a good pension scheme and training opportunities for its employees. However, there are reported concerns about the low base pay and lack of bonus or overtime schemes. Furthermore, the management has been criticized for not valuing its employees and not giving them enough opportunities to progress within the company.

To address these issues, L & G Modular Homes should have focused more  on demand planning and building a solid sales pipeline to secure jobs and grow the business. It could also have listened more to the expertise of and widened the fields of expertise in its leadership team and given them more autonomy. Additionally, the company needed to prioritize its customer led projects and make decisions faster. By taking these steps, L&G Modular Homes could have become a great place to work and got closer to achieving its goals.


The most similar Failure lately was the collapse of Kattera The US based Modular Behemoth, in June 2021.

Katerra, a construction technology company that started in 2015, collapsed due to a series of business failures compounded by the macroeconomic effects of the COVID-19 pandemic. The company’s financial position deteriorated rapidly, and it was unable to secure additional capital and business. One of the reasons for Katerra’s downfall was its connection to Greensill Capital, a supply chain finance giant that filed for insolvency in March 2021. Both Katerra and Greensill were heavily backed by SoftBank. This cashburning unicorn  failure is not unique; other companies like Enron and WeWork have also experienced similar fates. However, even with other examples to learn from there is still an appetite in ” Roving Caveliers of Finacialisation Land” to solve problems that no longer exist, such as Range Anxiety for Electric Cars, as seen with the failed pilot program Better Place. The lesson here is clear: businesses must have a sustainable financial model and be mindful of their connections to other companies.

The housing market has been plagued by two fundamental misdiagnoses of the problem. Firstly, the collapse in home ownership is mainly due to the withdrawal of mortgage finance from first-time buyers (FTBs). Secondly, there is a crisis of affordability and credit allocation, with people borrowing eight times their income to get on the housing ladder while hundreds of thousands of pensioners’ homes have at least three spare bedrooms. The availability of credit is a key factor in the gyrations we call the property cycle. In January of 2020, SoftBank first bailed out Katerra, then still a fully integrated manufacturing system with an order book of $2 billion. However, the sheer breadth and ambition of the company’s approach was always hugely ambitious, and ultimately it was brought down by the Hubris of another Softbank Unicorn, Greensill Capital.

The writer noted at the time “A winning solution could be an order book-led approach by occupier demand coupled with assembly off the supply chain that already incorporates a lot of  automation”.

In the world of House Building, the customer as occupier is king. The key to success in the housing market lies in dis-inter-mediation – cutting out the middlemen and advisors who have institutionalized and complicated the process.This is no more apparent than in the “Affordable Homes Crisis ” Talking Shop.

The UK MMC market is riddled with ingroup biases and silo-based thinking, which leads to a lack of customer engagement. Home@ix seeks to change this by incorporating the customer’s voice into the origination and briefing stage of the place-making design and site acquisition/viability process. The offsite manufacturing industry needs to think like a brand, creating a story and personality that consumers recognize. Manufacturers can create a product and brand that developers can market successfully, ultimately determining the overall success of a project. It’s time for the industry to pull together and push together to take a larger market share. Home@ix offers a direct-to-customer approach, giving customers the choice of design and finance options. It’s time to put the customer first and disrupt the broken industry.

There was always something of putting the Cart before the Horse with the L&G approach. In addition to the obvious market and industry challenges, the Management approach could IMO have been better.
Also Rans. Top Hat, Legal and General, ilke Homes and BokLok are very much also ran’s in their approach as are Etopia and a number of factoryos/Blokable Wannabees. Each to differing degrees display an Absence of Vertically Integrated Sales driven and Collaborative Origination.

Is Legal and General Modular Homes, Just another part of the Affordable Housing Crisis Lip Service Talking Shop?

The Logic of dividend policy and maximum export of financial surpluses might though give a better understanding of what is going on with housing in the UK in the context of the Global Financialisation and its own peculiar yet dominant logic system. As Saskia Sassen put it , there is ” A Savage Sorting of Winners and Losers: & Contemporary Versions of Primitive Accumulation,”   seem to be at work with the “accumulators” being “Off Shore” in nature. The Narrative “account therefore offers a partial picture at best, as it neglects the impact of capital flows into, and outflows from, the sector. Far more dramatic changes were taking place here than this ‘institutional recovery’ paradigm suggests”,Tom Archer & Ian Cole examine these themes in this paper from   The financialisation of housing production: exploring capital flows and value extraction among major housebuilders in the UK

The paper explores the financialization of housing production in the UK, focusing on the capital flows and value extraction practices of major housebuilders. The authors argue that financialization has led to a shift in the priorities of housebuilders, from building more homes and growing income and profit through expanding volumes, to maximizing profits for shareholders, often at the expense of production volume. They analyze the financial statements of major housebuilders and find that they engage in practices such as share buybacks, dividend payments, and land speculation to extract value from the housing market often for offshore shareholder  interests. The authors conclude that these practices contribute to the unaffordability of housing in the UK and call for policy interventions to address the negative effects of financialization on housing production. 

Using data provided by the Financial Times (2017), it was possible to identify the ten investors with the largest shareholdings in the UK’s biggest housebuilders. This analysis revealed that the largest investors held shares in multiple housebuilding firms. Indeed, three investment managers (Legal and General Investment Management, Norges Investment Management, Vanguard Group) were among in the largest shareholders in eight of the nine biggest housebuilders. Through this, these organisations can exert significant influence not just on one housebuilding firm and its financial decisions, but on the industry at large. They could assert their demand for maximising shareholder value in eight different board rooms, knowing what the ramifications of selling their shares would be for wider confidence in the firm and its stock price.”

“The global nature of financial interest in UK housebuilders is indicated by the fact that many of the largest shareholders were not UK investment managers. For instance, an estimated 71%\ of all shares in Taylor Wimpey were, at the time of data collection, held by investment managers based overseas. The surpluses created by housebuilders, and then paid out in dividends, are likely to flow well beyond UK shores, and potentially be reinvested outside of the UK’s housing market. This makes it challenging to assess the ultimate impact of such large-scale distribution of surpluses on domestic housing production. It also poses serious questions about the prospects for decisive intervention in these processes by any national government that is seeking to ramp up housing supply.”

The financialization of rented homes: continuity and change in housing financialization

Rental housing financialization has implications for housing shortages, prices, and volatility. In the short term, the impact on the market for sold homes is likely to be minimal as most rental financialization is oriented towards larger housing blocks. However, over longer time horizons, it is reasonable to expect that housing shortages may fuel more demand for rental property. Conversely, rapid growth in the availability of quality rented homes may have a depressing effect on prices for purchased homes.

Rental housing financialization should have a major impact on the distribution of rental housing availability, especially in dynamic local economies targeted by REITs and REOCs. These funds prefer to provide for asset-poor but education-rich urban professionals, especially in their younger years. Asset-rich elites also benefit from the integration of a new class of assets into mainstream financial markets while limiting any downside that might come with increasing the supply of single-family properties.

For renters who lack both human and physical capital, there is far less cause for optimism. They are too precarious as workers to be appealing as tenants to REITs and REOCs. Worse, the expansion of higher-quality urban housing often results in the removal of existing property serving these poorer communities. Without major efforts to orient listed real estate towards social ends, there is more than a little cause to assess these financial structures as further exacerbating the divide between insiders and outsiders to the knowledge- and asset-driven globalized urban economy.

The Home@ix Mindmap

Within that larger pure banking structure, the sorts of Bonds Home@ix is proposing and which Berkley homes floated last year could be underwritten by the new federated land banks of England, Scotland, Wales, and Ulster. a sort of rentenmark solution. Bonds and who benefits from the coupon are two key questions which are rarely asked and which this article seeks to address. The Distinction between Free Markets and Free Trade are crucial to understanding the point.

Free Trade vs Free Market , Careys American System vs Ricardo-Malthusian system. Monopoly vs Free Market Competition

The Home@ix approach is for one segment of the Market the reluctant 10%, Rungs 1-25 and rungs 35-50 of the housing market could quite seamlessly and for great benefit to society be worked into the brief of a regional English landpound, Scottish Land Pound, Welsh Landpound and Ulster Landpound. Etc, so forth and so on.

From Homes for Heroes to Exponential Zeroes. Neglected actors in the “Housing Crisis” Narrative#AbsorptionRate, #LastTimeBuyers,#Cash Buyers, #FiscalPolicy ( #MIRAS and #StampDuty ) and #MortgageLending by the #BankingSector. #Demography of #Immigration and#Ageing.

#Home@ix #Moduloft, The Affordable Housing Manufacturers. Defining the Terms of and Boundary Conditions of our Domain.

Benefits to Bricks , A Home@ix response to PM and Michael Gove . Proposing the; English, Scottish, Welsh, & Ulster Land pound .

The Iron Law of Oligarchy.

Author: rogerglewis

Real Estate Entrepreneur.

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