Council homes at risk after Scottish modular builders enter administration

Michelle Elliot and Callum Carmichael, partners at administrators FRP Advisory, were appointed to Connect Modular on 6 January and then as provisional liquidators to Hope South West the following day.

The administrators said both companies had suffered “significant financial challenges in recent months” due to “rising operational costs and losses made on previous contracts, which has placed significant pressure on trading operations and cash flow”.

Ms Elliot said: “Connect Modular Limited and Hope South West Limited had built a strong reputation and track record in delivering high-quality, affordable modular homes across Scotland.

“Unfortunately, following losses made on a number of historic contracts and rising operational costs, the businesses were facing significant cash flow pressure.

“Despite the best efforts of the director in exploring alternatives in recent weeks, the cash position deteriorated significantly placing unsustainable pressure on the business.

“We will now focus on marketing the assets for sale and on providing every possible support to the staff for claims to the redundancy payments office and accessing support agencies such as PACE [Partnership Action for Continuing Employment].”

In July, Connect Modular completed a £17m project in Kilmarnock to build 101 low-rise, modular affordable homes. The project was delivered to Cunninghame Housing Association with Scottish government funding and garnered two prizes at the Chartered Institute of Housing’s Scotland Housing Awards in November.

Also last year, Connect Modular and West of Scotland Housing Association submitted plans to Glasgow City Council for the region’s first “operational net zero” modular housing development.

Other recent projects included supported accommodation in West Lothian and a housing scheme in Stevenston for North Ayrshire Council.

Connect Modular also had developments yet to be completed in Garnock Valley, Livingston (48 homes for West Lothian Council), Penicuik (12 cottage flats for Ark Housing), and Clydebank (two affordable homes for West Dunbartonshire Council).

Connect Modular and Hope South West are both strands of The Wee House Company, which was set up in 2013 by father and daughter Ian Hope and Jennifer Higgins.

A West Lothian Council spokesperson said: “The council has been made aware of the situation regarding Connect Modular.

"The council is not in a direct contract with Connect Modular. Hub South East, a key delivery partner for the council, appointed Connect Modular for the construction phase of the project.

“The council remains committed to the delivery of new affordable housing in West Lothian and we are working closely with our delivery partner Hub South East to seek clarity on the developing situation and a way forward for the project.”

Connect Modular, Ark Housing and West Dunbartonshire Council were approached for comment.

The past few years have been a torrid period for volumetric modular house builders, with profits remaining elusive amid scaling difficulties and challenging market conditions. 

Modpods International appointed administrators in August, citing relocation costs, difficult trading circumstances and a dispute with an existing client.

Then in October, Goldman Sachs-backed firm TopHat said it was winding down its modular operations, with most of its factory staff being made redundant.

In 2023, Ilke Homes went into administration and Legal & General halted production of modular homes.

The previous year saw the collapse of House by Urban Splash, a joint venture between developers Urban Splash and Sekisui House and Homes England.