Modern Methods of Construction – guidance on lending issue

Many housing associations are now considering using modern methods of construction, but some lenders are unwilling to allow properties built in this way to be secured against their loans. We've outlined a series of actions we'll take to alleviate this issue. 

This issue was discussed at a recent meeting held in Savills' offices with Mark Farmer, the government-appointed champion of Modern Methods of Construction (MMC), colleagues from MHCLG and Homes England, the sectors valuers JLL and Savills, and five housing associations using MMC.

At the meeting, the housing associations set out their own ambitions, with some aiming for 100% of their developments to be MMC properties in the next couple of years. But with the majority of lenders unwilling to provide loan security, some housing associations are not developing properties in this way.

To alleviate this, the National Housing Federation will be carrying out the following three actions over the next few months:

  • Organising a meeting of the sector’s lenders, valuers, housing associations and manufacturers to consider the issues related to using MMC as loan security.

  • Consulting on the information that should be provided by MMC manufacturers to lenders to enable more MMC properties to be secured.

  • Creating an MMC supply group of housing associations that are looking to use MMC properties as part of their development portfolio over the next few years.

The MMC supply group will set out the scale of the sector’s ambition for MMC over the next five years to demonstrate our borrowing need over this timeframe to the lending community. If your housing association is interested in joining this group, please contact John Butler.

Who to speak to

John Butler, Policy Leader