Last week Winckworth Sherwood hosted a MMC (modern methods of construction) roundtable event attended by Savills, NHBC and a wide cross section of funders from the Social Housing sector. It was a great opportunity to discuss current views on MMC from a funders perspective and 5 main themes arising from the discussion were:
- MMC is not a new thing! – It has actually been around in various forms for a while and covers any units that are not traditional build block. However up until now there has been limited information available about MMC in the UK.
- Will lenders accept it as security? – Grant and planning permissions are now encouraging MMC and RPs are committed to it so they want to know what lenders policies are. However, lenders only get one chance to formulate policy for their credit committees and they are therefore looking at MMC thoroughly to ensure they get this right. Lenders are alive to MMC and are considering it but it will take time for them to formulate their policies as it is a significant change that they need to consider fully.
- Information – Information is key from a valuers perspective in order for them to be able to provide a valuation of MMC for charging purposes by RPs. Ongoing information will also be important to any funders of MMC particularly around valuations and the impact of maintenance costs.
- Durability – The main funder concerns when looking at MMC are lifespan and warranties. Whilst BOPAS provides an assurance it does not provide any kind of warranty. NHBC goes further than BOPAS and provides a 10 year warranty and funders are likely to require this comfort.
- Maintenance – Funders will also want visibility on repair and maintenance obligations in the longer term. Given the impact they could have on a RP’s cashflow, it is important that RPs understand longer term maintenance costs if they have a significant amount of MMC even if MMC assets are not in their security portfolio.
We are hosting a follow-on breakfast seminar for RPs on 6 November so please click here to find out more.