Modular builder TopHat is to lay off staff and wind down its modular housing operations, it has announced.
The latest blow to the modular housing sector comes a month after Construction News reported that the firm had seen off a winding-up petition lodged by one of its creditors.
Top Hat, which is backed with funding from Goldman Sachs, blamed the decision on “challenging” market conditions and a dwindling pipeline.
“This orderly wind down of volumetric operations will put the business in a position to assess all future options,” the company said in a statement.
“It is our strong belief that there is a continued need for category 1 [3D module] and category 2 [2D panel] modular in the UK and we hope that we can capitalise on this in the future.”
According to the firm’s latest accounts for the year to 31 October 2022, TopHat employed 212 people at its 11,600 square metres Derby factory. It posted a pre-tax loss of £5.1m despite turnover almost doubling to £13.4m.
In February this year, the company launched a consultation over 70 potential job cuts, CN reported.
In August, housebuilder Persimmon wrote off £25m it had invested in and loaned to TopHat.
The housebuilding giant has invested £700,000 in Derby-based TopHat and holds a further £24.3m of long-term loan notes from the company.
However, in its interim results announcement, Persimmon said it had reviewed the investment and loans and now believed they were worthless.
TopHat announced in March that it had paused plans for a 60,000 square metre manufacturing site in the South Midlands due to “market conditions”.
The firm initially said the Corby factory would be operational last year but its latest announcement leaves uncertainty as to when the long-promised facility will finally be ready.
The plant was planned to be seven times bigger than TopHat’s existing Derby site, and capable of creating one house per hour.
Last year, TopHat received a £15m loan from national housing agency Homes England.
In an email statement today, Homes England said: “We are aware of TopHat’s current position and continue to support the business.”
It added: “Despite the current challenging market conditions, housebuilders continue to invest in MMC in recognition of the vital role technology has to play in delivering more high-quality, energy efficient homes at pace and scale.”
TopHat is the latest in a series of modular firms to experience difficulties.
Despite a strong start for such businesses in the sector, concerns started to grow over the low margins associated with modular developments.
In August, modular housing specialist ModPods International appointed administrators after spiralling relocation costs hit its bottom line.
Investor L&G also wound down its offsite business in 2023 after years of heavy losses.
Modular specialist Urban Splash House entered administration in May 2022, after it blamed operating issues at its factory in Alfreton.
Other specialists including Ilke Homes, Mid Group, Eco Modular Buildings and Caledonian Modular have also failed in recent years.
