Flat Broke; Ikea Homes Rocked As Building Firm Hits Cash Trouble

Evening Chronicle (Newcastle, England), June 25, 2008

Byline: By ALASTAIR CRAIG

A FLAT-PACK homes scheme, hailed as the future of low-cost housing, is facing more problems.

Swedish BoKlok homes are being built next to Gateshead International Stadium.

The scheme has already been hit by several delays in buyers moving into their ecofriendly properties.

Now, consultancy Avebury International, which was hired to oversee construction of the 36 flats and 57 houses, has gone into administration.

The Milton Keynes-based group had taken on scores of local sub-contactors, who are now fighting to be paid.

Avebury's latest published accounts state "trading conditions have been difficult".

The joint administrator, Steve Wood from Mazars LLP in Birmingham, said: "The current uncertain economic outlook in the construction industry has been absolutely catastrophic for Avebury.

Contracts with value in excess of pounds 60m have been cancelled or delayed in the last four months leaving the Group with no option but to cease trading. Redundancies are likely in the immediate future."

Buyers are still waiting to move into their pre-fab homes and one potential buyer, said: "The whole project seems to have been badly organised from the start.

There's no communication."

A spokesman for developer Live Smart @ Home said: "We can confirm Avebury International, the construction manager for its BoKlok development in Gateshead, has gone into administration.

"Unfortunately, this was unexpected and we were given no forewarning.

"In relation to the site at Gateshead we can categorically state it is business as usual. Work on the first phase of 36 apartments is now almost complete and the first residents will begin moving into their homes very soon. To date 26 apartments have been reserved with most now nearing completion of the legal process. The remaining apartments are being held back for rent.

"The sub-contractors who were being managed by Avebury are now being managed by Live Smart @ Home and we have taken overall project management of the scheme."

A spokesman for the company said: "It's like with any new housing development, there are teething problems."

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TROUBLED: Builders work to complete the first of the Ikea flat-pack flats