(CNN) – Ikea conquered the world with inexpensive furniture. Now it’s turning its attention to affordable homes in Britain.
Worthing, a town in southern England, is considering a plan to work with developer BoKlok, a joint venture of Ikea and Swedish construction company Skanska.
The development would be BoKlok’s first in the United Kingdom since a previous project fell flat during the global financial crisis. The group, whose name is Swedish for “live smart,” has built more than 11,000 homes throughout Sweden, Finland and Norway.
By building homes in a factory and assembling them quickly, the project could demonstrate one way to ease acute housing shortages that help drive up prices until they’re out of reach for average earners. An innovative sales model that charges people based on what they can afford could spark further change in the market.
Housing in Britain
The proposal for Worthing, which will undergo a more rigorous financial analysis over the coming months, details an unusual model for affordable living.
BoKlok would build roughly 160 houses on land leased from the local council, with 30% of units earmarked for public housing, according to a plan posted online. The first homes could be occupied within two years.
The remainder would operate under BoKlok’s “Left to Live” payment model, where residents are charged only what they can afford after taxes and living expenses.
Payments — typically around a third of net monthly earnings — go toward a 25-year mortgage.
Local councilors said in a statement that the project would let Worthing rapidly build homes that meet standards for quality.
A spokesperson told CNN Business that BoKlok’s modular housing — or homes that are made of fitted sections that can be made off site — would be particularly helpful in Worthing, which has limited land. Three times as many homes could be built in the area compared to a traditional development approach, he said.
Construction would start in January 2021, according to the proposal. Residents would be able to start moving in as soon as April of that year.
BoKlok said in a statement that it can’t confirm any projects at this time, but it’s looking into potential sites in the United Kingdom, particularly in the southern and western parts of the country.
The BoKlok approach to affordable and sustainable housing draws heavily on Ikea’s tried and tested methods.
“BoKlok was designed the IKEA way: large volumes, low prices,” according to a Skanska blog post from 2011. “Industrialized production and large volumes — in other words, repetition — cut prices and save time in planning.”
The venture also controls its entire supply chain, including land acquisition, factory production, site work, sales and marketing. That helps trim costs. Additionally, BoKlok relies on wood for the construction of homes, and doesn’t buy land unless it knows it can be developed shortly.
This efficiency has the potential to be lucrative. In 2017, BoKlok made up about half the homes Skanska sold in Sweden, and the company said the venture delivered “great” returns.