Might Modular Housing Be England’s Next New Home Building Method?

By Author: Bradley Weiss
Total Articles: 272
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Offsite-built homes are more energy efficient and less costly to build than traditionally constructed houses. They could help solve the housing crisis faster.



“Modular housing” created a bad name for offsite-manufactured homes and building components in the post-war period, probably because most were intended to be temporary in nature. But in the 21st century, this type of residential building, sometimes called “flat-pack” homes, is in some ways superior in quality and might be the answer to Britain’s housing shortage.



The advantage largely lies in how modular homes can be built to higher energy-efficiency standards than those houses built onsite. Additionally, offsite-built homes will cost up to 25 per cent less than on-site construction. In the UK, such homes have gotten more attention recently because of these environmental and cost benefits, and also as a means of expediting building that might alleviate the housing crisis.



Typically, modular homes are detached houses accommodating one family, very often in the “self-build” category ...
... where the owner first acquires land in a rural or suburban area and then purchases the building components. In 2005, however, the industry was given a boost by the successful multi-storey, multi-unit Raines Court modular building located in Stoke Newington, London.



This suggests that larger-scale developments might be ripe for flat-pack housing. The accelerated means by which the country can build the 240,000 or more homes per year - versus the 140,000 being built today - is when investors in joint venture land funds buy several hectares of land. They will seek planning permission, develop infrastructure (roads and utilities) and then sell parcels to homebuilders who in turn build homes. The second part of this equation, the construction of homes, would be shorter when most of the building occurs offsite.



The Institution of Mechanical Engineers (IME) addressed this by publishing a report in 2015, “UK House Building, manufacturing affordable quality homes.” The IME makes just this case: “there is therefore an urgent and pressing need to substantially increase the number of new homes being built on an annual basis,” the report authors write, adding “not only does the number of new dwellings need to increase, so does the quality of their construction.”



The report goes on to express that home building companies are not sufficiently incentivised by regulations and economics to build larger and more energy efficient homes (the square-metres-per-person statistics for England are the lowest in Western Europe). Alternatively, off-site construction is urged by the IME for its several benefits:



• Shorter build times - Said to be less than half of conventional masonry construction.



• Superior quality - Because of factory-based design standardisation, precision engineering and quality control are exemplary.



• Energy efficiency - Due to superior thermal insulation, resulting in 20 per cent lower energy consumption for occupants.



• Less construction waste - Factory efficiencies result in 90 per cent less refuse.



• Lower cost of ownership - Due to reduced construction and operating costs.



• Reduced transport in construction - Lower fuel consumption in transporting raw materials to a centralised factory instead of the home site.



For investors in property fund management schemes - the financing behind buying land that achieves planning permission - these efficiencies do not directly affect the value increase in their funds and the developments they are engaged in. By and large their involvement ends with basic infrastructure on sites that are then sold to homebuilders. But if there is faster delivery on higher-quality, energy-efficient homes, that might enable more developments overall to be built. As of 2015, a construction labour shortage has stymied some building (many skilled construction workers left the industry as a result of the financial crisis that began in 2008).



IME calls for policy changes by the Government to support the still-relatively-small modular housing industry. First, the organisation supports investment in off-site construction technologies as a means of creating jobs (it bears noting that jobs would be diminished for construction firms that do on-site construction). Second, IME is critical of Whitehall’s wind-down of the 2016 Zero Carbon standard, exempting developments of 10 units or less from the energy-performance regulation. Third, it recommends a programme (and funding) to encourage diversification of the housing supply to favour self-builders, local authorities and housing associations in building different types of homes.



UK investors should always be keen to support new land investment schemes, new technologies and new methods for meeting market demand. The housing shortage certainly attracts investment to the sector, but an independent financial advisor should be consulted to ensure the investment provides the appropriate risk for the investor.