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Social Housing Speed Read – Mortar or modular? The future of construction of social housing

In this week's Speed Read, we discuss the renewed focus on modular (formerly known as 'prefab') housebuilding, particularly in light of the latest Affordable Housing Supply figures, published on 22 November 2018.

The recent statistics

The Affordable Housing Supply 2017-2018 figures, published by the Ministry of Housing, Communities and Local Government, show a staggering 78% reduction on the number of social housing units built in the last decade, with less than 6,500 social houses built in 2017.

It has also been reported the average number of households on a local authorities’ social housing waiting list is 3,500. Last month, it was revealed that just 7% of families on Greenwich Council’s waiting list had been rehomed this year, whilst 17,481 families remain on the list.

Many within the sector believe that the cancellation of council’s borrowing caps placed against their Housing Revenue Account will likely help improve these figures however, as Rory O’Hagan, director of architecture firm Assael, notes, ‘decades of under investment means councils do not have the people, skills or materials to start building hundreds of thousands of new units’. O’Hagan, amongst others in the industry, argue that turning to modern methods of construction is the solution to this problem.

‘Prefab’ rebranded

For many, references to ‘prefab’ homes conjures up negative images of low-quality, unattractive homes which were created in the post-war era as emergency housing. Modern homes which are built in this manner have therefore being rebranded as ‘modular homes’.

And it seems that the rebranding is not merely nominal. Thanks to technological advances in the digital age, factories can now manufacture precise, high-quality modular homes which are purpose-built and designed to fit in with the local area and community. Birmingham City Council, for example, recently revealed its own modular housing plans which ‘aspire to high standards of both design and delivery’.

Rosie Toogood, CEO of Legal & General Modular Homes, noted that customers currently favour traditional-style homes, and it is possible to achieve this by adding a brick façade to a modular home on-site, after fitting out kitchens, bathrooms, electric and plumbing in production, demonstrating the versatility of adding appropriate finishing touches.

Saving time and money

Mark Robinson, CEO of Scape Group, estimated that by turning to MMC, it is possible to quadruple the number of homes built with the on-site labour needed for traditionally-constructed homes. Whereas a traditional build takes around 40 weeks to complete, modular homes can be delivered within days. Producing modular homes in factories not only simplifies the supply chain, but also lessens disruption to the wider community.

Modular homes can be built on a larger and more efficient scale, leading to costs savings. Although there are currently a limited number of factories producing modular homes in the UK, it is hoped that the success of such developments coupled with investment from Homes England’s Housing Fund will encourage modular factories ‘to invest in bigger and better facilities’.

Environmental impact

It is argued that modular homes have a positive environmental impact, largely due to carbon neutral construction methods. Further, Tony Bloxham, CEO of Urban Splash, believes that the precision manufacturing of modular homes means that they are extraordinarily airtight, improving their overall energy efficiency. However, this may have its drawbacks. In July 2018, the Environmental Audit Committee published a report highlighting that modular homes were not resilient to heatwaves, and called on the government to withdraw public funding of these houses.

The Building Alliance have also criticised modular homes’ reliance on imported components due to increased air miles, arguing that traditionally-constructed houses ‘source 80% of materials domestically’.

Moving forward

On 29 November the Housing Secretary, James Brokenshire, visited the opening of a modular site in Knaresborough. He stated that there was a need to ‘challenge the way we have done things in the past’ and ‘scale up and build more, better and faster’. The Royal Institute of Chartered Surveyors also voiced their support of modular homes to help meet the Government’s target of delivering 300,000 homes a year.

Providers of social housing have been reviewing  the implications of modular homes for some time now with the planning, securitisation, logistical, skills and scale issues they raise.  As early adopters put their toe in the water, the industry will be watching carefully to assess whether this is going to be part of the solution to the chronic undersupply problem that exists.

If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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