Why modular homes have failed to gain ground in UK

Modular housing is frequently touted as a panacea to the UK’s housing crisis; according to a new report, conditions are aligning to prove that offsite manufacturing can bridge the gap between what the traditional housebuilding industry can deliver and what London needs.

To date, there has not been the volume of demand and continuity of supply to justify the up-front capital investment needed to build the plant to manufacture the product, the report says.

Traditional funding and financing models are not geared to the requirements of OSM where there is a need for greater ‘upfront’ finance and where smaller manufacturers can access credit at the risk levels involved.

There is also very little guidance anywhere that applies specifically to OSM housing, and this may be reinforcing the slow pace of adoption by local authority elected members and technical officers.

Innovation is a feature of OSM and this has led to a plethora of designs and systems bringing with them issues of intellectual property rights that often challenge the conditions required by manufacturing in volume and is a deterrent to contractors and lenders. Furthermore, the absence of OSM specific design codes and standardisation is holding back the development of the sector.

Rory O’Hagan, director at Assael Architecture, said, “Having a standardised design code will increase familiarity, lower barriers to entry for manufacturers and de-risk financing through advocating a design approach that unleashes the full potential of offsite technology. This means revisiting some guidance in the existing London Plan in terms of apartment building design, which just isn’t suited to optimising offsite technology. With strong strategic leadership, the mayor can ensure we get the most out of this exciting opportunity.”

The full advantages of OSM depend on scale and continuity of demand. Few institutions are large enough to achieve this critical mass, but London lacks collaborative partnerships that can deliver at the scale required.

Existing housing partnerships, or indeed organisations such as the G15, that might offer the basis of collaborative partnerships have yet to demonstrate a successful approach in London.

Government construction advisor Mark Farmer said the report “sends an unequivocal message to the Mayor of London that now is the time to show strong political leadership” in delivering an OSM revolution.

“This timely report sends an unequivocal message to the Mayor of London that now is the time to show strong political leadership to establish a mainstream precision manufactured housing market in the capital,” Farmer said. “It could underpin ambitions not just for housing, but for wider economic growth.

“There is also a great opportunity for the Mayor to align with national policy and the growing cross party consensus on the role of offsite manufacturing as well as tying this into his separate ‘Skills for Londoners’ manifesto commitment and the Construction Academy Scheme initiative. Future skills in construction may look very different to what we currently see on a building site, and we should be planning ahead for this in London right now.”

An increasing number of low-rise and high density modular buildings are being constructed across the country with full guarantees from mortgage lenders and insurers.

Christy Hayes, CEO at Tide Construction Ltd, currently the UK’s biggest OSM developer, said, “This is an extremely welcome report that makes some excellent recommendations for driving demand in offsite construction. The single most important thing needed for companies investing in OSM housing is certainty of demand. If, by becoming a market maker, the Mayor can drive continuous growing demand for offsite manufactured homes, we will see significant investment in this sector which can only be good for everyone.”

Moving production from the construction site inside to a factory environment has many other benefits, especially in attracting a new demographic to the industry and diversifying the workforce. Being able to offer professional ‘careers’ in a permanent place of work should help the industry attract a broader pool of talent – especially women and young people.

The report recommends that the Mayor should:

  • Look at the potential of using TfL-owned land to stimulate the OSM sector;
  • Create a standardised manufactured housing design code to help drive scale & minimum quality standards;
  • Provide clear and strong leadership in the development of awareness of OSM’s potential and encourage the use of OSM to achieve wider strategic objectives;
  • Announce a further round of his Innovation Fund specifically focused on OSM;
  • Set up a London-specific fully pre-qualified OSM led procurement framework.

Nicky Gavron AM, report author, said, “Meeting London’s housebuilding target is a huge task and traditional construction techniques will only take us so far. Offsite Manufactured Housing is an innovative, forward-looking and exciting way to close the gap. These buildings are high quality and outstanding in terms of performance. Their construction is more environmentally-friendly than traditional construction methods and they are a far cry from their prefabricated predecessors.

“Few will disagree that using vacant public land to build homes quickly and with less pollution and disruption could be great news for London, tailored to demands at every price point.”

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