Trends

THE REVOLUTION IS COMING!

There is justifiable talk that builders and developers are getting closer to their “Uber moment” – with the threat being modular or factory built homes.

Traditional methods of house building are expected to be 25-30% more expensive when modular methods of production reach optimum levels.

Other big advantages of modular building include speed of availability and consistency of quality. Once built, modular buildings can be installed and ready to occupy within a week or two, or even quicker.

With the UK apparently needing 3 million new homes over the next decade, fast-built modular homes could play a leading role in meeting housing targets.

Modular building methods are a clear and obvious danger to traditional builders and developers. If modular building continues its upward popularity, builders and developers may go the same way as high street taxi firms.

The modular building revolution has made a fairly unspectacular start, but those ignoring it do so at their peril. 

Modular house builder Comfortable Living say the average UK detached house costs:

  • £1,230 per square meter to build
  • £68,394 for building the average 67.8 sq m size
  • £126,592 grand total once external works, 15% risk allowance and 10% builder’s fee are added.

Comfortable Living state that they can supply an equivalent home for 20% below that cost.

An increasing number of house providers – especially providers of social housing – are taking a good long look at modular building.

The Birmingham Municipal Housing Trust (BMHT) – owned by Birmingham City Council – is set to trial a modular building initiative based on 50 pre-designed homes, with the scheme going into full operation in 2020 if successful.

The council is looking to contractors to offer “a turnkey approach” with homes “commissioned and ready to occupy”

Wolverhampton council has constructed modular housing units which are in use by its tenants.

Swan Housing Association in Essex has built its own modular factory and is set to deliver some 400 units per year going forward.

In a bid to tackle its chronic homelessness problem fast,  Bristol City Council is to trial several innovative solutions including two storey  modular homes from Totally Modular, modular apartments from Tempo Housing and “Zed Pods” – which are energy self-sufficient, can be built over and in conjunction with carparks and require no building land or foundations.

It seems inevitable that modular construction will provide ever growing competition for traditional builders and developers in years to come – especially in the social housing sector and in cities with an acute housing shortage and where quick radical initiatives are needed to address the problem.

The speed and affordability of modular house building are advantages no council hard-pressed to provide social housing can ignore.

The recent decision of the government to give councils full power to borrow to build council housing could give a massive boost to modular house builders.

Councils need more housing fast and modular house building could turn out to be the fast relatively cheap solution they need.    

Modular production opens up the way for investors without building skills to become housing providers. This could greatly boost the amount of investment in housing. 

However the speed at which modular building eats into the market share of traditional builders will depend on the ability of the newcomers to overcome various challenges including:

  • Not all modular units currently meet the standards of the National House Building Council
  • Time alone will tell whether modular units will stand the test of time and age well
  • It is not a given that buyers will prefer modular units given a choice even if they are cheaper
  • Time will tell whether modular units will hold their value and prove a good investment
  • Lenders will be cautious to lend on modular units until they are proven
  • Modular units need to comply with building regulations and new systems and perhaps legislation will be needed to ensure efficient and adequate building regulations compliance.   

Like with anything new, teething problems can be expected with modular housing.

However the need to meet housing shortages is such that many interested parties – not to mention the government, councils and housing associations – are likely to throw their weight behind the new kid on the block.

If housing targets can be met, that will operate to keep down house prices making housing more affordable to first time buyers, who have seen only modest wage rises since the credit crunch.

Factory-based mass house building also has the virtue of creating tens of thousands of jobs and giving a boost to the country’s long declining manufacturing sector.

Expertise gained will in time offer export opportunities to help meet world-wide housing shortages.

Builders displaced from traditional jobs should be able to find work, albeit of a different kind, in the modular homes factories which are springing up across the country.

Modular house building is set to be a game-changer for house building in the UK and across the world. That can only be a good thing with a UN report last month predicting that the world’s population will increase by 2.2 billion by 2050.

Dalton Barrett
Rebel Property Coach

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