A SOLUTION TO OUR HOUSING CRISIS? | Mayo Wynne Baxter
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A SOLUTION TO OUR HOUSING CRISIS?

That there is a serious housing shortage in the UK is not in debate. The government estimates that a million new homes need to built by 2020 and at the moment we are building around 140,000 a year.  There is also little argument about the damage this is causing on a wider social and economic level both in terms of creating an inter-generational divide in home ownership and an unsustainable housing bubble.  Solving this problem is not going to be easy but new technology may provide part of the solution.

Policy makers are showing increasing interest in prefabricated modular homes. These are being developed on assembly lines with precision engineering and are a far cry from some of the less appealing architectural innovations of the 1960s and 1970s. At the moment around 15,000 homes are built this way in the UK each year.

At the end of last year a Housing Association signed a landmark £2.5 billion joint venture with a Chinese owned State Construction Company to build 25,000 new homes over the next five years.

Whether the EU referendum and a resurgent nationalistic impulse threatens further similar projects remains to be seen but if the factories and technology can be developed in the UK then there could be electoral and economic dividends in terms of new jobs and new skills both of which are likely to remain high on the political agenda.

The main advantages of modular designs are two fold – Speed and Cost.

Modular Homes are constructed off site and transported to their final destination resulting in a quicker and cheaper building process. It is estimated that off site modular homes can be built in approximately half the time of houses built using traditional construction techniques as the modular home can be built in the factory while the foundations are being laid.

Developers also claim that modular homes are made to a more consistent standard and labour costs are easier to control as less “on site” skilled labour is required. It is also claimed that the building process is safer and there is less scope for construction related accidents.

Advocates of the new modular style homes argue that the properties are more energy efficient and will be cheaper and more efficient to heat. Designs can also be customised easily.

If the modular homes are less expensive to build then they should be less expensive to buy – good for consumers but perhaps less good for the established large home builders who may find their traditional business models are threatened and profit margins squeezed.

So are there any downsides?

Critics of modular homes cite the fact that at the moment materials used are normally imported from abroad and that this offsets some of the environmental advantages of the “air tight” modular designs. There is also concern that the demand for locally sourced skilled labour may decrease.

In the past mainstream mortgage lenders have been wary of lending money against properties built on a “non-standard construction” basis. If the modular homes are structurally sound and durable it seems reasonable to assume that lenders policies will evolve to take account of these innovations.

So can we expect the trend to increase?

Historically the UK property buyer has been willing to pay a premium for desirable period homes with original features and it remains to be seen whether these latest innovations will usher in a revolution in the UK housing market or whether the constriction of modular homes will endure as a niche cottage industry.

Either way many will be playing close attention to the government’s White Paper on housing reform due to be published shortly, for signs of just how committed it is to innovation in this sector. If we don’t take advantage of the new technologies and invest in UK capacity and skills in this area then we risk losing these new jobs to firms located overseas.    Burying our head in the sand on the assumption this is passing fad may be an opportunity missed.

By Daniel Pike

Solicitor

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