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Modular Housing: Homes of the Future?

We explain the concept behind modular housing, before investigating its advantages and disadvantages.

Modular housing is being scrutinised as one option for alleviating the UK’s housing shortage; the method offers rapidly constructed houses and lower build costs. The Government has modular construction firmly in its sights as a means of increasing the pace of housebuilding and creating good quality, energy efficient houses. Homes England, the Government’s housing agency, is carrying out research and investing into modular building by partnering with specialist firms to build homes. Modular housing is not a new concept, it has been used at various points in history when a need for speedily-built houses arose, such as during the post-war boom in the UK and USA when shortages of steel and labour were experienced, however, the demand was not sustained. Now, digital tools and lighter-weight materials are changing perceptions of modular housing, making it more appealing and it could become a significant market disruptor (McKinsey, 2019).

What is Modular Housing?

The term applies to houses which are built in sections in a factory using precision technology; the sections are then transported to the build site and constructed on a pre-made foundation. Head of Construction at the Royal Institution of Chartered Surveyors (RICS), Alan Muse commented that Modern Methods of Construction (MMC), the technology behind modular house-building, are one solution to boosting housing numbers in terms of certainty of delivery and quality of finished product. “Modern Methods of Construction can be a complete solution, i.e., a fully pre-fabricated building, or a part-solution, involving off-site construction,” he said. “With traditional construction, there is often a lack of skills, the resulting house is late and not to the required quality. MMC accounts for 3-4% of the UK construction industry and the government is keen to increase this percentage.”

“Other countries such as Scandinavia and Germany have a higher rate of MMC, so we can see how they are achieving progress. At RICS we are keen to see improvements in construction and technology.”

Mr Muse pointed out that there are issues with transporting modular buildings as more carbon is involved which is a disadvantage. He said that they work best in rural or semi-rural areas, especially schools and hospitals, where there is space to bring the modular components together, rather than on an urban building site, where logistics involving cranes and transport lorries are a problem.

He added: “MMC is also useful in refurbishment and renovation work, and allows for adapting existing housing stock; there is a drive to adapt our town centres to residential housing and MMC can come into play here. It also helps with capacity, skills shortages and takes away on-site risks such as weather. The more industrialised construction becomes, the more risk is reduced.” Mr Muse commented that in the UK pre-fabricated buildings have unfortunate connotations, but this is a cultural issue which will change with the quality, look and feel of more highly engineered houses.

Advantages of Modular Construction:

Price: modular buildings cost less than traditional buildings, depending on factors such as materials, design and location. The lower costs mean that they can provide buyers with a first step onto the housing ladder.

Speed: the standardised design means that modular construction is far quicker than traditional building methods, making it a less costly option. The speed of implementation means a shorter investment time, therefore lower costs for any investor and more homes can be built within a budget than traditional builds. Windows can be fitted, internal walls can be plastered and even bathrooms and kitchens can be put in place in the factory, ready for connection on site (This Is Money, 2021). The speed of build reduces site overheads and construction management costs: it can take up to 50% less time to build a home, (McKinsey, 2019). The factory-built model also eliminates delays caused by bad weather as sections are mainly constructed under cover, reducing the number of construction days lost to bad weather.

Environmental: eco-friendly materials can be used in the construction and modular sections use less power to produce. Construction involves less waste due to the precision manufacturing process, resulting in a lower carbon footprint. Homes can be installed with the latest eco-technology such as solar panels and ground source heat pumps, making them highly insulated and airtight, reducing bills, making it an attractive option for affordable housing and tackling fuel poverty. The cost of green improvements is predicted to fall which may enable the modular format to become mainstream as a way of decarbonising housing stock at scale, helping to meet net zero carbon goals (This Is Money, 2021).

Energy efficient: lower utility bills can be achieved as a result of energy efficiency measures; some models are being made with zero-carbon capabilities, offering buyers the possibility of zero energy bills. Modular homes can also achieve high EPC ratings.

Workforce: construction does not require a highly skilled workforce, offering job opportunities for unskilled workers on production lines (Building products.co.uk, 2018). The factory construction model also removes the need for contractors to travel long distances to building sites.

Less waste: the building industry generates high quantities of waste; factory-built products are efficient as it is easier to calculate the amount of material needed and less is stolen from site. Purchasing volume creates discounts on materials, however, modular buildings require more construction material than conventionally built homes as they must be reinforced for delivery to site.

Durability: the extra reinforcing measures which enable the sections to be transported result in a strong product; the fact that they are precision-engineered adds to durability.

Acoustics: sound insulation qualities can be superior to those found in traditional builds. As each module is a separate construction, when connected, the modules are protected from transferring noise from one to another.

Flexible uses: modular buildings can be used as emergency accommodation, being portable and quickly erected. They can also be a useful option in remote areas.

Design flexibility: specialist software can allow for bespoke modules to be created. 

Disadvantages of Modular Houses:

Financing: this is a relatively new market; lenders are cautious about offering mortgages on prefabricated buildings which are classed as `non-standard construction’. A borrower seeking a mortgage may find few options and face higher costs, however, if the building firm has relevant accreditations it helps. Obtaining insurance may also prove difficult, depending on the construction materials; specialist insurers exist but choice may be limited (This Is Money, 2021).

Consumer Concern: potential buyers may have concerns over quality control construction guarantees. Peace of mind may be offered by the BOPAS (Buildoffsite Property Assurance Scheme), a risk-based evaluation that can be used to show lenders, valuers and purchasers that homes built from non-traditional methods and materials will last for at least 60 years (Bevan Brittan, 2018). It is also possible to obtain 10-year NHBC certifications.

Land restrictions: some areas have restrictions regarding the type and design of house that is permitted.

Resale: while the value may appreciate, a prefabricated building may deter some buyers.

Do you think that modular housing is the way forward?

Let us know your views about whether this is the best way to get more homes built, more quickly, by sending us a comment.

References

McKinsey. 2019. Modular construction from projects to products. [Online]. Available from: https://www.mckinsey.com/business-functions/operations/our-insights/modular-construction-from-projects-to-products (Accessed 4th October 2021)

This Is Money. 2021. Goodbye bricks and mortar. [Online]. Available from:  https://www.thisismoney.co.uk/money/mortgageshome/article-9745083/Goodbye-bricks-mortar-visit-factory-pumps-two-houses-day.html (Accessed 1st October 2021)

Building Products.2018. Are modular homes the answer to the UK’s housing crisis? [Online]. Available from: https://buildingproducts.co.uk/are-modular-homes-the-answer-to-the-uks-housing-crisis/ (Accessed 1st October 2021)

Medium.com. 2018. Advantages and disadvantages of modular homes. [Online]. Available from: https://medium.com/@piotrgoawski/advantages-and-disadvantages-of-modular-homes-3592799ea  (Accessed 1st October 2021)

BBC. 2021. Shetland fires should act as a warning to the modular building industry. [Online]. Available from: https://www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-57942459 (Accessed 1st October 2021)

Bevan Brittan. 2018. Modular homes. [Online]. Available from: https://www.bevanbrittan.com/insights/articles/2018/modular-homes-can-they-help-solve-the-housing-crisis/ (Accessed 1st October 2021)

GOV.UK. 2021. Ground-breaking partnership delivers first modular homes at Northstowe. [Online]. Available from: https://www.gov.uk/government/news/groundbreaking-partnership-delivers-first-modular-homes-at-northstowe (Accessed 4th October 2021)

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