Beyond Brick and Block

Last year the Building Society Association (BSA) came out firmly in supporting offsite construction as a positive way of providing well-designed, quality, affordable homes quickly. The recent Housing White Paper also brought into focus questions surrounding mortgageability and long-term value for banks and lenders for offsite manufactured homes. 

The amount of newbuild housing required to ease the UK’s residential crisis are well documented. But if the annual target of 250,000 homes a year is to be met, there needs to be a shift in the way that lenders make money available so that it can actually happen.

The financial sector has become a more risk averse world in recent years and lenders always operate in a climate where unknown quantities are not overly welcome.  At the moment offsite manufacture is one of those – still regarded as a mysterious construction sideline when approached for funding.  We live in a world in motion where the technological advances of offsite manufacture have given rise to new materials, new techniques that reduce this element of uncertainty and risk.  

As the BSA says in its report ‘Laying the foundations for MMC: Expanding the role of Modern Methods of Construction, one potential solution to the UK housing crisis’: “One of the challenges is that as some of these construction methods are so new, there can be little or no historical data demonstrating how they will weather and the likely lifespan they will have. This is clearly a challenge when mortgage terms are 25 years plus and getting longer.”

Housebuilding in the UK is reaching – if not already - an historical tipping point. We are decades behind other parts of Europe in the understanding and adoption of offsite manufacture to any meaningful degree. So the wider understanding of offsite by the lending fraternity is essential for it to really make a difference to increasing housing levels. “We have to explore radical solutions to solve the housing crisis,” says BSA Chairman Dick Jenkins. “To get there we rely on Government to lead the way and break the cycle in relation to new construction technologies.  At present supply is so low that lenders can’t routinely lend on these properties because they don’t fully understand the risks and builders won’t build more of this type of home because mortgage lending is in limited supply as is home insurance.  For the sake of consumers, these types of building technology must become as conventional and mainstream as brick and block has been for the past 100 years.  If we do it could be a game-changer.”

The BSA Report, while using an outdated term in modern methods of construction (MMC) is excellent and outlines a pragmatic approach for lenders to get to grips with offsite methods without being blinkered to historical problems.

Outside of the offsite bubble, many operating within the built environment still need convincing. In some circles the term offsite construction still conjures up images of dreary, post-WW2 temporary prefabrication and all the inherent problems of quality and longevity. The BSA report even goes as far to say that the term ‘prefab’ should not be used any longer, as the term is generally associated with the poor quality emergency housing of the past. The recent Housing White Paper (covered across this issue in some depth…) has also prompted several commentators to express reservations.

As reported in trade paper Mortgage Introducer, Simon Read, Managing Director of Magellan Homeloans, was quoted saying: “The challenge is whether they’re going to be standing in 25 years and until you’ve gone through 25 years you just don’t know. Workmanship is an issue because it’s all well and good saying it’s created in a workshop and fitted onsite but if the person onsite doesn’t put the right amount of screws in, or insulate or put the cladding on right you end up with a house that rots on the inside and you don’t know it’s happened until it falls down.” 

Matthew Wyles, Executive Director of Castle Trust, also added “I think I’d rather spend 12 months building something that’s going be able to stand for 100 years rather than something that after 10 years will be uninhabitable. I’d like to challenge how many of these good people who come up with these prefabricated schemes want to live in these properties themselves or want their children to live in them. Offsite construction is about speed, and quality and durability should come ahead of speed.”

So that is the other side of the coin. Comments based on an entrenched view of ‘traditional’ brick and block construction, or little in-depth understanding of what offsite construction offers? The point is that many lenders hold similar views surrounding quality and longevity.  However, advances in factory technology, precision engineering, digital CNC/CAD systems with building information modelling (BIM), improvements in material specification and quality management, means that offsite construction now offers as the BSA aptly point out: “almost unimaginable improvements in performance compared with earlier generations.” The quality differences of a 21st century offsite manufactured building to those rickety prefabs of the 1940s is off the scale. 

How to make things better and ease concerns? The BSA report outlines 10 key recommendations for the housing industry and its shared responsibility to support new techniques in housebuilding.  These include valuers and lenders understanding the multiple different systems of offsite available, the standardisation of terminology and systems with more reliable, independent and factual information developed and made accessible to lenders – provided through a single Government-approved gov.uk page. 

Another critical recommendation centres on a newbuild warranty being required by lenders before accepting a newbuild property as suitable security for mortgage purposes. This should see a significant increase in offsite volumes and warranty providers will need the capacity to meet this rising demand. The BSA recommends that the capacity of warranty providers is monitored to ensure policies remain robust enough and readily available without compromising on quality and be continually reviewed.

The housebuilding and construction sectors are striving to modernise and change the ways they do business. It doesn’t take that long to get used to doing things differently. Often those different things are better. If the neverending saga of the UK’s housing crisis is ever to ease, the UK’s banks, building societies, surveyors and valuers need to collectively do something similar. 

For more information visit: www.bsa.org.uk

Source: Offsite Magazine - Issue 5