In Elements’ factory in Telford, Shropshire, workers are making homes destined for a 23-floor high-rise in Greenwich, south-east London.
Each module takes seven days to make: on day three it is painted, on day four the windows are installed. Electrics and plumbing are fitted, and all the furnishings are included – down to the soap dish and coat hooks.
On the eighth day, it is ready to be transported by road and craned into the site on Deptford Creek for a rental scheme developed by landlord Essential Living.
Modular – or offsite – construction could hold the key to unlocking the UK’s housing crisis. Last year, just 142,890 homes were built, below the Government’s target of 200,000 a year to hit one million by 2020.
In a survey of 230 house-builders by the Build Show, a trade event, 67pc said that offsite construction will play a key role in new-home supply. The reason: speed. The build time for these homes is cut by six months or more.
It’s still small, though. Mark Farmer, founder of advisory group Cast, estimates that just 15,000 homes are constructed offsite a year, alongside prisons, schools and student accommodation.
But the number of large companies entering the market, such as Legal & General and Laing O’Rourke, suggests that the industry is rapidly expanding.
In Greenwich, 632 modules will be stacked one on top of another, plugged into a concrete core, with 20 arriving a week. Each apartment is made up of two or three modules, with the façade covered onsite. They can be built as large as necessary; the only restriction is what can be taken on the road.
Essential Living’s Greenwich scheme, Creekside Wharf, is London’s first build-to-rent block designed specifically for families; its newest block, Vantage Point, in the redeveloped Archway Tower in north London, and is due to open on Sept 1.
L&G’s £55m, 500,000-sq-ft site, due to open later this month near Leeds, is fully computerised and automated, and can produce 3,000 homes a year for its build-to-rent schemes. The factory does not require the same level of skill as Elements. “It is much more akin to the manufacture of cars on a production line,” says James Lidgate, head of housing at L&G.
The emergence of modular homes is also a way of hitting house-building targets while dealing with a skills shortage, says Farmer. The shrinking construction workforce, which is partly down to demographics, is likely to be exacerbated by a lower reliance on EU labour after Brexit.
“The amount we build with the labour we have needs to improve,” says Farmer. “Productivity has been pretty poor, and we have built in the same way for the last 50-100 years. To offset the critical shortage of labour we need to change the way we construct – and that’s with modular.”
Offsite construction works best with the burgeoning private rental sector, funded by institutional investors. This is because the modules are made on a large scale, designs can be repeated and, crucially, the six- month advantage they have over a traditionally built block, meaning rental income can come in sooner. "Once we have designed a product, we can repeat it, becoming more cost effective as we go," says Simon Underwood, chief executive of Elements.
Creekside Wharf was initially meant to be built traditionally. “Cost inflation in traditional construction has been substantial. Offsite methods are, as a result, more price competitive,” says Martin Bellinger, chief operating officer of Essential Living.
L&G sees the future of building houses for sale much like what happened in the United States in the first half of the 20th century, when you could choose the design of your home in a Sear’s catalogue, and it would be delivered soon afterwards.
It is also starting up its own pipeline of land, with a site in a Crowthorne in Berkshire, and foresees opening many more factories to deal with demand.
There is scepticism in the industry, since in order to take off, it needs scale. Underwood admits that “barriers to entry are high with significant investment involved”. Many of the major house-builders are talking about modular homes, but may be a long way off committing to it. In part, this is because they can only sell homes at a certain speed, but renting out homes can be done more quickly.
Another hurdle is investment. “The difficulty of listed house-builders is that they are so focused on return on capital: why invest thousands in a factory when you don’t need to?” asks Lidgate.
“Where some have dipped their toe [into building modular homes] they have not invested in the longer term because they don’t need to, when they are thinking about immediate development opportunities.”
Berkeley Homes is one exception. After starting to build in the traditional way in a development in Kidbrooke Village, south-east London, it has since switched to modular because of the quick delivery times.
Another is Pocket Living, which is using modular methods to create apartments for sale, using standardised designs. It is currently finishing a scheme in Lambeth, south London, where flats are sold to first-time buyers at a 20pc discount from market value.
The chief executive, Marc Vlessing, says that "it seemed a natural move for us. In short, it has proven to be faster (it shaves about a third off the delivery time), more efficient (waste is reduced by 90pc) and less disruptive in close urban environments (60pc fewer truck movements)."
There is also an issue of perception: by buyers, who think of modular homes as resembling a Portakabin, and by lenders, who fear the quality is lower.
"We need to make [the construction method] more widely accepted, as it is a crucial technology that we should be deploying," says Vlessing. "We need the right manufacturers to gain widespread support so consumers and lenders can have complete confidence on the quality of the end product."
However, they are coming round to modular homes, partly due a new insurance-backed warranty scheme. So is the offsite house-building revolution here to stay? “The house-builders are fine at the moment but there will come a point when they have to change,” says Lidgate. “And the forward-thinking ones are thinking about offsite manufacturing.”
Original link - Telegraph
