The BSA is calling for expansion in the housing market and that's not just numbers, it also means diversity of housing supply including modern methods of construction (MMC).
Paul believes MMC has the potential to radically speed up the housing supply, particularly offsite construction; but there are challenges to be overcome before MMC can be fully embedded into lending policy. Lenders have a responsibility to understand innovation in house building but it's a big ask to expect lenders to fully assess every variation of MMC.
In November 2016 the BSA published its report, Laying the Foundations for MMC. The report identified barriers - the decision to lend on a property of non-standard construction cannot be made in isolation. Lenders need to consider whether it is in a desirable location, are there other properties of a similar type in that area, is infrastructure in the locality adequate?
The report came up with 10 recommendations to boost the take-up of MMC. Government should lead the way to facilitate the conversation across the industry and a technical group was set up bringing together lenders, housebuilders, warranty providers, insurers and surveyors.
Three field trips have been arranged by the BSA for building societies, surveyors and warranty providers. The first was to Legal & General's house building factory to learn how modular homes are built.
The second trip was to Almere in the Netherlands - a town of self and custom built homes popular since the 1970s. In the plot shop, buyers can choose the plot and how it is built - it's very flexible. Homes are built out of a variety of products including cardboard covered with breathable foil. Initially in the 1970s there were reservations about some of these properties but that was soon superseded by confidence the Netherlands has in building regulations and trusting the durability. So far Rabobank has had a good experience of MMC. That's what can be done in a market that is open to innovation.
The third visit was to Graven Hill, Oxfordshire where 1,900 homes are being built - it is the largest site of its type in Europe. It is council owned and built on former Ministry of Defence land. There is also a plot shop for self and custom build homes - predominantly timber and insulated concrete board but also hemp solidified into insulating boards.
MMC has the potential to deliver high quality housing quickly. Lenders will need to know what the lifespan of these buildings are to ensure they are suitable security. But customers also need to be educated about the maintenance of these properties. BOPAS (Buildoffsite Property Assurance Scheme) can provide warranties for the properties.
Image: Paul Broadhead, Head of Mortgage Policy, Building Societies Association
Original link - Mortgage Finance Gazette
