The percentage of homes built offsite remains low due to concerns from housebuilders, but with new government thinking MMC could provide urgently needed housing
We all know there is a severe housing shortage in the UK and the number of homes we require to meet the needs of the nation seems to change daily, especially since the Office for National Statistics has just revealed that it may have overestimated the country's requirements for accommodation. Nevertheless, around 300,000 new homes per year is the current consensus and it is just not going to happen. To put that into perspective, the latest planning pipeline report by the Home Builders Federation shows that 391,000 homes were granted planning permission last year, more than double the 183,570 actually built.
It is not surprising therefore that, apart from the ongoing Brexit fiasco, housing was one of the hottest topics during this year's party conference season. The message coming from all parties was that we need to build quicker and smarter. This political emphasis on housing was underlined by the prime minister's sudden new commitment to support local authority housebuilding. This was as jarring as hearing the tones of ABBA's Dancing Queen unexpectedly transitioning into a metaphorical Money, Money, Money. It was certainly welcomed by local authorities but left many of us wondering where the funding for supporting infrastructure would come from and who actually would build these homes - with so many restriction on tradesfolk post-Brexit.
Perhaps like me the PM has noted the growing adoption of modular techniques in residential as well as in commercial construction. It has to be said that the widespread use of modern methods of construction (MMC), or offsite construction, premanufacture, or design for manufacture and assembly (DfMA) - as it is variously described - is nowhere near at full capacity, and many remain to be convinced. Indeed, there are no reliable figures for the proportion of UK homes currently built offsite, but it is estimated to be less than 10% of total output. So, should it be more?
Ken Shuttleworth, one of the UK's leading architects, certainly thinks so: "Housebuilders remain a way behind the office market […] where modular has been happening for years. We're still seeing people building houses like they did in Roman times," he told me.
Most would agree that with tradespeople in short supply there is an urgent need for the industry to reduce the demand for on-site labour, which is one of the potential benefits of modular construction. It is estimated that over the next 10 years there could be as much as a 25% decline in our construction workforce (even without factoring in the potential loss of the 8% of UK construction workers who hail from the EU).
We need new ways to build.
A report from the House of Lords science and technology committee agreed, saying: "The construction sector's business models are no longer appropriate and are not supporting the UK's urgent need for new homes and infrastructure. The sector needs to build more trust and create partnerships so that companies can work together to improve the uptake of offsite manufacture."
The committee heard evidence that if the government is to achieve its aim of building 300,000 homes a year by 2020, such methods would be the only way to meet this target, as traditional methods just do not have the capacity to build homes in large enough numbers.
That said, there is risk for the builder - offsite manufacture requires high capital expenditure to create the factories to make the modular sections. The view of many is that without a guarantee of work it could be an expensive mistake. The business model of most private sale housebuilders in the UK also makes it desirable to build homes at the same rate as they can sell them, which for standard edge-of-town sites is one to two homes a week - easily within the capacity of traditional construction. Hence, the ability to build faster with MMC doesn't necessarily enable the housebuilder to make a return any quicker. So, while developers of homes for rent such as Legal & General are betting on receiving a big financial boost from the principal benefit of MMC - its speed of construction - the fact the majority of homes are built for sale means this speed isn't valued by most housebuilding firms.
It is a case of commercial reality versus societal need. It is not all about land and planning, as many would have us believe. If we want more houses built we may need to move outside the traditional construction process in order to achieve this.
Some suggestions, then: The government must make consideration of modular a requirement for receipt of public funding, in order to generate a consistent pipeline of work. This pipeline would provide housebuilders with clear justification for committing to investments in UK-based factories, which would create jobs and reduce expenditure associated with logistics. The government could then invest more in the housing types most commercially suited to modular construction, such as private and affordable rented homes. Finally, more must be done to ensure clients understand the savings they could achieve over the lifecycle of their projects, so that modular construction becomes a standard requirement and not an unknown quantity.
As new innovations such as 3D printing of materials become available, the industry must discard its risk-averse attitude to new technology and harness, manage and adapt in the way other sectors have done to their benefit. This is the future.
Image: Richard Steer is chairman of Gleeds Worldwide
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