John Carter, commercial director for commercial real estate, Aldermore, explores how modern methods of construction (MMC) can help ease the current pressures felt by the UK construction industry
In recent years, there has been a greater emphasis on modern methods of construction (MMC), which have become increasingly popular in the construction industry. MMC is a wide-ranging term that covers many different types of construction techniques, new technologies and ways of working. Many argue the adoption of such techniques is key to fulfilling the UK's housing demand and to resolving challenges arising from the ongoing labour and materials' shortages.
Indeed, a recent report from the Building Back Britain commission1 argued that the UK requires a new national housing strategy that makes greater use of MMC in order to achieve the goals set out in the government's levelling up agenda. There are many compelling reasons to invest in MMC, yet despite this, to some lenders, it is still relatively unfamiliar and they, therefore tend to take a conservative approach when deciding whether to invest in such projects.
Utilising MMC practices to meet the UK's housing demand
The UK construction industry has had to deal with the reality of their ageing workforce for some time, however, labour shortages have been accelerated by the effects of Brexit which saw many EU workers relocate outside of the UK. This issue has been exacerbated by the pandemic, which contributed to materials' shortages. The availability of crucial materials, such as timber, are in scarce supply, leading to an inflation of prices. With the outlook unlikely to change in the near future, MMC can appear more appealing for a number of reasons.
Back in 2019, the House of Commons Housing, Communities and Local Government Select Committee's report2 on MMC acknowledged the need to adopt more MMC in order to increase volumes in the industry and attract young talent into the profession with the convenience, added safety and digital working opportunities which MMC offers. There is also less material waste involved in MMC practices, allowing for more efficient use of materials.
MMC techniques can bridge the gap between sustainability and construction practices that have edged higher up on many businesses' agendas, and rightly so. With current technology, MMC has the capacity to help build better quality houses, efficiently and at a faster pace.
In the UK, many housebuilders are starting to adopt MMC practices such as modular housing. Modular housing involves various components being made in advance, then put together on site. This allows them to be built in a fraction of the time of traditional construction methods.
In fact, it's estimated that the adoption of MMC techniques can reduce construction programme time by 20-60%, while there is potential to see a significant reduction in construction costs3 when compared to traditional techniques.
Indeed, utilising offsite factories in itself provides a range of benefits. When looking at working conditions, offsite factories offer a safer, more controlled environment for construction workers.
Furthermore, it is inherently a less wasteful process, offering an overall reduction in energy consumption for MMC-built homes, not to mention better air and sound quality for the surrounding area, due to a reduction in deliveries needed to be made on site.
Why do we need to support the adoption of MMC?
With MMC techniques becoming more widespread, the industry requires support in order for businesses, local authorities and government to look past barriers to adoption and support investment into MMC techniques.
The Building Back Better's report argues that the government should introduce a target of 75,000 homes built using MMC a year by 2030 and with greater tax incentives to encourage investment into zero-carbon MMC factories. Banks also have a role in helping to support investment into more sustainable practices.
However, when making any lending decision, the primary consideration should be the quality of the proposed development. Any build must be of high quality in order to meet and retain its value against which funding can be advanced.
For Aldermore, accreditation under the Build Offsite Property Assurance Scheme (BOPAS) is a critical requirement when considering any MMC project. BOPAS is a risk-based evaluation scheme that demonstrates that a property will stand the test of time for at least 60 years – thereby showing that development meets quality and sustainability considerations. We may also look for other warranties too, such as NHBC certificates for residential properties.
Earlier this year in June, Aldermore provided an £8.4 million development finance loan to Citu Group, a low carbon property developer which specialises in using MMC techniques. The loan financed part of Citu's new Kelham Central scheme in Sheffield, delivering 46 residential units.
The timber panels used at the Kelham site are being manufactured at Citu's own off-site manufacturing facility less than 35 miles away and are designed in collaboration with Leeds Beckett University. Using sustainable technology, Citu is able to create high-quality homes that vastly reduces construction time and waste and will radically reduce homeowners' carbon footprints once occupied.
While the road to achieving net zero and the UK's housing demand by 2030 will not be without its challenges, modern methods of construction (MMC) offer the industry a step forward in adopting more sustainable, safer and efficient ways of working that should not be overlooked.
At Aldermore, we are embracing such changes in construction and are committed to working closely with construction firms, housebuilders and property developers to provide funding solutions to deliver the much-needed homes this country needs.
Source: PBC Today
