House builders and barriers to modern construction methods

London’s largest housing associations have committed to building as many as 180,000 homes nationwide by 2025. In this Future of Housing guest blog, Charles Glover-Short, Corporate Research at Optivo Housing, explains how modern methods of construction can help meet this target, highlights what the methods are and why the industry should be pressing for their implementation more widely.

The G15 – a group of London’s largest housing associations – has pledged to expand their use of modern methods of construction (MMC) in order to build the 180,000 homes that have been promised in the next decade and a half. Broadly speaking, MMC involve some element of pre-fabrication or off-site manufacture. Panels, three-dimensional modular units (eg, bathroom or kitchen ‘pods’) or even complete houses can be precision-manufactured in a factory, transported and then assembled on-site. The benefits this approach offers in terms of construction speed are clear. Work to prepare land and lay foundations can take place while homes are being manufactured. This enables significant time savings.

But that isn’t the only advantage. Modern methods offer increased build quality, improved thermal efficiency and less disruption to surrounding communities as work takes place. They’re also less labour-intensive than traditional methods, which is becoming more and more of a virtue given the likely effects of Brexit on an already restricted labour supply.

One of the G15’s largest members, L&Q, announced an ambition to use MMC on all its development sites by 2025. Currently one in five of L&Q’s sites use MMC. It’s also aiming to deliver its first fully offsite home by 2028. Other G15 members are also adopting MMC, albeit on a smaller scale. At Optivo, we’ve partnered with Pocket Living to deliver a new 21-storey residential tower in Croydon. The 153 apartments at Addiscombe Grove, all of which will be affordable, will be made up of 300 room modules or ‘pods’ assembled off-site before being put together at the installation stage.

Despite this progress, there are still some quite substantial barriers delaying the more widespread adoption of modern methods of construction. Most of these relate, in some way or another, to cost. As part of our submission to the Homes, Communities and Local Government Committee’s ongoing inquiry we outlined some of the steps the UK Government and others could take to encourage housing associations to adopt MMC more readily.

Making MMC the obvious option

One such step relates to capital grants for new homebuilding. MMC require much greater upfront investment than traditional methods. The costs of opening a factory and securing the necessary materials and labour mean initial costs are invariably high. Government could help by offering specialised and more flexible grant funding to allow housing associations to adapt to the different cash and risk profiles. Preferential grant rates for associations committing to a particularly high proportion of MMC could also help drive demand.

Another relates to the planning system. MMC are especially vulnerable to planning delays and any late imposition of design tweaks by planners. That’s because designs are typically ‘frozen’ at an early stage to enable off-site manufacture to commence. And economies of scale, which are so vital for MMC, depend to a large extent on standardisation. In our submission to the committee, we suggested housing developments featuring a high degree of off-site manufacture, perhaps 50%, could be subject to a streamlined planning process.

A third concerns standardisation. The sheer diversity of design standards currently available makes it difficult to achieve economies of scale and contributes to the continued lack of confidence in MMC held by lenders, valuers and insurers. Some form of industry accreditation, in the form of a manufactured housing design code, for example, could make MMC a much more straightforward and attractive proposition for a number of stakeholders.

Signs are we’re reaching something of a tipping point with MMC. Certainly, the news Amazon and Alphabet (Google’s parent company) have invested in the methods is further evidence of an impending sea change. G15 members are already embracing the technology and, with a little more help from government, could become some of the leading providers of homes manufactured using modern methods.

Charles Glover-Short, Corporate Research at Optivo Housing. You can follow Optivo on Twitter @optivohomes.

This guest blog is one in a series and is part of our new Future of Housing programme. Find out more about our work in this area by visiting our new Future of Housing hub.

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Our Future of Housing blog series is intended as a platform for open debate. Views expressed are not necessarily those of the Connected Places Catapult.