Modular housing

Could modular homes solve the housing crisis?

July 13, 2022 PR Officer

Tim Foreman, Managing Director of Land and New Homes, LRG

The average UK house price hit a fresh high in May, rising for the 11th month in a row, according to Halifax data. However, as the annual growth rate slowed following the cost of living crisis, it’s clear that the UK needs to find alternative, more affordable ways to help first-time buyers on the property ladder. Now, retailers are part of the movement bringing innovative housing to our streets.

Although retailers are better known for furnishing the inside of homes, many are now turning their attention to bricks and mortar to help tackle the national shortage of homes.

John Lewis is targeting suburban locations and commuter towns in the South East with plans to build 10,000 rental homes. The company, which owns Waitrose, said it would build accommodation over supermarkets in Bromley and West Ealing in Greater London and replace a vacant John Lewis warehouse in Reading.

IKEA, famed for flatpack furniture, is also using its expertise in new ways to build affordable green homes in the UK. The Swedish furniture giant is delivering sustainable homes in partnership with Worthing council to build162 flats through its parent company, BoKlock. The green development is well underway, and its commitment to building homes as efficiently as possible to reduce costs and pass them on to homeowners – has led to a significant uptake in sales. With houses in the seaside town selling for around 11 times the average salary, Worthing Council says this innovative development utilises unused land and improves affordability for target groups such as local first-time buyers and key workers.

With the Government aiming to build as many as 300,000 homes a year by the mid-decade, factory-built properties could prove an attractive option. But just how affordable and sustainable is a modular home? And can factory-built houses truly solve the housing crisis?

The next generation of sustainable modular homes 

When people think of modular homes, they tend to associate them with the simple prefabs of a few decades ago, but the design and technology of factory-built houses have improved significantly since then. 

Today, many factory-built homes demonstrate the latest green architecture and technology, such as net-zero emissions, solar panels, rainwater systems, and recycled materials.

Modular houses are constructed in a factory, often right down to plastering walls and fitting kitchens and bathrooms to walls. Building them in factories according to specific measurements means there’s no need for excess material, reducing building waste significantly.

The home is then delivered to the site, ready for pre-treated timber frames to be slotted together. As most construction is done undercover in a factory, bad weather doesn’t hold up the work, making this a cost-effective and efficient method.

Should developers embrace modular homes?

The rise in the number of people working from home since COVID-19 has led to customers taking green credentials more seriously when buying their next home or property investment. A recent survey by LRG found that almost three-quarters (70%) of buyers nationwide would like their property to be more eco-friendly. As the cost-of-living crisis bites and energy prices skyrocket, eco-friendly fixtures that help reduce expensive energy bills are a selling point.

With consumer demand for sustainable housing growing, developers must think more innovatively about how to put eco-friendly materials and technology at the heart of their plans. 

While most developers have been installing eco-friendly features in properties for years, such as double glazing, heat insulation, energy-efficient boilers, and rated appliances, they can see the advantages building sustainably can bring to their business.

Developing properties takes time and money; like any industry, success is down to the financial bottom line. Development proposals that achieve sustainability are more likely to be warmly received by local communities – which may help developers with land allocation or securing planning permission.

Building off-site can also offset long, drawn-out planning applications, saving time and expense for developers. While developers may still have to go through lengthy planning permission processes, constructing a property in days instead of months means they will likely have a quicker return on investment. 

Just how green is green in the modular construction industry?

A recent study by Cambridge University and Edinburgh Napier University shows that a switch to modular construction could radically reduce the carbon footprint associated with the UK government’s ambition to build 300,000 better-quality homes. 

The report found that embodied carbon, the CO2 produced during the design, construction and decommissioning phases of development, is slashed because buildings require lower volumes of carbon-intensive products such as concrete and steel.

Of course, developers must also ensure they are managing carbon emissions from transporting modular homes from factory to site, and timber is taken from sustainably managed forests to prevent the critical effects of deforestation.  

Can modular builds solve the housing crisis? 

Despite Government efforts, there’s still massive demand for affordable homes in the UK, with housing and homelessness charities warning of growing waiting lists and increasing numbers of people placed in council-provided temporary accommodation. So, change needs to happen fast.

The good news is that modern construction methods and production speed means an increasing number of people, mortgage companies, and housing authorities now see modular homes as a viable option.

However, the financial services industry needs to step up and make modular mortgages mainstream if factory-homes are to become a panacea to the housing crises.

Some mortgage lenders have been reticent about lending on modular properties because they’re classed as ‘non-standard construction’ for surveying purposes. Issues often centre around whether the modular home company has building industry accreditations. In most cases, applications are treated on a case-by-case basis, subject to valuer comments.

Embracing the housing turning point

In the last few years, there’s been significant growth in modular housing in sectors as diverse as ILKE Homes, The Berkeley Group,  insurance giant L&G and housing association Places for People, as the government commits to building modular homes to meet the massive demand.

The UK housing market is like a great big oil tanker that’s been going in one direction for years, and when it must turn, it takes time to do so. I believe we are at that turning point now.

After years of discussion around the potential use of modular homes as a tool to ease the housing shortage, we are now seeing the large-scale application of the construction method and a move towards sustainable housing that could help tackle climate change – and that can only be a good thing.