Modular housing and the housing shortage

With a housing shortage demanding rapid solutions and major investors moving into the offsite market, could it be that modular housing’s time has come at last?

While offsite housing has been voiced as a possible solution to the housing crisis many times before,  it has yet to take major hold in the industry or shoulder responsibility for addressing the UK housing shortage. But with the government targeting a goal of 200,000 new homes a year in England and Wales – but only averaging around 140,000 – new thinking is urgently needed.

The repetitive nature of offsite construction means it’s often a cheaper way to deliver homes, but only if done at scale against a backdrop of demand certainty. But the lower costs on offer are increasingly compelling, given that construction inflation is soaring, putting the viability of some developments now under threat. 

James Lidgate, a director at Legal & General Capital, says “The opportunity for offsite construction is unquestionable and I have no doubt we will look back in 10 years’ time and wonder why more homes weren’t built this way before.”

One key factor driving future uptake of offsite residential solutions, Lidgate believes, is the growth in the private rented sector (PRS): “Offsite construction is almost a perfect fit with the build-to-rent market, particularly due to the sector’s non-cyclical characteristics. The design aspects can be fully detailed before the manufacture commences, the homes are more thermally efficient, the quality can be assured and the speed on site is significantly better.”

But he calls on the government to do more to provide incentives for offsite methods. “One way in which central and local government can really help create a step change is through their procurement strategy. On publicly owned land, there is no reason why a higher weighting couldn’t be given to those developers and contractors that utilise offsite construction techniques.

James Pickard, director at Cartwright Pickard Architects, a long-time champion of offsite construction, agrees that government policy needs to do more to provide incentives for this sector, including policies to ensure that public sector land can reach prospective self-builders and custom-builders – another possible source of demand for offsite construction.

"Instead of being gobbled up by some of the large house builders, the government should make 50% of the public land available for self-build and custom-build.”

Pickard continues: “The elephant in the room that nobody wants to talk about is that the volume house builders will never ever solve the housing crisis – it’s not in their interests financially. But one way would be to be to unleash the potential of the offsite and custom-build market. Every other European country has a massive amount of self-build and we’re missing a trick.”

As Pickard points out, offsite, prefabricated housing and modular construction are widely used in countries such as Sweden, Germany and Norway – and further afield in Japan and Australia. It’s the norm to have large-scale factories churning out livable, affordable high-quality homes.

“The market (here in the UK) has gone from social rented to very much around homes to buy. Offsite is now becoming more and more accepted. If you go back quite a few years they were kind of prefabs, or temporary buildings. Now they are far more accepted and people appreciate that modular can be a solution.”