Are modular homes the answer to the housing crisis?

Flat-pack, pop-up, modular homes - whatever you want to call them, off-site construction has long been held up as a potential solution to the housing crisis, but despite becoming mainstream in Europe its time in the UK never quite seems to arrive – yet every day we seem to read more and more about it.

The creation of a 550,000 sq ft warehouse in Leeds will see the largest modular housing factory in the world – and yes it’s in Leeds! The plan is for the first homes to come out of production by June 2016 with the ambitions of L&G Homes to build thousands a year. Yet why should it be any a surprise? This has been occurring across Europe and North America for a number of years yet for once not in the UK. This is likely to be an image problem – flat pack is associated with cheaper materials and generic designs – and even Ikea haven’t changed our view on this.

 

Now we are in 2016 so let us not forget that times have changed. Modern manufacturing methods can produce high-quality homes without the high construction overheads and in a greatly reduced timeframe. In a world of skills shortages surely a process that can reduce up to 70% of on-site time should be applauded.

But even if modular housing manages to overcome its image problem, other stumbling blocks remain, not least achieving economies of scale and building an industry around a model that in the UK has largely been used for small-scale projects. To do so requires significant upfront investment but that does not come without risk – though surely we can look at countries like Austria, Germany and Scandinavia where this is simply the normal.

It is not just L&G that see the potential with Roger Stirk Harbour & Partners seeking to scale up the production of Y:Cube modular housing to as many as 7,500 units a year with backing from the mayor of London, and support within City Hall. There is also regeneration developer Igloo who have announced plans to build floating custom built houses on the Thames next to the ExCel conference centre in London.

Up to 70% of construction projects could be built using off-site manufactured components. Whether these growing calls are heeded and the alternative housing revolution, whether modular or floating, finally takes off will depend much on the success or otherwise of ventures such as L&G’s and Igloo’s. After all, if these alternative housing schemes are to make any dent in Britain’s severe supply shortfall, the method must be successful at scale - and that has yet to be proven.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

 

Enjoy the weekend

Lee