For several years now, it has been impossible to attend any construction industry event without hearing clarion calls for modular construction. Because modular involves manufacturing large components in factory conditions, its advocates argue, homes built using the methodology can be assembled quicker and at lower cost, are of a higher quality and can boast far better environmental credentials.
Despite the warm words, for a long time it seemed that little was happening on the ground. However, there is now good reason to believe that momentum for modular is increasing. Indeed, it could be that we will come to regard 2019 as something of a tipping point. So, what are some of the most significant recent developments? And what barriers remain that are preventing widespread adoption?
Perhaps the most high-profile deal announced this year came from Manchester-based regeneration specialist Urban Splash. In May, the company revealed that Sekisui, Japan’s largest housebuilder, was to invest £22m of new equity into the company’s House concept, alongside £30m of equity and debt funding from the government’s Home Building Fund.
Chris Shaw, director of delivery for House at Urban Splash, says that even before the investment was announced, the developer had already built a substantial number of homes under the House brand. “We completed and sold all homes at New Islington in Manchester, Irwell Riverside in Salford, Smith’s Dock in North Shields, while a fourth scheme at Port Loop in Birmingham is 80% are sold following a launch this summer,” he says.
For commercial reasons, Urban Splash is hesitant to talk specifics about forthcoming projects, but Shaw says that the deal is already reaping rewards. “Thanks to our new partnership we’re doing even more and we’re on course to scale up production to thousands of homes each year,” he says. “Sekisui has delivered more than two million modular homes, with around 15,000 customisable individual homes developed every year. That scalability and the deal means that now we can take a long-term view.”
Legal & General Modular Homes has also made real progress this year. Set up in 2015, the L&G subsidiary has built a 50,000 sq m factory Sherburn-in-Elmet near Leeds, which at peak will be able to build 3,000 homes a year. After much fanfare in the construction and property press, things then went quiet.
However, it would appear that the company is on the cusp of starting to deliver at volume. According to a spokeswoman, L&GMH recently completed a relatively small project comprising affordable homes at Bucklers Park in Bracknell. A planning application for a much larger, 154-unit development in Selby is currently being considered by the local planning authority and work is expected to start towards the end of the year.
Next year, the spokeswoman says that L&GMH’s ambition is to deliver 600 units, so 20% of capacity, and that “negotiations are progressing well to deliver schemes ranging from 100 to 240 units with selected partners”. Plans for 500 units spread across projects in Bristol, Hampshire and Oxfordshire are at pre-application stage and the spokeswoman says that 2020 “will mark a significant step in the industrialisation of volume housing supply”.
Another company that was founded in 2015 has also reached several important milestones this year. Project Etopia may not yet be a household name but it is starting to make waves. In the last 12 months, the company has announced a £19m investment from property stalwarts the Reuben brothers, appointed Lord Stanley Fink, the former CEO of the Man Group hedge fund, as its chairman, opened a 2,000 unit a year capacity factory in Ellesmere Port, Cheshire, and completed the first units on its debut UK project in Corby, Northamptonshire.
Most recently, Project Etopia started work on a demonstration home at BRE’s Watford Innovation Park in September. “The BRE project is an exemplar and will be the highest performing building in the world,” says Joseph Daniels, the company’s CEO. “It will be tested across all 80 BRE establishments globally to prove that we can build a house that in the summer months will be more than 10 times energy positive while also keeping our cost to the UK conventional norm.”
The BRE demonstration project may prove to have broad influence. It is the first project to be built to the BRE’s new BPS 7014 standard, which the organisation has drawn up specifically for homes built using modular techniques. The introduction of the standard is important because up until now there have been questions around how comfortable mortgage lenders and insurers feel about modular products due to the lingering memory of poor quality post-war prefabs.
“I think there will be a combination of different techniques and technologies, but BPS 7014 is definitely setting what should be the guidelines,” says Daniels. “BRE is such a trusted institution so there will be no lack of quality control and checking. That is the way we can deploy high quality modular housing. It should really set an outline for the future of housing in the UK.”
Elsewhere, in June this year housing association Places for People announced a £100m deal with ilke Homes under which it agreed to buy 750 units from the modular builder. According to the organisations involved, it was the biggest deal yet for the modular housing sector. Nigel Banks, product and marketing director at ilke Homes, is obviously excited about the sector’s prospects, but he also knows it still has challenges to confront.
“Things are certainly moving forward for modular, but to get to scale the sector will need government support to unlock sustained growth,” he says. “The housing minister has been vocal about her support for modern methods of construction, and Homes England has recently promised £32m to local authorities to invest in MMC housebuilding.”
He added: “These are certainly steps in the right direction, but this progress cannot halt if the government is serious about building 300,000 new homes a year. Given the cross-party determination to meet ambitious housing targets, it is a prime time to get the modular housing industry to a very significant scale.”