Modular design: the answer to our broken housing market, or just blue sky thinking?

The government’s 7 February 2017 Housing White Paper identified that “we need from 225,000 to 275,000 or more homes per year to keep up with population growth and start to tackle years of under supply” and confirmed “an extra £1.4 billion for our Affordable Homes Programme taking total investment… to over £7 billion to build around 225,000 affordable homes in this parliament”.

Potential solution?

One solution has been the much talked about implementation of modular construction techniques that are increasingly utilised in the hotel and student accommodation sectors with the White Paper confirming that a “£3 billion homebuilding fund would provide loans to small developers, custom builders and offsite construction with the aim of diversifying the market”.

The United Kingdom has, of course, been here before with the erection of pre-fabricated homes in response to the post World War Two housing crisis as outlined in the Housing (Temporary Accommodation) Act 1944. While the fact that many of the c. 150,000 pre-fabricated homes lasted significantly longer than their planned 10-year life expectancy, they were seen as temporary with many resembling static caravans.

Modern techniques

Modern construction techniques have however moved on significantly since the 1940s with television shows such as Grand Designs providing an insight into the market for swiftly constructed bespoke luxury housing utilising flat packed materials and designed to customers’ precise requirements. Similarly to high-end pre-fabricated homes, modular construction offers mass production at comparatively lightening speeds, when compared to projects utilising traditional construction techniques, with advantages including:

• Simultaneous construction of the foundation and module fabrication
• Increased speed to market resulting in a faster return on investment for developers
• Indoor/controlled construction enabling consistency and quality of production through standardised processes
• Healthier builds in terms of waste and site disturbance
• Virtual models to check integration
• Flexibility as homes can be easily extended or built upon
• Modules can be ‘refreshed’ or simply swapped in and out as required
• Production can take place where the skill sets/expertise are – nationally and/or internationally.

Perhaps most important of all is the fact that with truncated construction times and efficient processes modular homes should be cable of being delivered at a lower cost than those constructed using traditional methods.

There are however also disadvantages of modular homes, including:

• Land costs still exist
• Unlike cars, people want their home to feel bespoke and not mass produced
• More upfront payment – financing rather than mortgage funding is more difficult to get
• Responsibility for the product and the interface between the various component parts if often unclear
• Repair and maintenance can be more costly and complex as you cannot make changes easily to your own home without risking the integrity of the module itself
• Transit risks between the off-site factory location and site
• Insurance obligations – including who is responsible for what aspect of the finished product
• Building inspection and planning requirements may differ between where the module is designed and fabricated and where it is being installed.

Sign of change?

Unlike the car industry, the construction industry is notoriously slow to embrace technological advancements and perceives modular off-site construction as a disruptive technology in a field which is very traditional. However, there are signs of change. Developments such as the project in Greenwich to deliver 249 new homes utilising 632 modules with an estimated 60% of the work to take place off-site in Shropshire, demonstrating the construction industries’ willingness to embrace the opportunity to reduce time and costs. However the key will be ensuring that modular homes are not expensive one-off projects but opportunities to progress and refine modular off-site construction techniques in order to take advantage of the economies of scale modular processes offer.

In the event that modular construction methods are taken advantage of, will this result in a sector within the construction industry developing where modules are moved from continent to continent as owners move geographical location? Will modules be assembled in parts of the world where labour is cheaper and then be shipped to countries where construction is only possible for small portions of the year due to adverse weather conditions? Will specific sections/modules of homes be replaceable depending on an individual’s needs – i.e. bathrooms simply replaced overnight on a “plug-in” basis? Only time will tell, but at present the construction industry appears ready, and increasingly willing, to utilise modular construction techniques to reduce build times and costs.

Finally the use of modular construction techniques will also give rise to a number of insurance related issues for both insured’s and underwriters, including in respect of the interplay between different policies (for example project polices, professional indemnity policies, and product policies), aggregation issues (such as those explored in Mitsubishi Electric UK Ltd v Royal London Insurance (UK) Ltd [1994]), and whether polices covering modular construction right through from design to installation should be made available to entities operating in the modular construction sector.