Modular housing

Is modular housing really cheaper?

Blood, sweat and tears aside, constructing flat-pack furniture at home is often a simpler and cheaper alternative to what could otherwise require months of woodworking.

With this in mind, one could be forgiven for thinking that assembling pre-manufactured homes, or even having them delivered complete, could prove an economical solution to the housing crisis.

Speaking exclusively to Development Finance Today, Brian Maunder, managing director of Totally Modular, revealed that certain aspects of the off-site construction process did come cheaper.

“…The vast majority of our workforce are semi-skilled, and not skilled workmen,” he explained, “we’re putting on exterior brick slips and tiles, so you don’t need a bricklayer to do that.

“So instead of paying a bricklayer however much per day – £150 a day’s rate – we could be paying someone £80 a day to work in a factory.”

However, producing homes in a factory comes with its own slew of fixed costs, including employee salaries and rent. 

“Most building sites operate on a sub-contractor basis, ie a lot of the workers are just brought in for that job and then laid off … [but] we’re running a business.”

And with modular housing providers hoping to achieve the same level of quality as traditional developments, there is no skimping on materials.

“…You could not tell that it was a different house, it looks exactly the same … and it’s costed exactly the same,” Brian insisted.

False hope?

While modular housing may not be the budget alternative which the sector so desperately needs, the technology brings with it a host of advantages that cannot be ignored.

Knowing exactly how much material needs to be used in off-site construction means the costs are easier to forecast than on a building site.

Meanwhile, working indoors means labourers do not have to stop during adverse weather conditions.

“We, generally speaking, have only a fraction of the wastage that you would have on a traditional building site,” said Brian, “have you seen how many skips leave a building site every day?”

These efficiencies enable Totally Modular to set up to four houses to base in a day, with single module properties being ready for occupancy 48 hours later, subject to services such as gas, water and electricity.

Meeting halfway

With the advantages of modular housing plain to see, some in the industry have begun to adopt a blend of the traditional and the new.

One alternative is timber frame construction, with floors constructed off-site before being assembled and completed by cranes and work crews as normal.

“…The material cost of timber frame construction is very similar if not slightly more expensive than standard construction,” conceded Jordan McBriar, managing director of development finance brokerage Adapt.

“However, due to the technology and the timescale, in order to get the property watertight, the labour costs are massively reduced and so are the relevant finance ones.”

Adapt previously arranged funding for seven, 3,000 sq ft eco homes with timber frames.

The properties took just 17 days to construct from slab to watertight, with both external and internal contractors then able to begin work simultaneously.

modular home
Several of the timber frame eco-homes funded with help from Adapt Finance

The project – which would have taken between 12 to 15 months using standard methods – was completed in only four months, providing at least eight months of finance saving and labour costs.

“We have never had any issues funding these types of projects,” Jordan added.

Behind the times

Although it is likely to be a long time before modular homes can be produced on the scale needed to solve the housing crisis, some have already made significant headway in getting the technology off the ground.

Industry heavyweight Legal & General has formed its own modular division, which is due to employ over 400 people at the largest modular homes construction factory in Europe.

When at full capacity, L&G expects to produce up to 3,500 modular homes each year.

Last year, private rental developer Essential Living secured a £60m development loan from RBS and HSBC to fund the first modular build-to-rent scheme in the UK.

“It’s becoming huge, the enquiries are coming thick and fast, almost every day,” said Brian.

And despite this crisis occurring at a time when the UK’s relationship with the rest of the world is on a proverbial knife edge, the solution to the scale problem may require us to look abroad.

As Brian explained: “Modular housing is not new in the rest of the world, it’s only new for us.”

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