Giulio Dandrea

Could MMC be the solution to the UK's post-coronavirus housing backlog?

Is this the moment – as lockdown eases – when Modern Methods of Construction (MMCs) come into their own? Or will a crash in house prices inhibit building finance and construction, whether modern or traditional?

If it’s certainty you want, then you are in the wrong business. House builders and those who finance housing development have always made their living by embracing and putting a price on uncertainty and risk. If that is true, generally, it applies above all to innovators, those offering MMC as the most economic and ecological way of providing new housing.  So, what, if anything, has changed?

With the housing market now emerging from relative hibernation, estate agents are reporting a flurry of activity from both buyers and sellers. In some cases, sellers are achieving their asking price or more. But assessing how much to ask or to offer for a home is largely guesswork. In the short term, pent up demand from families whose house hunting was thwarted by social distancing may even push prices up.

With the government lurching from financial orthodoxy to a gigantic deficit spending programme backed by huge quantitative easing by the Bank of England, a flaccid economy is about to encounter a massive injection of economic Viagra. With national debt now exceeding annual GDP, how will that affect business generally and the housing market in particular?  

Whether economists and market forecasters are right or wrong about where prices are headed, it remains to be seen how developers might react. Let’s suppose housing developers believe prices will slide; some will be reluctant to commit funds to new builds. On the other hand, bolder brethren will want to adopt a build to rent strategy. 

With the 2008 financial collapse in mind, lenders are understandably cautious in how much they lend and to whom. We all now know that inability to gain adequate finance can presage a housing market crash, which would only worsen the recession brought on by governmental measures to curb Covid-19. It is a good bet that the government would spend and borrow to stave off economic or housing market collapse. 

So, now really is the time for developers and lenders to help themselves by embracing MMCs. Compared to traditional building processes, MMCs can limit the time, risk and cost - factors inherent in housing development. That is because the government has already taken some measures to support the sector by allowing savvy lenders to issue CBILS to fund new developments. In addition, many developers have also applied for bounce back loans to put funds into their cash-starved businesses.  

If Covid-19 has taught us anything, it is the benefit of looking outside our borders at alternative ways of doing things, such as tried and tested international technologies to combat a virus. The same is true when it comes to methods of construction. MMC systems may be unfamiliar to some in the UK, but they are tried and tested elsewhere. That fact should give investors, who want buildings that match the best in the world, the confidence to innovate at home by thinking beyond our national limits.

The basics won’t change – that much is certain; the UK faces a chronic shortage of good housing. The need for new construction and refurbishment of the older housing stock remains strong, whatever happens to the market. And whether prices rise or fall, the case has never been stronger for using MMC to build economically and ecologically.  That’s where the MMC experts come in. This is the time for banks to fund high quality developments that are cheaper, greener, quicker and smarter. 

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