How Modular Can Solve The UK Housing Crisis

The UK Government has set an objective of one million new houses to be built by the end of 2020; 200,000 new homes need to be built per annum. But according to analysts at Jefferies Financial Group, build costs are rising by 3-4% every year and the skills gap is continuing to widen. Add on top the looming threat of Brexit – to both costs and staff numbers – and the target becomes an even more ambitious one.

With high demand set against a dwindling supply, industry experts agree the market is calling for new, more radical building practices.

Make way for: the modular build.

What is a Modular Home and What are the Benefits?

In the aftermath of the Second World War, prefabricated homes were the quick-fix to Britain’s housing crisis, replacing those demolished in the Blitz. Since then, the stigma of the cheap, low-quality, undesirable home has stuck to modular builds. But today’s modular homes are no longer in the same league as those from so many years ago.

Contrary to popular belief, a modular home is not a mobile home. A modular home now simply refers to a house that is built offsite – indoors in a factory setting – and assembled on location. Because of this, there are a number of major advantages:

Faster

Because modular homes are built indoors they are not subject to the same weather complications as onsite builds, meaning no delays, less setbacks and much quicker production timescales. According to leading construction company Skanska, offsite builds take 65% less time – that can means weeks instead of months.

Cheaper

As a result of a quicker building time, prefabricated homes can be substantially cheaper to make – up to 44% according to Skanska – as labour and machine hire costs are much lower.

Safer

Controlled factory environments are significantly safer in being more predictable. Also, all inspections are performed at the factory by third party inspectors during each construction phase; Skanska revealed in their report that there are 73% less defects in modular homes compared to on-site builds.

Energy Efficient

Most modular homes use 2x6 framing for the walls, which means more insulation and more energy efficient homes. Modular homes also have a far lower level of air infiltration, the biggest cause of heat loss in most houses; being factory produced, manufacturers can utilise more sealants in problem areas that site builders would have no access to.

Environmentally Friendly

The amount of waste generated by site-built homes is significant; according to the National Association of Home Builders (NAHB) Research Center, the standard amount of waste for new 2,000 sq ft, site-built homes is 8,000 lbs. Effective in-plant recycling is in place at most modular manufacturing facilities, so all excess materials are able to be recycled.

A Solution for Skill Shortages

More Modular projects will also help to relieve the staffing crisis overwhelming the construction industry. The industry is currently faced with a monumental skills gap. As more staff move toward retirement, the work population is predicted to decrease by 20-25% in the next 10 years - but there is a stark lack of new entrants to replace them. Construction consultancy Arcadis calculated that 700,000 people need to be recruited in the next five years just to replace those leaving, but less young people are buying into the industry as it appears less aspirational than other career paths.

Brexit also poses a substantial threat to the construction workforce. One in eight of UK construction workers are foreign – 23% within London – and if Brexit leads to foreign labourers leaving the country that’s a huge loss. A weak sterling may also make working in the UK less desirable for others in the future.

Modular work would reduce the reliance on manual, subcontracted labour by replacing the traditional construction roles and utilising a new, wider talent market. What’s more, roles at offsite factories are arguably more attractive to young people. Factories are increasingly automating aspects of the process which is creating more technical jobs – Service Engineers, Design Engineers – for which there are much wider talent pools, especially of younger generations. Automation will also help to improve the current, low-tech status of construction to level with other, more aspirational industries.

Investment and Intervention

UK housing minister Gavin Barwell has commented on Modular’s potential to tackle the skills gap and alleviate the housing shortage in the UK – he said that the government sees a huge opportunity in manufacturing houses offsite. The Autumn Budget announced that government departments will favour offsite construction from next year. The Government will use its own purchasing power to drive the modular industry, namely in the public sector, with the five key departments in this 2019 initiative being defence, education, health, justice and transport. Assets such as schools, hospitals and prisons are examples of where the modular agenda is being driven.

The Government’s long-awaited Housing White Paper showed further support of modular in their Accelerated Construction programme and the Home Builders’ Fund. Both schemes mean more funding for new modular projects and more work with local areas, creating new opportunities, encouraging investors and inspiring more confidence in current suppliers to expand into the housing market. These schemes are set to aid more growth in the sector whilst also delivering more high-quality, energy-efficient homes.

68% of construction firms are already investing in modular housing techniques on their own too, according to Lloyds Bank annual housebuilding report. In order to maintain profits and save money, many are adopting the use of factories instead of sites for a large portion of construction. Engineering firm Aecom, for example, will be delivering 3,000 modular homes as part of a £3.5bn regeneration of Silvertown Quays in East London. Peter Flint, their Chief Executive, has said that “if offsite is embraced in the right way, it has to be a better way of building”. He says that clients are “crying out” for modular construction where large volumes of homes are needed amidst a housing crisis and urges the industry to stop thinking of modular construction as a threat and more of an opportunity; “It’s high time the industry addressed our productivity challenge. We haven’t improved or changed our methods for decades – offsite manufacturing gives us an opportunity to do that.”

Conclusion

With limited government funding and tightening regulations, shortages of manual labourers, anticipated post-Brexit complications and an ever-widening gap between housing supply and demand, modular homes may be the radical innovation that the country has been waiting for.

Even though offsite manufacturing is on the rise and the benefits are becoming more widely known, there is still a palpable tension between increasing client demand and general industry resistance; construction companies are threatened by the challenge modular presents to traditional contracting roles. Currently offsite construction only accounts for 10% of the industry’s output; the government has a major role to play in catalysing the growth of the modular industry.

It is clear that the movement to modular will reshape Construction’s wider talent landscape. A new industry means new staff with new skills, so a change in hiring approach is crucial. Within CSG’s Engineering & Construction Team, I work exclusively with a range of Modular businesses, hiring the senior-level, strategic staff members needed for companies to make the most of the industry’s wave of investments. Whether you are a client looking for fresh, experienced leaders to see your business grow, or a candidate seeking a new challenge within the Modular field, my experience and expertise will see that you achieve your goals. For a confidential chat, you can reach me at james.martin@csgtalent.com or + 44 (0) 207 0021685.