Modular homes

At the end of the Second World War, with two million homes destroyed by German bombers, the government turned to prefabrication to help solve the housing crisis. Could it now hold the answer to modern Britain’s housing woes?

Adam Greaves, Investment Manager, Rathbones

In 2017 the wrecking ball finally crashed through south-east London’s Excalibur estate of post-war prefabricated bungalows. In the wake of a campaign by residents to save them, six were left standing, given listed building status by English Heritage as testimony to their role in British history and their remarkable durability.

The 189 homes in Catford had been built in the late 1940s as part of former Prime Minister Winston Churchill’s solution to the damage of the Blitz. Britain was facing a housing crisis and “prefabs” were the obvious, albeit temporary, solution. Designed to last for a decade, they could be rapidly constructed and boasted exciting mod-cons, like indoor toilets. Eventually over 156,000 were built.

Fast-forward three quarters of a century and the country’s need for housing is arguably as desperate as it has ever been.

Lofty target

Research by Heriot-Watt University suggests the UK needs to build 340,000 homes per year until 2031 to meet the backlog of demand, and that 145,000 of these need to be social housing. Given that just 163,420 houses were built in the year to September 2018 (the latest data available from the Ministry of Housing, Communities & Local Government), there is some distance to go.

Could modern prefabricated housing — now re-christened ‘modular’ — once again hold the answer?

Today’s modular homes are precision-built in factories and transported by road as pods that simply have to be fitted together and plumbed in at their desired location. Notionally this means quicker builds at cheaper prices.

Typically, it takes 40 weeks to build a traditional house. Because the parts are constructed indoors, modular house construction is less susceptible to delays arising from bad weather. Ilke Homes, which began building modular houses at its factory in Knaresborough last year, usually completes construction in under 10 days. Likewise, Legal & General Modular Homes properties — made near Leeds — take just days to complete. Fledgling business Creating Enterprise, launching in Holyhead in Wales, claims its timber homes will be made in two days and erected in 10. 

But what about the quality? The residents of Catford may have fought for their prefabs, but few others found them so appealing. Sarah Curtis, a director of estate agent Strutt & Parker, says: “By today’s standards, these homes were poorly constructed and leaked heat like a holey bucket. Many prefab homes are listed in the Housing Defects Act and, unless they’ve been fully refurbished, it’s almost impossible to get a mortgage on one.”

That reputation hangs over the sector but things have changed a lot since an inside toilet was considered the height of modern living.

A key feature of modern modular buildings is typically their eco-friendly design. Ilke claims its homes are a fifth cheaper to heat than new-build traditional homes and half the cost to heat compared to the average UK home.

In Germany, where there is a long tradition of wooden houses being pre-built in sawmills, more than 20% of houses are now modular and the sector is growing. German builder Huf Haus shows just how good modular housing can be. It has had a UK division for 10 years, building glass and wood or steel designer homes that would grace any episode of Channel 4’s Grand Designs.

Huf Haus claims to have built over 200 houses in the UK in the past decade. That will do little to solve the country’s housing crisis. Not surprisingly, most of the newcomers in Britain are focused on the challenge of building high-quality low-cost housing. 

At 27 storeys, Pocket Living’s Mapleton Crescent social housing development in Wandsworth is one of the tallest residential modular towers in Europe. Each flat was built and fitted out off-site then craned into place — a storey a day. A few miles south a pair of 38- and 44-storey towers, containing 546 new homes (over a hundred classed as affordable housing), are close to completion in Croydon. The taller of the duo will be Europe’s tallest modular building. The developers chose modular construction because they argued that it delivers a higher-quality finish, with 80% less waste and greater certainty on costs and time.

The buildings demonstrate that modular need not be an inferior social housing solution. But Will Jeffwitz, policy leader at the National Housing Federation, which represents housing associations in England, says two problems remain. He warns: “This is still a fairly new, fledgling industry in England and there is not the level of data available to prove whether these products last the 30, 40 or 50 years that housing associations need. The other key issue is cost — modular housing does not work out any cheaper in the way it is being procured by housing associations at present.”

The problem is one of scale. While L&G Modular is part of one of the UK’s largest insurance companies and its factory has the capacity to build 3,000 homes annually, production has not reached that level yet. Ilke hopes it will hit 2,000 homes a year in the next couple of years. Besides L&G Modular and Ilke, Berkeley Homes recently announced plans to build 1,000 modular homes out of a factory in Ebbsfleet, Kent. By contrast, Britain’s biggest traditional housebuilder, Barratt Developments, built 17,579 homes in 2017. Rival Persimmon delivered another 16,449.

Jeffwitz says efforts are being made to encourage National Housing Federation members to join forces and submit combined orders to create a long, steady order book for modular constructors, helping them realise economies of scale. The government is under pressure to do more to support the industry too.

Modular is unlikely to present a threat to traditional housebuilding in the immediate future, but that could change. Knight Frank’s Housebuilding Report 2018, which surveyed more than a hundred housebuilders and developers (accounting for almost 75% of houses built in the UK each year), showed nearly nine out of 10 thought modular would boost supply in five years’ time, with more than a quarter predicting it would have a “significant impact” by then.

One reason for that may be a skills shortage. According to the Royal Institution of Chartered Surveyors, 62% of surveyors reported that a lack of skilled workers was limiting building activity, something that could be exacerbated due to Brexit if European nationals opt to leave the UK.

Strutt & Parker’s Curtis argues that off-site construction requires fewer builders. She says: “The challenges of the UK’s housing shortage are much more complex and political than simply finding a quicker way to build homes, but factory-built houses address some of the issues, particularly speed of construction and overcoming the shortage of skilled labour.

“There is clearly an appetite from developers and policymakers to overcome the barriers and introduce more modular housing, and advantages to be passed on to home buyers.”

While many of Britain’s post-war prefabs lasted longer than anyone might have predicted, as a building method prefabrication quickly died. But times have changed. Technology has moved on; traditional builders are an expensive and reasonably scarce resource. This time, perhaps, the foundations are in place for modular housing to take off.

Huf Haus

Homes built by Huf Haus combine the Bauhaus school of design with the centuries-old German tradition of half-timbered houses — or Fachwerkhäuser.

Introduced in the 11th century, Fachwerk houses could be built at speed and were well insulated while still allowing for open-plan designs — all now highly desirable traits in today’s modular homes.

Just as simply as they can be put together, Fachwerk houses can be dismantled and reassembled somewhere else. This has made historical examples much easier to preserve in the face of modern construction.