Thinking outside the box: could a modular approach help address the shortfalls in Britain’s housing market?

Britain has a housing problem. The country doesn’t build enough houses, and the ones already standing are eye-wateringly expensive. The government has made noises about confronting this challenge, but nothing has solved the basic problem of supply and demand: there’s not enough of the former and far too much of the latter.

Prospect convened a panel of politicians, analysts and industry experts to discuss the part that modular housing might play in finding a solution. That’s the process where the main elements of a home are constructed off-site, then assembled on-site, as if from a kit. A short-hand way to describe it might be “flat-pack housing.” Might it help bring an end to Britain’s housing crisis?

Brian Ham is the Executive Director of Home Group, a company developing new modular construction methods. Brian acknowledged that, when it came to these new types of home, there were some problems with what he called “customer acceptance.” “The British public still suffers from the post-war pre-fab phycology,” he said, which associates modular construction methods of today with the drab emergency pre-fabricated housing of the 1940s. So the first thing the industry has to do is confront that mental resistance to the idea of living in a pre-made home.

Home Group has done this by building a village in Gateshead composed of new modular homes. If people can see these houses, and register the fact that they look just like any other house, they might become more open to buying one for themselves. Liz Twist MP, who sits on the Housing, Communities and Local Government Select Committee, recently paid a visit and was impressed. “Modular is definitely part of the answer,” was her conclusion. David Sheridan, the CEO of Ilke Homes, a company leading the way in the construction of modular housing, said that the village’s success, “has proved the vast majority of consumers can’t tell the difference between traditional and modular methods.” As such, the village has proved a success. It has helped to show that, although the process of building is a little different, the end result is just as sturdy as the old bricks and mortar approach.

Andrew Lewer MP, also a member of the Housing Committee, is enthusiastic about modular homes. “I’m amazed this conversation is taking place now, and not 40 years ago when Britain really could've done with modular methods.” It was a good point—there has been a resistance to new construction methods, and a political failure to confront the issues of housing supply and demand. Westminster failed to see it coming. He went on to discuss skills. Modular housing brings with it the potential for new, innovative manufacturing processes, and that means the workforce must be conversant with these advanced ideas. But then Britain’s uncertain relationship with Europe calls into question its ability to retain the highly-trained individuals that the modular industry needs.

Barbara Young, who sits on the Lords Science and Technology Committee agreed that “re-skilling the workforce will be the biggest challenge we face.” But while accepting that, she saw substantial benefits coming from the modular approach to housing. “Local governments are already strapped for cash,” she said. “Standardised modular methods will accommodate for repeatability. Repeatability will ease the procurement, design and construction phases, making it easier for local councils.” Following on from that point, Huda As’ad of the Infrastructure and Projects Authority said her organisation was “encouraging the government to become a better and bigger client of those who want to standardise and drive modular methods.”

It’s not only homes that can benefit from the modular construction method. Rajdeep Gahir, the CEO of Vivahouse pointed out that modular construction methods were extremely useful for re-purposing old buildings. So, for example, a formerly derelict building can be re-fitted and re-purposed with new sections of pre-constructed materials in a very short space of time. She pointed out that “working inside existing structures takes away the stress of finding affordable land to procure.”

That point brought the conversation to the crux of the current housing problem, which is that the buildings themselves—made of bricks, wiring, steel girders and so on—are not the most expensive part of constructing new homes. It is the land on which they are built that brings most of the cost. And as Richard Bacon, who founded the All Party Parliamentary Group on Self-Build, Custom and Community Housebuilding pointed out, the current system favours what he termed “the oligopoly” of large house-builders “that controls the market.”

In his view, “reducing barriers to the construction market is essential and this is the job of government.” Richard Best, who chairs the All Party Parliamentary Group on Housing agreed, said that “land value capture is very important.” In his view, “the future of modular depends on our ability to be able to procure land. We could do this through reforming compulsory purchase power.”

The housing problem is especially insidious because it creates such a sharp divide between home-owners and the rest. As such, it forms part of the deep argument about social and economic imbalances, and the policies pursued since the crash of 2008, which caused asset prices—including housing—to surge to unaffordable levels. A quick, efficient way of building new homes could help to diffuse that problem, especially if it created technical, well-paid jobs along the way. The discussion made clear that there were huge opportunities at hand and that the industry, and government, should seize them.