Industrial Britain Is On Its Way Back
As the UK begins to fuel the tank for 2017, one of the most significant announcements has been the government's pledge of £5 billion towards the acceleration of home building in its bid to meet the target of creating 1 million new homes by 2020.
The pledged sum is split between:
- a £3 billion Home Building Fund targeted at providing loans to developers for the purpose of building residential housing for sale or rent; and
- a £2 billion accelerated construction fund to provide 15,000 new homes on public land by 2020. It has been indicated that the government may stimulate developers further, by offering to use this fund to step in and purchase any unsold units.
According to the Home and Communities Agency (HCA), which will administer the funding for the government, it has deployed around £4.4 billion of funds to the private sector since 2008. The task now set for the HCA will be to deploy slightly more than that in under half the time.
One of the proposals to tackle the scale and pace of the development required in the UK is to finance the use of modular construction as a build speed solution. Modular construction is a form of off-site building, whereby individual units are manufactured and transported to the build site to be joined together. The UK building market has been historically dominated by craft based building methods, other than in the immediate aftermath of World War II when many homes had been destroyed by the war and were quickly replaced by factory built homes. Prefabricated housing of the 1940's may not have been synonymous with quality, but it checked boxes for speed and cost and it ultimately solved a critical housing shortage.
In the UK, we are now, once again, suffering a large scale housing shortage, with house prices being, on average, seven times more than people's incomes. According to Shelter, around a third of private rental properties do not meet Decent Homes Standards and the number of homeless households has risen to more than 50,000 a year. The post war approach to fast delivery building is once again required as a step towards tackling the crisis.
The advancement in design and technology since the 1940's now means that modular buildings can be built here in the UK to the highest specifications, meeting all of the same building regulations as buildings constructed on-site. Many manufacturers of modular housing have also embraced the lean production methods originated by Toyota in Japan where they try to eliminate every kind of waste in their manufacturing flow. Coupling this with enviable energy efficiency levels of the end product, the surge of modular building could radically improve 'green building' in the UK.
Importantly, the modular buildings that have already gone up or which are in the process of being developed in the UK have genuine curb appeal and are changing the landscape of local communities for the better.
Since 1999 when The Peabody Trust delivered Murray Grove, the UK’s first-ever multi-storey housing development using volumetric construction (in which flats were prefabricated in 3D modules in a York based factory before being assembled on-site in Hackney), the lure of this form of construction has gained some momentum. That momentum must be set to surge now, with the pressure on the government to deliver on its pledge to build 1 million new homes in 3 years.
Significantly, the pioneering build to rent developer Essential Living is set to begin a 23 storey modular residential development in Greenwich with 632 modules being delivered by a UK based manufacturer, Elements Europe, to the site at a rate of 20 per week from February 2017. The modular approach taken at Creekside Wharf in Greenwich will halve the construction time, allowing Essential Living to deliver on its family designed rental properties quickly.
However, one of the most significant features of Creekside Wharf is the fact that it will benefit from bank finance. In a sign of how acceptable modular construction has become in the build market, it has just been announced that HSBC and RBS will provide £60m of debt to Essential Living for the Greenwich PRS scheme, which will deliver 249 homes and be one of the tallest modular builds in the UK.
With a combination of government funded incentives for faster home building and the traditional debt finance market dipping their toes into modular building, all the signs of a new industrial revolution are afoot in Britain.