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Will the UK embrace modular building?

Alex Delin
24/02/2020
The stigma around prefabricated houses has turned many homeowners away from modular builds, a choice which has also deterred lenders and construction companies from supporting the practice. But as pressure mounts on house builders to use more affordable and less environmentally damaging methods, this may be about to change. Modular build, a construction process where sections of a structure are built away from, and then delivered to site, has become more popular in the last five years.

Predominantly using the same materials, without sacrificing standards, the process is meant to be faster and generate less waste for both the build cycle and the environment.

The term 'modular' generally refers to a permanent construction method to incorporate sections into projects built on site, although it can also refer to relocatable buildings designed to be transferred to different locations, such as schools or new construction sites.

The UK continues to lag behind its European counterparts when it comes to permanent modular construction practices, which are particularly common in places like Scandinavia.

There has been a perception in the UK that modular build is for temporary accommodation, a view supported by cautionary tales about people who unknowingly purchased prefabricated homes built by local authorities, which were later incorporated as "defective dwellings" pursuant to the Housing Defects Act 1984.

Given the lack of consumer confidence in these types of structures, lenders have been reticent to finance homes built using modular processes.

Nevertheless, modular methods in building practices are now being considered more freely in the UK, with one leading developer aiming to build 1,000 modular homes per year.

In June 2019, consultancy McKinsey & Company released a report on modular construction, demonstrating various benefits of employing this practice, including an accelerated timeline for most projects using off-site components and substantial cost savings.

McKinsey & Company also predicted that new construction using modular build could reach a market value of $130 billion in Europe and the US by 2030.

With that in mind, and the operational requirements of modular build, including for example hybrid designs, it is likely that stakeholders will seek more certainty over the way such projects are managed.

This is achieved through careful review and preparation of contractual documentation and findings in formal and informal dispute resolution procedures.

Employer's agents under JCT Design & Build Contracts may need to make more use of their right under section 3.1 to access premises where prefabricated materials are manufactured.

There may also be an increase in bespoke appointments, where design obligations are carried out under different conditions.

As new methods of design and construction are implemented, it will be interesting for construction companies, their funders and lawyers with a particular focus on construction practices to see how the next year unfolds.
 

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