Over 1m households are waiting for social housing in the UK, yet far more of these homes are sold or demolished every year than are built. Amid cost and supply crunches for housebuilding, could Modern Methods of Construction offer a way to accelerate delivery? Andrew Shepherd, managing director at Goldman Sachs-backed modular housing firm TopHat, thinks so
The UK is in the midst of a housing crisis.
Inflation at a 30-year high, with interest rate rises no doubt following along.
A cost-of-living crisis, exacerbated by rocketing energy prices.
Housebuilding costs escalating, with material price inflation and a dwindling construction workforce.
There is not much to cheer about. To address these compounding challenges requires some significantly different thinking.
Social housing stock loss
Homelessness charity Shelter believes the UK has suffered a net loss of nearly half a million social housing units since 2000. Add to this research showing waiting lists for social housing going beyond 60% of the official council estimates, and you begin to understand the scale of the problem.
The Right to Buy scheme has drastically reduced the social housing stock, without this stock being replenished through new development. As it stands, the UK requires 150,000 new social housing units built every year to meet demand, and yet the average annual output stands at just 4.4% of that figure. In fact, the UK has not delivered that amount of social housing since the halcyon days of the 1950s and 1960s.
With this in mind, innovation as a means of boosting the industry’s productivity levels has never been more important.
The construction process is usually long and fraught with complications – reliant on too many variables; be they contractors, materials or the weather. Moreover, with the construction sector facing an ongoing skills shortage and the rising cost of staple building materials, meeting output targets becomes near-impossible through traditional means – which is partly why we’re seeing so much merger activity among registered providers.
Could MMC provide a solution for the delivery of social housing?
One solution for the delivery of social housing could be the adoption of Modern Methods of Construction (MMC) to help accelerate the output of social housing in the UK. MMC developments offer high-speed, sustainable solutions to narrow the gap between supply and demand.
One form of MMC is modular housing, like that produced by TopHat. This form of construction employs precision-engineered techniques to produce homes in a factory, ready to be transported and installed on site. These high-quality modular homes can be produced and delivered in half the time of a traditional house with a fraction of the traditional workforce, helping speed up the delivery of social housing within the communities they are most needed, without compromising the wider housing market’s ability to deliver.
In addition, it will be these types of communities, where the social fabric is usually made up of those on lower incomes, that will be hit hardest by the impending cost-of- living crisis. Tax rises, rocketing energy bills and spiralling inflation – which could hit double figures later this year – means there has never been a more important time to ensure homes being delivered today are energy efficient.
Affordable Housing Programme
The UK government is fully aware of the potentials MMC has in solving the affordable housing shortage. In 2020, Homes England, the government’s housing agency, confirmed that housing associations looking to sign agreements under the £11.5bn Affordable Housing Programme will have to commit to using Modern Methods of Construction to deliver at least a quarter of their pipelines.
If we are to accelerate the delivery of social housing in the UK, it requires a joint approach between modular housing firms, councils and central government. Modular housing is not the overall solution. Instead, it offers much-needed additionality to the market at a time when businesses are aiming to become net zero and offer customers energy efficient homes to help deal with the drastic price rises. Homes England, as it has been for the last five or so years, should continue championing modern methods and look to make more public land available for modular homes.
Andrew Shepherd
Managing director
