New build housing starts fell by 9% in the first quarter of 2019, according to the latest statistics. Joseph Daniels, chief executive of modular homes provider Project Etopia, argues that the system is clearly failing and there is a need for speed in both planning and construction
Housebuilding is on the slide again, despite political promises to increase housing numbers.
With an established housing crisis long having swept the country, we should be enveloped in a whirlwind of activity and yet figures for the first quarter of 2019 only present a downward spike on new build starts.
It is becoming abundantly clear that for all the talk of 300,000 net new homes a year, the UK is still well off target for delivering it.
New build starts were down 9% in the first quarter of 2019 – 25% down on the peak before the financial crash – and the lack of urgency in building is going to ensure this crisis only deepens.
The government has set its target to eventually build 300,000 homes a year by the mid-2020s, but even then, this is unlikely to be sufficient, with the National Housing Federation recommending that 340,000 be built every year to meet the demand.
If the government does hope to reach 300,000 then there needs to be evidence of a rapid acceleration in housebuilding, something which is certainly not happening at the moment. The most recent figures on the net gain in homes, which includes new builds and conversions, was 222,190 in a year (from April 2017-2018). It will take a considerable effort to grow the net gain by 35% to reach the target.
At present, there is no consistency in delivery. Successive increases in build numbers are often followed by a decline, at a time when the trend should only be going one way. A fall in new build starts at the beginning of 2019 means a fall incompletion is programmed for later this year. All the while, house prices continue to climb and people who were priced out of the market before are not going to find it any easier to get on to the ladder in the coming years.
What it all comes down to is the need for speed – speed in the planning process and speed in actually getting the homes built. The fact that we are not building quickly enough to meet the targets suggests that the current system is falling down somewhere.
Reaching 300,000 homes a year is by no means an insurmountable task, but it does point to a pressing requirement to change what and how we are building.
The Ministry of Housing, Communities & Local Government’s (MHCLG) report in June said it will not be possible to reach 300,000 net additions by the mid-2020s unless Modern Methods of Construction (MMC) are used in a significant proportion of homes alongside traditional building methods.
The government has signalled its support for MMC and modular housing before, with Philip Hammond making a Budget commitment to prioritise the use of offsite construction in 2017. Homes England is also making money available to support these ventures. The MHCLG report offers the government advice on how it can ensure offsite builds become more common, including increasing funding for those projects and providing clarity on the standards for modular homes.
BRE is in the process of developing accreditation for modular homes, and Project Etopia will be building a house to meet the new standard later in the year. Government support for new accreditations will provide an added boost to the industry and would lead to more funding and investment.
One of the key reasons why modular housing will play a pivotal role in reaching housing targets is a simple one: buildings of this kind can be constructed in a matter of weeks. The superstructures at our development in Corby were built in just over four weeks, for example. Modular housebuilding will outpace bricks and mortar builds every time.
If the government can lead the charge and support MMC, through funding and removing planning barriers, then there is no cap on what can be achieved. And it is clear that councils can be at the forefront of leading change, not just because they can but because they need to be – social housing numbers have fallen from 126,000 new builds a year in 1980 to 6,463 in 2018.
Theresa May’s move to boost council housebuilding by scrapping borrowing caps that have limited how much they can build means authorities are increasingly likely to commission their own projects. However, at a time when councils are under immense spending pressure, they still need to demonstrate value for money and pay back loans quickly. They, therefore, need to adopt high-quality schemes that can be delivered with speed and are cost-effective. Modular housing ticks all these boxes.
At present, around 15,000 homes are delivered using MMC every year – 5% of the number of homes that need to be delivered annually. At Project Etopia, our goal is to build 21,500 modular homes a year in the UK by 2025, providing high-quality, eco-friendly homes with smart technology for tens of thousands of people, although we are putting no ceiling on our ambitions.
Offsite schemes are starting to spring up around the country and, although they utilise different techniques, by and large, what they have in common is the speed with which they can be constructed. They also have a lower upfront cost and yet lack nothing in terms of quality, and the method of construction means they offer unrivalled flexibility.
There are added benefits too. At a time when Parliament has declared a national climate change emergency, sustainability and the environment must be a crucial element in all construction moving forward. The high level of technology installed in modular homes allows for energy to be generated and stored, making them more sustainable than traditional builds and fit for the future.
Modular housing will be central to reaching target and, better still, surpassing them. But there cannot be a delay in the government putting its enthusiastic backing behind modular methods. The 300,000 target is there for a reason – there are not enough homes in the UK. This is a crisis decades in the making and it is a trend that cannot be reversed without a transformation in thinking and building delivery.
Joseph Daniels
Chief Executive
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