Can offsite construction solve the UK housing crisis?

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It’s no secret that the UK faces a severe housing shortage. Kim Vernau of BLP Insurance examines how offsite construction can help to bridge the gap

The UK is facing a chronic housing crisis. Pressure on housing supply in the UK comes at a time when the average age of the construction workforce is increasing, creating a potential time bomb that will play out over the next 10 years as the workforce shrinks by 25%.

The construction industry is struggling to attract new talent and replenish the level of those leaving the country and/or sector. The result is a critical skills shortage across the sector. As building firms in the UK face a huge shortage of skilled workers, they are forced to double the wages for tradespeople from abroad, increasing the cost of traditionally built homes.

Quality is suffering, with an increase in construction defects and buildings not performing according to their design, highlighted in the findings of the APPG for Excellence in the Built Environment report More Homes, Fewer Complaints.

To overcome shortages in housing supply coupled with lack of talent, the industry needs to consider forms of construction beyond traditional methods of housing that are both sustainable and of high quality. Currently, the traditional housebuilding community is finding it challenging to change their business processes, which is hindering their ability to increase output to solve this problem.

There is a simple solution: the industry needs to embrace offsite or non-traditional forms of construction also known as Smart Construction. To do this requires modernisation, both to increase the attractiveness of the industry to new entrants and to improve productivity in order to increase output with less labour.

Can Smart Construction help?

Smart Construction refers to any non-traditional form of construction methodology. Prefabrication in a factory setting is by no means a new concept and the benefits are clear: speed of construction, reliability of materials and manufacture, improved performance and a potential reduction in construction costs if units can be delivered at scale and through repeatable design.

Conventional housebuilders continue to respond to homebuyer requirements and are unlikely to move completely to ‘Smart’ forms of construction, despite the trialling of various offsite solutions. While they may engage with the concept on the periphery, the burgeoning private Build to Rent sector, together with housing associations, will be key growth areas for adoption of offsite methods.

Smart Construction provides high quality buildings. Currently, buildings in the UK fall short by up to 30% in terms of design performance versus actual performance. Properties built in a factory will have a higher level of quality control compared with a construction site, improving the performance of the building over time, which in turn should translate into reduced energy and maintenance costs.

What is hindering widespread uptake of Smart Construction?

The level of innovation and modernisation in the industry so far has been limited, restricted by a reticence to invest in a cyclical market that also suffers from short-term thinking and low levels of capitalisation. Mainstreaming offsite manufacturing in the UK housing sector needs coordinated action from both central government and the construction industry.

Although the benefits of Smart Construction are clear, concerns about systematic failure, and fire spread and water ingress resulting from offsite techniques both during and after construction, exist within the industry. These concerns are, in part, being addressed by the Buildoffsite Property Assurance Scheme (BOPAS), which seeks to provide long-term assurance to mortgage lenders, valuers, funders, landlords and homeowners that properties built using non-traditional forms of construction will be robust for at least 60 years, without requiring disproportionate maintenance.

The importance of the scheme was highlighted in the recent London Assembly report Designed, Sealed, Delivered in which the Council of Mortgage Lenders noted that quality standards such as BOPAS are “crucial in instilling confidence in the sector”.

BOPAS, which was launched in March 2013, was developed by Buildoffsite, Lloyds Register and BLP Insurance with RICS, the Council of Mortgage Lenders and the Building Societies Association. The BOPAS process gives an independent assessment of quality and reassurance from inception through to construction for investors, developers and owners.

The reassurance offered by BOPAS enables Smart systems and other innovative construction methods to provide a sustainable, cost-effective solution to the increasing housing shortage. Major London-centric developers such as Pocket Living are already utilising modular manufacturers for large-scale projects in the capital. Both manufacturers have gained accreditation from BOPAS.

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Government support for offsite manufacturing is vital for maintaining momentum. In its Residential Policy Paper, the Royal Institute of Chartered Surveyors (RICS) urged ministers to support non-traditional construction and endorse BOPAS. Support from the mayor in endorsing quality assurance schemes such as BOPAS is key in promoting lender, funder and developer confidence.

There are many different sectors vital to the success of Modern Methods of Construction; to succeed, the industry would benefit from an inclusive and collaborative approach where further policy is being developed. It is vital that the mayor facilitates and nurtures this growing industry, demonstrating a long-term commitment to supporting innovative forms of construction. This will give manufacturers the necessary assurance that there is a sustainable pipeline of future developments.

 

Kim Vernau

Chief Executive

BLP Insurance

Tel: +44 (0)20 3411 4136

kim.vernau@blpinsurance.com

www.blpinsurance.com

Twitter: @ChooseBLP

The Offsite Construction Survey

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