A modern solution to London’s housing crisis?

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housing crisis

A new report argues that Modern Methods of Construction can help London meet the huge challenge of improving the quality and quantity of its housing. One of the study’s co-authors, Erica Belcher of Centre for London, explains the barriers facing their adoption

Offsite construction has come a long way since the days of post-war Britain. Prefabrication, as it was then known, helped address the post-war housing shortage. Yet a method that was once seen as a cheap and largely temporary solution is now a modern and viable option to help solve London’s present-day crisis.

London faces huge challenges in improving the quality and quantity of its homes, and these challenges are likely to be worsened by growing skills shortages. Modern Methods of Construction (MMC), otherwise known as offsite construction, modular construction and precision manufacturing, have the potential to enhance the speed, cost and quality of housing delivery. However, the sector is still in its infancy, and several barriers are impeding its growth.

Finance

While MMC are attractive to new housing market entrants, the current cost is still higher than many budgets allow, with few UK manufacturers and immature supply chains. The availability of finance and mortgages for developers using MMC is few and far between. Compared to traditional building, offsite methods require considerable upfront costs, with design and manufacture decisions made prior to inception. Accessing the large amounts of finance required is excluding many housebuilders, particularly SMEs, from entering the market.

housing crisis

Planning

The current planning system is perceived as unaccommodating of MMC schemes, especially planning policies regarding the employment of local people.

Though many planning authorities do focus on local employment, this should not on its own be a material consideration for rejecting an MMC application, at least not without due consideration of the opportunities created in the area surrounding a factory. And planners should also note the benefits of this type of housebuilding, such as the speed of construction and the smaller impact on residents during the construction process. We believe that councils should include a general statement in local plan policy that supports MMC, where it can override policy on local employment to recognise the specific construction requirements of these methods.

housing crisis

Skills

As the Brexit deadline looms, it looks likely that those born in the EU will no longer be given priority to work in Britain. This is a particularly acute worry for London, where EU nationals account for one-third of the construction workforce, a disproportionate number of whom are skilled on-site workers. Faced with this challenge, and a languishing Apprenticeship Levy scheme, developers and industry bodies should invest in upskilling staff for the transition to MMC, a move that could in turn encourage greater diversity.

Industry culture

We’ve found that housing innovation is also being held back by a lack of collaboration and trust within the industry. To ensure resilience and deliver economies of scale, MMC manufacturers need to build long-term relationships with developers, enabling them to specify components and manufacturers to clearly communicate the benefits of MMC to clients. Closer integration between all stakeholders involved in the development and manufacture of modern homes, including the industry, their clients, the government and the GLA, would enhance take-up.

If MMC is to be part of the solution to London’s housing crisis and help speed up housebuilding across the UK, a step-change is required – to develop skills, improve supply chains, promote the potential of MMC and ensure supportive policy and financing structures.

Our research identified a growing a coalition of the willing. Developers, housing associations and homebuyers alike are ready to buy in. But realising the potential of MMC will require better collaboration within the construction sector, standardised techniques and financing models, and a strong lead from the mayor and national government.

 

Erica Belcher

Research Assistant

Centre for London

Tel: +44 (0)20 3757 5555

hello@centreforlondon.org

www.centreforlondon.org

Twitter: @centreforlondon

LinkedIn: Centre for London

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