Help with solving the UK’s housing crisis with modular homes and developmental loans

How modular housing could boost the housing supply

Theresa May has said on more than one occasion that “Britain’s housing market is broken and in need of fixing.” With property prices almost eight times the average annual income, an entire generation has little chance of owning their own home unless drastic action is taken and soon.

Various measures were revealed in the Budget back in October 2018, including help for first time buyers, relaxing planning permission so that unused commercial property on the high street could be used for housing and there was help for housing associations. But an idea that has its roots in an idea first used in Britain after World War II (when we faced a severe housing shortage) may at least help solve our latest housing crisis.

How modular housing could boost the housing supply

Modular housing, long associated with prefabricated housing, or ‘prefabs’, are homes that are mainly built off-site in sections that can be rapidly put together on the building site.

Although many people who still live in ‘prefabs’ to this day love them, they have a reputation for being low quality buildings and energy inefficient.

The latest version of modular buildings are much better quality, energy efficient and boast cutting-edge design. Nicky Gavron, former deputy mayor of London goes further, describing them recently as “Precision-engineered, digitally designed and eco-efficient”. 1

They could boost the housing supply because compared to traditional building methods, they can be built quickly, giving them a vital part to play in helping solve our current housing crisis.

So what exactly is the size of the housing crisis?

It’s estimated that around 300,000 homes need to be built in the UK to keep up with demand. In 2017, roughly 15,000 modular homes were built here, but now the UK government wants that figure to quickly increase to a massive 100,000 homes by 2020.2

Support for modular properties is already growing

Mark Farmer, advisor to the UK government on construction strategy reckons, “The construction industry is one of the last to embrace modernisation” and says that, “Whilst we are all using smartphones, construction is still pretty much the same as it was in Roman times.”3

Mark Bryden, an adviser to the Greater London Authority on its house-building programme feels that the construction industry is due for an “Uber moment”, or in other words, it’s ripe for disruption by new technologies and more efficient building practices3. With tech giants such as Amazon already showing a growing interest in the industry (even buying a flat-pack house builder in the USA), there’s a good chance that he is right.

Meanwhile, Legal & General has invested £55m in a modular factory in Leeds and is aiming to build 3,500 homes a year. Berkeley Homes is building a factory in Kent that should produce 1,000 homes per year.

How modular could help solve the housing crisis        

When you build a house completely on a building site, it has to be constructed in a certain order, which depending on what the weather’s doing can lead to long delays and inefficiencies.

With a modular building, the site and foundations can be prepared whilst the rest of the building is being created off-site in a dry, covered factory. So, there are no delays due to the notoriously poor British weather, no waiting for building materials and less disruption to those neighbouring the building site.

Building modular homes is also good for building on smaller plots of land that are hard to get to, as there’s no need for lots of delivery lorries.

Unlike the small prefab homes built after the war, the modular style of construction is now being used for residential tower blocks, such as Europe’s tallest modular residential tower in Europe, currently being built in Wandsworth and the 257-bed student accommodation scheme just completed in north London.

At the opposite end of the scale, anyone that’s watched Grand Designs will probably have heard of Huf Haus, the German company who put together highly desirable modular houses, usually for well-heeled self-builders. Once the concrete base is down (put in whilst the house is being built in sections off-site) it usually takes just one week to put up a highly desirable house. That compares to an average of six months for the average, traditionally built home.4

Funding a modular home through Loan.co.uk

Whether you’re a property developer, investor, self-builder or landlord, at Loan.co.uk we’re able to help with development loans from £50,000 right up to £100 million.

The first step would be to purchase a plot of land. Being a ‘ground up development’ you would probably be best seeking a development loan with the finance drawn-down/released as agreed stages of work are completed.

Typically, a lender would be able to finance 50% of the land and 70% of the build with a development loan. And of course, you’ll also need money for legal and conveyancing fees.

Contact Loan.co.uk to see how we can help your modular home building project get off the ground with a development loan.

Sources:

1 and 2: Money Week:  https://moneyweek.com/497732/prefabs-make-a-more-stylish-return/

3: Financial Times: https://www.ft.com/content/8f26e0ea-d375-11e8-a9f2-7574db66bcd5

4: Eye on Housing: http://eyeonhousing.org/2015/08/how-long-does-it-take-to-build-a-single-family-home/

 

 

 

Related articles

buy to let loans

Is a personal loan better than using a credit card?

We take a look at personal loans and credit cards and explain how they work and why one is better than the other in certain situations.

Buy to let hotspots of the future

Best places to buy to let in the future

Once new tax rules bite in 2020, buy-to-let will get a bit tougher. So what are the best and worst areas for landlords to invest and if you’re looking to buy an investment…

types of property surveys

Types of building surveys and choosing the right one for you

If you’re looking to purchase a home, make sure you get expert advice on your mortgage. A property survey is vital because once you’ve exchanged contracts it will be down to you and at your cost to put any defects..

Building new frame energy-efficient house

Help with solving the UK’s housing crisis with modular homes and developmental loans

Theresa May has said on more than one occasion that “Britain’s housing market is broken and in need of fixing.” Could modular housing boost the housing supply?

Understanding debt consolidation loans

Understanding debt consolidation loans

Understand exactly what debt consolidation loans are and how they can help you if you’re struggling with debt.

Buy to let tax rules

Buy-to-let tax rule: is using a limited company better for tax?

If you are a buy-to-let owner, you could start to feel the pinch of the 2017 tax changes – but what are your options to help prevent you from slipping into the red…

Will Brexit affect your mortgage?

Will Brexit affect your mortgage?

A mortgage broker such as Loan.co.uk can help you through the options. On 29 March, 2019 the UK is due to leave the European Union. We take a look at how Brexit could affect mortgages, most people’s biggest..

How to manage your debt

Seven random things that can hit your credit score

Here are a few possible reasons your credit score could drop. Ever checked your credit score only for it to be lower than you’d expected it to be? Well, it’s surprisingly easy to hurt your..

The 7 benefits of getting a mortgage via a mortgage broker

Using a mortgage broker such as Loan.co.uk not only makes sound financial sense, but will provide you with all sorts of vital help. So, you’re looking for mortgage deals to help you buy a property, but..

What is credit score?

What is a credit score?

The terms credit score and credit rating often appear when it comes to your finances. Find out exactly they are and how they affect you.

Categories

Homeowner
Loans

Mortgages

Remortgages

Buy to Let
Loans

Bridging
Loans

Development
Loans

In the
News

Shall we get started on building your bespoke loan?

Simple online application Online loan application icon

Share This