What the future holds for offsite

Sponsored by LHC

With its benefits having been well rehearsed, why does the use of offsite remain limited in social housing? Inside Housing and LHC brought together sector leaders to consider the next steps for modern methods of construction.  Photography by Belinda Lawley

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A short distance from Gateshead International Stadium, there is a special neighbourhood under construction. Gateshead Innovation Village will consist of 41 homes, most of which will be built using a modular technique or modern methods of construction (MMC).

While the project won’t be entirely finished until next April, some modular properties are already complete and so site visits are well under way. According to Simon Williams, senior delivery manager at Home Group, these visits tend to provoke an interesting reaction.

“People go into the building, and then they come out and say, ‘It’s just a house!’ Well, that is the purpose of the project. I’m not sure what they expect when they turn up,” he says with a chuckle.

It is an anecdote that sums up the complex feelings about the use of modular techniques in social housing. Offsite and MMC are often seen as both sector saviours and cause for deep suspicion.


Giant housing association pledges to use offsite manufacturing on all schemes by 2025Giant housing association pledges to use offsite manufacturing on all schemes by 2025

Met with suspicion

The national steer is clear. If the pressing need for homes is to be met, MMC must be embraced. Indeed, Home England’s recently published strategic plan states it will incorporate into its leases a requirement to use MMC.

Yet the experience in Gateshead indicates the depth of wariness that will need to be overcome if such methods are to be used widely in the sector. This sentiment was echoed in the results of a survey conducted by Inside Housing and LHC in August: some 41% of respondents said their organisations had not used and were not using offsite construction.

Mr Williams and other housing leaders gathered at an Inside Housing round table discussion, in association with LHC, to consider the topic further.

For Colin Rae, group development director at Places for People, the Gateshead experience provokes a laugh of recognition. His organisation has also been making headway on the MMC front, completing its first modular houses this year in partnership with Modular Wise. He too reports perceptions that such properties will resemble flimsy boxes, rather than sturdy and welcoming homes.

“People don’t know about modular. Their starting point is, ‘It’s those prefab houses, isn’t it?’ But the quality of the stuff we’ve seen produced by ourselves and other people is exceptional. We never really thought you could achieve as good a quality a house as we can now get out of our factory.”

Our panellists suggest these concerns may be part of the reason for the sector’s continuing cautiousness towards MMC, despite the well-rehearsed potential benefits – most notably, reduced cost and faster delivery.

Tony Woods, head of construction at LHC, suggests it is a perception of risk that is stymieing progress. “What we’ve seen with the public sector is that everybody is waiting to see someone be successful,” he says.

His organisation has developed an offsite procurement framework with the aim of giving housing organisations more confidence in the sector. “I think everybody is risk-averse,” he says.

What the future holds for offsite 2

It’s a theme built upon by Jenny Coombs, project director at Local Partnerships – a public sector consultancy jointly owned by the Welsh Government, the Treasury and the Local Government Association.

“The issues around assuring quality and enabling organisations to have confidence in what they’re buying is really crucial,” she says.

One result of these worries is that the sector has opted for a number of pilots that would be the envy of a large airline. The irony, suggests Alan Yates, executive commercial director at Accord Housing, is that such projects can serve as a self-fulfilling prophecy – small schemes do not have the scale to deliver the expected benefits, leading to a perception there is greater risk.

“I’m not in favour of people saying I want to do two-unit sites,” says Mr Yates, whose organisation has its own offsite manufacturing facility. “If you’re going to move to offsite manufacture, do a decent-sized site. Commit to doing it: ask your questions, decide on one or two products, and just get into the market.”

What the future holds for offsite 3

Too little choice

Which is not to say the current market is complication-free, as Mark Baigent explains. He is director of PLACE Ltd, a new pan-London modular housing venture. Its intention is to procure modular units to serve as temporary accommodation for homeless families, moving homes from site to site across the capital to match need.

He tells the panel that a private house builder offered him a stark warning about market capabilities. “They said to me that at the moment there were only three modular manufacturers in this country that they would buy from.”

It is a point echoed by Jeff Endean, housing strategy and programmes manager at Lewisham Council. The council’s PLACE/Ladywell scheme – which it characterises as the UK’s first ‘pop-up
village’, offering temporary homes alongside community space – launched in June 2016.

When the council went to market with its first modular housing scheme, he says: “There were two manufacturers that came back to us and only one that could have built it. We’re now going out with three projects, and we think there are probably five or six, max.”

What the future holds for offsite 4

It is another example of the current chicken and egg situation, the group agrees. Established players are hesitant to get involved in social housing provision because of the sector’s lack of full commitment. Meanwhile, start-ups swarm, attracted by the positive mood music but without the credentials that give housing associations confidence.

“There is a mature group of companies, but it’s just not very big and they haven’t got a lot of exposure to our market,” argues Geoff Pearce, executive director of regeneration and development at Swan Housing.

“Then that’s compounded by lots of start-ups. We’ve all been to BRE [Building Research Establishment] and seen innovative homes built by companies that have been taken away because those companies no longer trade.”

Subsidiary Nu Living serves as Swan’s housing development vehicle and its construction and modular housing business. “It is a really difficult market for start-up-dedicated modular construction companies to enter,” says Mr Pearce. “You need a pipeline of work and you need quite a high level of production in order to get to any kind of efficiency.”

Jackie Maginnis, chief executive of trade body the Modular and Portable Building Association, agrees. “What we’re finding is that the existing suppliers that have been going a long time are really reluctant to take that leap of faith because of the uncertainty,” she reports. “And my concern is the new companies that are coming in may not have the quality and standards that we have been achieving.”

What the future holds for offsite 5

Too much choice

All too familiar with the multitude of players and construction methods out there is Richard Whittaker, director of development at WM Housing. He says he’s been researching MMC for the past three years in the hope of making it work for his employer.

He fears the number of choices on the table is a challenge: “Part of the problem is there is so much choice, and it’s about performance standards and it’s about longevity,” he contends. “It’s a 100-year investment for us around this table and for developers it’s not.”

He adds: “In my opinion, [the housing sector’s wariness] has not been about the risk, it’s been about the cost. Because you can now get modular products that are [approved by] the CML [Council of Mortgage Lenders]; they’ve got BOPAS [Buildoffsite Property Assurance Scheme] – so it’s mortgageable, it’s proven itself in terms of its performance, so it removes that risk a little bit.”

Allan Griffin, head of construction strategy at the University of Sheffield’s Advanced Manufacturing Research Centre, also offers reassurance on quality. The centre was founded in 2001 to help the aerospace and automotive sectors with technology development for manufacturing, but Mr Griffin was appointed two years ago with the intention of supporting such technologies in housing construction.

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“Every action that is taken in a factory can be recorded and documented, and it is there for anyone to come and view before it’s signed off,” he explains. “And that’s where you should get the quality improvements from factory production.”

So, if worries about quality are being addressed, what of Mr Whittaker’s point about cost? At Magna Housing in Dorset and Somerset, Paul Read reports an agenda that has moved from asking why they should use MMC, to asking why they shouldn’t, to assuming they should. And he says that shift is coupled with a desire to be the best partner it is possible to be, so helping manufacturers to offer value.

“We want to become a client that has got the tools to evaluate, appraise and decide which systems to go with,” he says. “What can we do to make sure we’re ready for MMC? How can we sensibly procure? How can we change the systems that we’ve currently got?”

So, will more organisations finally make that ideological shift, asks Inside Housing managing editor and round table chair Martin Hilditch? Might we finally hit the offsite tipping point?

“I think in five years’ time, there will be a lot more people who are going: ‘This is a logical way,’” responds Mr Rae. “People will be saying, ‘Actually, we’ve got a number of examples, we can go, kick the wheels, walk about the house and go: ooh, it’s just a house, isn’t it?’”

The panel

Mark Baigent

Director of PLACE, Tower Hamlets Council

Jenny Coombs

Project director, Local Partnerships

Jeff Endean

Housing strategy and programmes manager, Lewisham Council

Allan Griffin

Head of construction strategy, Advanced Manufacturing Research Centre, University of Sheffield

Martin Hilditch

Managing editor, Inside Housing (round table chair)

Jackie Maginnis

Chief executive, Modular and Portable Building Association

Geoff Pearce

Executive director of regeneration and development, Swan Housing

Colin Rae

Group development director, Places for People

Paul Read

Head of development and sales, Magna Housing

Richard Whittaker

Director of development, WM Housing

Simon Williams

Senior delivery manager, Home Group

Tony Woods

Head of construction, LHC

Alan Yates

Executive commercial director, Accord Housing