Government wants more than 100,000 modular homes to be built in the UK to support its target of 1m new homes by 2020. This means increasing the current level of modular home delivery by 55% as supply levels of UK modular homes stand at just 15,000 a year. There have been recent moves by key companies in the sector to choose modular but is this a viable solution for ramping up supply of PRS homes?

From our experience of consulting on modular schemes, we would choose to highlight the efficiencies in the modular construction process that produce cost savings and increase speed to market. However, there are also areas of the delivery model where there is inherent risk, most notably at the pre-construction stage. This risk has not been adequately recognised among the industry clamour surrounding modular.

Committing in Pre-Construction
There is a high level of commitment in making the decision to develop a modular scheme and finding the funding for it from the outset of a project. Yes, there are undeniable benefits in terms of faster delivery time on-site and therefore earlier revenue generation from quicker occupancy. But the financial commitment at the pre-construction stage of the project lifecycle represents a significant undertaking.  

For each modular project, a specific design and product is going to be manufactured and tailored to the relevant scheme. 70% of this product is being built off site and at least a 40% deposit will have to go down to cover the costs at the point of order. Compared to conventional schemes, this is a far higher cost to be delivered up front.