Summary
For decades this country has not built enough homes, which has led to rising housing costs. The Government has set an ambitious target to build 300,000 homes annually by the mid-2020s but constraints such as the shortage of skilled workers mean it cannot meet that target using traditional building methods alone. A significant proportion of homes must be built using modern methods of construction (MMC) if we are to meet the target to deliver 300,000 homes annually. The conclusions and recommendations in this report are intended to make this happen.
This inquiry focused on the benefits of using MMC to build homes and the barriers that prevent greater take-up. It sought to address those barriers and make recommendations that will help the industry to overcome them.
The main conclusions and recommendations are as follows:
- The Ministry should report annually the total amount allocated to MMC developments across all its different funding streams and implement a coordinated strategy across all relevant government departments to increase MMC homebuilding.
The Ministry should track how much of its total spending on housing goes towards MMC developments specifically. It should also implement a coordinated strategy with other government departments that oversee schemes such as construction skills provision and research and development (R&D), to increase MMC housing output. It should monitor how many homes are built using MMC annually, in order to evaluate the impact of this strategy.
- Homebuilders should use more digital technology in their processes and not simply move construction off-site.
There is some disagreement about which methods should come under the banner of MMC but to take advantage of the predicted benefits, such as improved quality, homebuilders must use more digital technology.
- The lack of long-term data on the durability of MMC homes in the UK is a considerable barrier to industry actors engaging with MMC housing schemes.
Financial service providers, including insurers, mortgage lenders and valuers need to have certainty that MMC homes are safe and durable if they are to engage with them.
- The Government should develop a digital database that records the design, processes and materials used in the construction of buildings.
Digital technology makes it possible to create a database that would store and track data about built environment. It should record the materials and processes used in the construction of homes. It could also track repairs and alterations in larger housing developments and make this information available to relevant stakeholders, including insurers and fire services.
- We welcome the proposal for an “MMC Scheme” that will set out a single set of standards for warranty providers against which to make decisions.
Currently, warranty providers set their own standards against which to assess homes. The “MMC Scheme” which is being developed by the MCHLG Joint Industry Working Group will provide financial service providers with more certainty about the quality of MMC homes.
- The Government must ensure skills programmes, apprenticeship schemes and the new T Level give learners the skills they need for both traditional techniques and MMC and encourages more young people into the sector.
The shortage of workers with relevant skills is one of the main constraints to increasing homebuilding in the UK. It is vital the Government increases skills provision and turns homebuilding into an appealing career choice for young people.
- There is a lack of robust supply chains for MMC homes.
Supply chains for MMC homes are underdeveloped in the UK. The Government should help to aggregate demand for MMC products to provide certainty and allow businesses in the supply chain to invest in factories to produce relevant components and machinery.
- Local authorities need to start building homes in far greater numbers than they have done in recent years.
In the past, local authorities have been major homebuilders and have contributed significantly to the total number of homes delivered. If we are to get close to delivering 300,000 homes per year, local authorities must supply a significant proportion of them. Social housing is particularly well suited to MMC because it often includes large numbers of similar homes which reduces unit costs and provides certainty of demand to the supply chain.
- Helping homebuilders to access land for development is key if we are to increase rates of homebuilding.
Homebuilders cite the lack of access to land as a constraint to increasing housing supply. It is even harder to access privately owned land for MMC developments than traditional developments. The Government should help MMC homebuilders to access land that it controls so they can increase their overall delivery of homes and shore-up demand for the supply chain.
- The Government should urgently set out a clear plan for the review of the building regulations, including the whole suite of Approved Documents, and consider how they relate to MMC buildings.
The current system of building regulations is confusing, and homebuilders told us it is difficult to apply the guidance to MMC buildings. We welcome the Government’s review of Approved Documents in light of the Independent Review of Building Regulations and Fire Safety, led by Dame Judith Hackitt but the review should go further and consider specific guidance for homes manufactured off-site.
- The building regulations should set more stringent energy performance targets for homes to take into account achievable levels of energy efficiency.
At present, many new homes do not achieve the high levels of energy efficiency possible with MMC. The Government has set a target to eradicate the UK’s net contribution to climate change by 2050 and the built environment has a major role to play in achieving that target. The Government should strengthen energy performance targets to reflect this.
- If current schemes are insufficient to provide the finance needed to increase MMC output, new schemes aimed at MMC developments should be considered.
MMC homebuilders require capital upfront to pay for factories and assembly lines. This presents the biggest barrier to SME homebuilders that do not have reserves to draw on to invest in MMC. Private investors are cautious about investing in innovative methods of construction, so the Government should ensure it is enabling homebuilders to access the finance they need for MMC.
Published: 3 July 2019