As Berkley enter the fray is it time to get into the modular homes industry?

With the current housing crisis everyone is looking for new, innovative and most importantly profitable solutions. The housebuilding process has not changed in decades, and remains complex allow despite increasing demand.

Modular housing is a broad bracket that covers everything from shipping containers to glass boxes, or aluminium housing to co-living developments, it could even be the reinventing of an existing space or the manufacturing of a prefab home.

What is a Modular Home? 

Modular homes has been an idea floating around the construction industry for some time now but it has often been associated with the image of aluminium bungalows built in a rush in the 1940’s post war. In recent times the modular homes industry has undergone a transformation and is being touted as the next construction boom as the demand for affordable housing takes hold. Some even consider it to be the only way to save the housing industry, as Mark Farmer, an industry veteran, concluded in a government report the housing industry must “modernise or die” due to the severe lack of carpenters, brick layers and surveyors.

Modular Homes and the UK's Housing Crisis

Developers are starting to take note and Berkley are to be one of the first big UK home builders (they build 10% of all residential new builds in London) to branch out into this growing market. With a technologically advanced manufacturing facility in Kent, the whole production and installation of Berkley’s process takes less than 21 days per home. This is to become a large portion of their business with 1 in 4 of their 4,000 new homes to be built on the factory floor.

Berkley aren’t the only welcome newcomer to the market, Legal & General, a FTSE 100 insurer, is in the process of building the biggest modular factory in the world in Shelburn-in-Elmet, North Yorkshire and are producing 3,500 homes per year at capacity.

With the government setting an optimistic target to increase modular home production from 15,000 to 100,000, the addition of Berkley and other big players to the market will be a welcome sight to the Ministry of Housing and they will be hopeful other large home builders follow suit.

One example of a recent modular homes project is the The Collective at Willesden Junction, North West London. It has 550 rooms priced from about £780 a month, including council tax, utility bills, cleaning, wifi and gym membership. In addition, each floor has a kitchen and the development has amenities such as a library and a cinema. The residents are an average age of 28 says Ed Thomas, the head of community experience at The Collective, and the rent is below the £989 average for the South East, according to the Homelet Rental Index. Mr Thomas says: “In ten years’ time, I think co-living will be the way that a large proportion of urban renters are living.”

There is also a development set to begin in Croydon, as Greystar and Henderson Park have exchanged contracts with Tide Construction to purchase the 550 apartment residential development in Croydon. Once complete, the development will include 2 blocks of 44 and 38 storeys making them 2 of the world’s tallest towers built through modular construction. The current tallest building is in New York at 32 storeys tall.

The Rise of Micro-Living

Whilst Berkley are focusing on a high-end modular solution, a new trend of micro living is taking off in urban markets. Even with the growth of house prices and rent slowing down, first time buyers still struggle to get a foot on the ladder. The solution being offered is smaller homes for a smaller price, and thanks to a loophole developers are taking advantage of, they are able to circumvent size restrictions to construct homes as small as 12-30sqm.

Bearing in mind that a one bed apartment for 2 should be at least 50sqm or 1 bed flat for 1 must be a minimum of 37sqm developers of micro living spaces are able to sell or rent at a price more attainable for the growing first buyer demographic.

One example of this is a company based in London called Pocket Living, who have a waiting list of 35,000 for its 38sqm 1 bed apartments. They often sell their modular homes for 20% below the local housing market value and it’s first building was advertised on the open market last year. They have also received a £150m from the government, Lloyds bank and the Mayor of London to build more than 1,000 homes for the first time buyers of Greater London by 2021.

What Does this Mean for the Construction Industry?

All of this may be great for the housing shortage and first time buyers but it is likely to see a reduction in work for construction workers as everything is completed within the walls of a factory including the installation of kitchens and bathrooms.