Building the Future: Will future homes be built in factories.

It's no secret that demand often far outstrips supply when it comes to Britain's housing market, with property prices a major talking point among everyone, from dinner party guests to political party leaders.

In this first of a new series on the future of homebuilding in the UK, we look at whether cracking the housing crisis lies in factory-built timber homes – and the challenges this may pose for mortgage borrowers and providers alike.

New construction methods

Conventional wisdom is that housebuilders deliberately strangle supply in order to keep prices buoyant. But it's not that simple.

The Royal Institution of Chartered Surveyors' September 2018 report 'Modern Methods of Construction: A forward-thinking solution to the housing crisis?' highlights the shortage of available bricks as just one bottleneck in a construction industry that operates a fragmented and inefficient supply chain. And it's a situation that may worsen in a post-Brexit Britain – we imported half a billion bricks from Europe in 2014.

One solution, RICS proposes, is off-site construction using cross-laminated timber (CLT), citing the popularity of similar schemes in Japan and Scandinavia. CLT glues several layers of timber together, at right angles to one another along the grain, allowing it to flex in two directions like concrete – and therefore providing the stability demanded by today's construction standards.

Its building and material costs are approximately similar to concrete, but there are said to be savings in logistics because it requires fewer deliveries to site. And, as a lightweight building material (CLT is around 80% lighter than concrete), foundations needn't be as extensive, and larger buildings placed on what would otherwise be considered poor ground conditions.

Quick construction

If CLT is a new material for home building, modular construction is a new approach to home design. Instead of creating a house as a single unit, individual modules – i.e. rooms – are created separately, and can then be combined in limitless ways. In essence, it gives residential architects a range of modules to choose from, each conforming to minimum room standards.

Made off-site, each module then quickly slots together on delivery – allowing rapid construction, and minimising traffic disruption if the build is taking place in a built-up area.

Improving standards

One benefit to factory-built properties is the potential for automation, which minimises the risks associated with human error and, in turn, the likelihood of inconsistent building standards from one site to the next.

For manufacturing owners, this automation could possibly bring costs efficiencies as labouring costs are replaced by one-off investments in robotics. There's also the potential for reduction in delays caused by lack of labour, or inclement weather.

And for workers, there may be more skilled jobs available in the maintenance of machinery, and the design of new modules. The advent of 'digital twins' in particular allows engineers to find the most efficient way to – for example – design a new module, without ever leaving their desks.

Green considerations

British public discourse frequently references the environmental impact of our lifestyle choices, so a switch to sustainable building materials like wood may be one way of reducing the carbon dioxide emissions of the construction industry. Statistics indicate that these increased by over 40% between 1990 and 2016.

Trees famously absorb CO₂ while growing, so switching to CLT may go some way to offsetting the huge CO₂ emissions of cement – a principle ingredient in concrete and, by extension, mortar. In fact, RICS suggests that properties made using CLT may actually be carbon negative.

Securing mortgages and loans on factory-built properties

The reality for mortgage lenders is that factory-built homes pose a serious challenge, and potentially a new approach to risk.

Mortgage providers are ultimately concerned with the long-term viability of properties – that they will stand the test of time. And the only way to know with certainty is to wait and see, because there are arguments both for and against.

On the one hand, production line-built homes CLT may offer the peace of mind that the product adheres to enforceable minimum standards, in the same vein as cars and home electronics – reassuring at a time when even some newly built bricks-and-mortar properties are reported to be suffering structural issues, or failing fire safety inspections.

On the other, the legacy of the last time Britain dabbled with large-scale homebuilding using pre-fabricated panels – the infamously defective 'pre-cast reinforced concrete' homes built in the post-war period – remains. Many mortgage providers still treat concrete homes with trepidation.

The role of specialist lenders

Specialist lenders already well-versed in the arena of non-standard construction are perhaps best positioned for this new world, especially considering construction materials are just one of several changes to 'normal' happening simultaneously. Few better examples exist than the world's largest CLT residential building, on Dalston Lane in Hackney, London.

These flats were sold on a Shared Ownership basis; are in a building spanning 10 storeys in height; and are made of non-standard materials – all factors that can complicate a mortgage application. Add in a self-employed buyer with imperfect credit, and many mainstream lenders would be unable to help.

Knowing this, builders may be discouraged from switching to modern methods of construction like CLT for fear of being unable to sell properties once completed. So it may ultimately be these risk-averse lenders who are responsible for many aspiring homeowners' woes.