What does the future of MMC look like now?

Author: Steve Lees, MRICS, Head of Technical Surveying at e.surv

News reports about the demise of Legal and General’s modular housing factory* and Urban Splash’s
prefabricated house product have left many in the residential sector asking, where does that leave
Modern Methods of Construction (MMC)?

MMC was supposed to be the perfect solution to the housing shortage and the 300,000 new-homes-a-year target that has been, until recently, a staple of Government policy.

Modern, energy-efficient dwellings built at scale in factory conditions seemed to be the ideal shot-in-the-arm for a bricks-and-mortar industry which hadn’t changed its processes for generations.

It addressed many of the problems associated with the current construction model – a shortage of skilled labour, on-site waste, time to completion – problems which were highlighted as far back as 2016 in the Government-commissioned Farmer Review Modernise Or Die*.

So what has gone wrong?

There are a number of reasons but a major factor has to be the difficulty of securing a big enough pipeline of work to justify the cost of investment in a modular homes factory.

Weak demand has been exacerbated by planning delays. Reforms to the planning system are simply not happening quickly enough. The number of MMC dwellings being built is still very low compared to the need for housing.

MMC should be a great fit for the delivery of social housing. Medium or large estates built at speed would also be a great testing ground to prove the end-to-end process. But it simply isn’t happening.

The Legal and General product took time to get to the market. It also took time to gain acceptance. The quality assurance that mortgage lenders require did not seem to be available, and the position of warranty providers and the Build Offsite Property Assurance Scheme was unclear to consumers and lenders alike.

L&G invested heavily in its modular housing business but if this financial services giant can’t make it work, who can?

National House Building Council’s (NHBC) approval process for innovative systems – NHBC Accepts* – certainly helps by providing a quality assurance framework whereby new products are monitored from concept through construction to the final turnkey product. Sites using approved systems and components will then qualify for the NHBC newbuild warranty, putting MMC on a level playing field with traditionally built sites.

However, uptake of modern methods still seems slow, with many builders reverting to the certainty of brick and block.

So what can change this state of affairs?

The answer must be ‘certainty’. Certainty that a supply of land will be available; certainty that customers are willing to buy the completed product (which should be the equivalent cost or cheaper than ‘traditionally’ built dwellings); certainty that the finished home will exceed energy efficiency standards and align to future standards; and certainty that secured lending will be readily accessible.

It may well be that the Government needs to support SME contractors and alter the perception of the construction industry. University graduates should be fully engaged with homes of the future and embrace the technology that is moving on at pace.

Building at volume with innovative products and processes will help improve production and may see the evolution of a standard for products so that small businesses can create components to ‘plug and play’ into the structure.

Sadly, the most recent Government budget announcement was virtually silent on the housing sector. Without a significant injection of fresh thinking, tax breaks for innovation, improved planning processes, and possibly a new way of underwriting innovative schemes, MMC may remain as a great concept, but no more than that.

* Legal & General halts new production at modular homes factory near Leeds | The Guardian

* Construction labour market in the UK: Farmer review | Gov.uk

* NHBC Accepts – Building confidence in innovative construction | NHBC