Relying on local authorities and housing associations will not get modular moving fast enough, or at the kind of scale that will make the factory-built system work at maximum efficiency. The most recent Ministry of Housing figures show that local authorities were responsible for just 470 housing starts in the last quarter for which data is available (October-December 2019, before the coronavirus pandemic). Housing associations produced 5,200 in the same period. The private sector started 28,400 units in the quarter, and it is here that real growth and volume is to be found.
Data is hard to come by, but the often quoted figure (from a document published by law firm Pinsent Mason) is that roughly 15,000 of the UK’s 200,000 a year housing starts are modular.
If modular output doubled, it would still be a niche business.
That said, serious money is moving into the sector with an eye to the short-term opportunities and the long-term structural change that will push modular from niche to mainstream.
Yorkshire-based modular housing company, ilke Homes, is one of the businesses on which many hopes are pinned because they could, potentially, become the kind of Tier 1 contractor the modular sector needs. ilke has opened new offices in London, Birmingham and Bristol thanks to near-200% annual growth of the company’s pipeline.
ilke aims to deliver 5,000 homes a year by 2025, and already has a pipeline of around 3,200 units.
If a turnkey contractor such as ilke can develop momentum, and in the process allow customers to purchase complete developments sourced and delivered by ilke Homes, one of the big obstacles to growth in the sector will be diminished.
Legal & General are also pushing into the modular sector. Legal & General Modular Homes has gained planning consent to deliver 154 homes, using modular construction, at an eight acre site at Portholme Road, Selby in North Yorkshire. From its factory not far away in Sherburn-in-Elmet, Legal & General Modular Homes has ambitions to build its annual housing delivery to 3,000 modular homes a year by 2024. The delivery pipeline continues to grow, with 350 homes added to the pipeline so far this year.
Selby is the first scheme where Legal & General Modular Homes will deliver a full development proposition from buying land, developing the product, achieving planning consent, and through to delivery: so that is another potential Tier 1 contractor in the making.
Surveying the changing modular sector, HTA’s Simon Bayliss sees reasons for soundly-based hope.
‘The last five years have been game-changing,’ he says. ‘We’ve got people like Legal & General and ilke in the market, and a lot more people talking about it. It’s not an explosion, no, but pledges from organisations like Homes England mean more modular construction is on the way. Things really have changed.’