Government fully supports Modular Construction - What does this mean for traditional housebuilding?

In my July article, I commented on how Modular Construction was moving up the Housing Agenda. Today the Times has reported on Government plans for a major investment in factory-built homes. This was part of a key speech by Robert Jenrick at the Conservative Party conference and has been supported by Rishi Sunak, the chancellor, and Steve Barclay, chief secretary to the Treasury.

Robert Jenrick’s comments are significant to the future of housebuilding. We are already seeing some of the traditional housebuilders invest in modular construction. For example: Berkeley Homes has set up a modular construction arm. Countryside is investing circa £20m in a modular construction factory. Barratts intends to construct 20% of its homes off-site. The Government believes that this initiative would aim to deliver 75,000 modular homes a year by 2030, creating up to 50,000 jobs and reducing carbon emissions from new homes by 40 per cent.

Whilst there are many barriers to overcome with modular construction, with Government backing, the housebuilding industry will need to adapt, in particular if housebuilders wish to work with Homes England or London Councils who will all have the ability to force a housebuilder to provide a modular element in the tender process.

With sweeping planning reforms approaching (see a planning white paper summary here), it is possible that permissions for certain types of developments will only be granted if there is a modular element.

Many modular construction companies are already recruiting land buyers and project managers from traditional housebuilders. This is a positive sign as it shows that modular construction companies are moving away from engagement as a (albeit main or single) contractor but into a housebuilder model where particular care is given to the long-term strategic goals of regeneration.

It is also significant that this latest announcement from the Government is being reported in the Times. Modular construction is a fairly niche topic and typically only people with an interest in housebuilding take note of these changes. However, given this is being reported in some of the mainstream media it shows how important this topic is becoming. The Government has certainly signaled its intention to back modular construction and it will be very interesting to see how the housebuilding industry evolves.

I will certainly keeping a close eye on how this develops as this continues to look like a serious shake-up of the industry.