As Britain gears up formally to announce its departure from the European Union this month, some of Britain’s leading housebuilders, including Berkeley, Taylor Wimpey, and Persimmon have said they are either planning new developments of prefabricated homes or are considering doing so, Reuters reports.
They are catching up with smaller social housing developers, and some very big non-traditional housing suppliers who are moving boldly to capitalise on huge pent-up demand in the UK for affordable rented accommodation.
Prefabrication – which sees panelised or volumetric (whole rooms) components made in a factory and bolted together on site – is seen as an answer to two chronic shortages in the UK: that of homes, and also of skilled construction workers, a shortage many fear will be exacerbated by Brexit.
A report by Dutch engineer Arcadis in February estimated that the industry as a whole could see a reduction, by 2020, of as many as 214,000 workers in the event of a "hard" Brexit.
The situation would be most acute in London, where a recent report shows that 95,000 of London’s construction workers – more than a quarter of the total – have EU nationality.
Berkeley will produce its first ever factory-built homes this year, Reuters reported. It is starting small, with just 16 prefabs in southeast London, but has another 50 in the pipeline for the capital and plans to gradually expand the programme.
Eventually, without giving a timeline, the company said it had a target of building 10-15% of all its houses using prefabricated techniques in the "short to medium term".
Taylor Wimpey is also exploring ways to "future proof" its business and is considering offsite construction options, divisional managing director John Gainham told Reuters.
Another leading housebuilder, Persimmon, has long had a factory in central England, part of a business called Space4, that makes prefabricated timber frames for about 40% of all its houses.
Now Space4 is looking at proposals to either increase volumes at the existing factory or build another factory elsewhere in Britain, regional executive Richard Oldroyd, told Reuters, citing a desire to reduce the company’s dependence on traditional labour like bricklayers, and partly in light of Brexit.
Smaller players are ahead of the game.
One of the most ambitious of these is the Leeds-based company Citu, which has a timber-framed housing system designed to high environmental standards.
We’re looking to turn over about £50m a year within the next two to three years– Chris Thompson, Citu founder
Citu was founded 12 years ago but now it is scaling up. The company has invested £3m in a 60,000-sq-ft factory located on a 3.5-acre brownfield site in Leeds city centre. With help from a £400,000 grant from Leeds City Council, Citu’s new factory will eventually be able to produce up to 750 low-carbon homes each year.
In the shorter term, Citu is basing its business model on a more modest output of 250.
The company has planning permission for about 900 homes so far in Sheffield and Leeds.
"We have capacity to expand if and when we prove our business model," company founder Chris Thompson (pictured above) told GCR’s sister publication Construction Research & Innovation in December. "We can form partnerships that will open up channels elsewhere. We’re looking to turn over about £50m a year within the next two to three years."
Big players getting involved from outside the industry
Companies with huge financial clout are getting in on the action, as well, and they are not traditional housebuilders.
As GCR reported last year, the £12bn-turnover financial services company Legal & General (L&G) is setting up a 550,000-square-foot factory near Leeds, intended to be "the largest modular homes construction factory in the world".
It has teamed up with a Dutch pension fund manager PGGM to construct 3,000 apartments across the UK under a £600m "build-to-rent" plan.
L&G and PGGM will initially build 650 flats in Bristol, Salford and Walthamstow, north-east London. L&G will act as the developer and once the flats – ranging between one and four bedrooms – are built, it will be the landlord, targeting yields of 3-5%.
China is also getting involved.
As GCR reported in December, China National Building Material Company (CNBM) will bring its industrial might to bear in a £2.75bn joint venture with a UK housing association, Your Housing Group (YHG), and a renewable energy supplier, Welink, to build six factories that can produce 25,000 homes a year by 2022.
Such initiatives have clearly got the incumbent housebuilders thinking.
"Fundamentally, the construction industry has been doing some things the same way for hundreds of years," Berkeley Chairman Tony Pidgley told Reuters. "Historically, we had the labour … But the challenge is different now."
Image: In the Citu factory in Leeds: From left, Citu founder Chris Thompson, Colin Dixon and Jonathan Wilson, of Citu, and Professor Chris Gorse, Leeds Beckett Univerity (Credit Simon Dewhurst)