Innovation in housing


3rd March 2017

Innovation in housing supply

England is not good at dealing with its housing crisis. The government has lacked imagination when it comes to thinking about how to deal with the under-supply of houses and what stands out about the response that it has been making is an almost complete lack of imagination.

Let’s looks at some of the ideas that could help to bring a quicker solution to the problem of meeting housing needs. Firstly, using imaginative methods to create places to live in.

Manufacturing prefabricated units at considerably less cost than building with bricks on site. Companies are already making living units in factories. These are transported in a nearly-finished form, put in place and services connected and all this can be done at considerably less cost than building houses with bricks and in less than half the time. Using modern materials and up to date methods of fabrication, the production of such units has already started and is proving to be successful.

Several British companies are now offering modular homes for as little as £80,000. Units of this kind are constructed to a high standard of energy efficiency, thus reducing their running costs. Because modern techniques and materials are being used in their manufacture, they can be tailored the needs of the clients. The key factor is that they can transported to site and finished very quickly. Sales of these unites have been good and the house-buying public as shown a real appetite for these innovative units.

Many of the units currently available require land; that can be a problem for many local areas where inner urban building land is in short supply. However, some of these units, designed for urban life, are stackable, making better use of the smaller inner city areas that result from site clearances. In fact, in some cities (where space really is at a premium) units have been placed on top of existing buildings. They are lighter than conventionally built penthouses.

The units are ready to have electricity, drainage and water connected when they arrive on site. Inside one of these units the accommodation is very similar to modern apartments. If you were to walk into one of these units you would think you were in a flat in a newly built apartment block. That is enough to convince many prospective buyers that these are viable living spaces. The size of units ranges from one bedroom to four bedrooms. On the whole, stackable units tend to be low rise projects, if they are stacked on top of each other. Providing three or four tiers of units does not involve much infrastructure.

Pre-fabricated units are a real alternative to traditional buildings and offer a serious solution to the housing crisis. They are affordable in a way that conventional brick-built houses are not. Prices are considerably lower than for the equivalent amount of inside space provided by conventionally constructed houses. Being comparatively light, they can be built on piers allowing car parking space to be provided at ground level. They can thus be erected over existing ground-level car parks. Some units have been designed that employ solar panels to supply electricity. The materials used to make walls and roofs use eco-friendly materials and allow modern materials made from recycled plastics to be used.

Not just cheap

Many of the units currently available offer cheap solutions to meeting urgent housing need. They can also provide homes for other sectors of the housing market, in areas where land is more freely available. If we can provide housing stock for the higher ends of the market (I mean units from £100,000 to £300,00 or more) it would lead to purchasers freeing up existing accommodation. That would also relieve pressure on demand at the lower end of the market. Some of the prefabricated units are clearly intended for the wealthier end of the market; people who can afford the land required and can afford to put services and drainage in place. Providing more units at this end of the market will enable movement to take place that would, I would argue, reduce the pressure on the lower-priced sectors and free up opportunities. Thinking back to what I said before on the renewal of existing urban housing stock, these units could be very useful on sites where redundant properties need to be demolished. Instead of replacing properties with brick-built houses, these prefabricated units could be installed at much less cost and in a fraction of the time. In urban areas, the challenge is not to create new land but rather to use existing land more effectively.

The goal of housing policy should not be to do things on the cheap but to provide housing that is of good quality at prices that people can afford – people who are desperate to have homes but who cannot afford to climb the ladder of conventional housing. When we look at the units being offered by the prefabrication suppliers, we see a lot of architectural and engineering expertise has gone into the design. Much more intelligence has been used by designers in the prefabrication sector than we see in traditional housing building.

So why aren’t we doing it?

The housing crisis is not that difficult to solve. The bigger problem lies in our members of parliament – the people who make the decisions. They are like an old record that got stuck – endlessly repeating the same old formula about building housing with bricks. I have argued before that brick-built houses are not the most viable option for the situation we have in this country. Until our policy-makers move away from that antiquated mantra, we are unlikely to make progress.

We need people with imagination to head up future housing policy. Not just in the palace of Westminster. Local authorities could do a great deal more to provide housing in their areas but this will require both elected members and officers in housing departments to change their long-established, entrenched, attitudes about to how to do things.

The goal is simple: provide quality affordable housing cheaply and quickly. You cannot do that with bricks and mortar.

Learning from failure

The housing acts of the last twenty years are widely regarded as being failures. Successive governments have failed to respond effectively to the growing problem inadequate housing supply. Recent responses by the present government looked very much like knee-jerk reactions that had been poorly thought through.

The housing White Paper of February 2017 achieved one thing: it recognised that the housing market was broken and needs fixing. Little else of worth was contained in it. But then a white paper does what a white paper does; it opens the door to consultation. The white paper realised that there is a need to encourage diversity in the housing market. It said:

Action to help small independent builders enter the market given including through the £3 billion Home Building Fund. Currently around 60% of new homes are built by just 10 companies.

Those ten companies are brick builders and they are part of the problem – not part of the solution. If we want diversification in housing supply we have to break that monopoly. In my view that means providing incentives for non-brick fabricators to do a lot more. If the Home Building Fund is in fact to provide much-needed scope to enabling new methods of construction, then we will be well on the way to dealing with the crisis in the supply of affordable homes.

Another thing that Sajid Javid said the White Paper:

The proportion of people living in the expensive private rented sector has doubled since 2000 and that more than 2.2 million working households with below-average incomes spend a third or more of their disposable income on housing.

If there are more people in the renting sector then we need to find ways of supporting them. I very much doubt that we will see a significant decrease in the rental sector over the next ten years – what ever else happens to housing supply. What would help the rental sector is to provide a much more diverse range of options and an robust increase in the number of apartments that are available to rent. Building high rise apartment blocks in urban areas is one way of increasing supply but it is not the only one. Policy-makers need to be much more imaginative; that means letting go of traditional methods of building construction and focusing more on innovative contemporary techniques.

The government consultation on planning policy and legislation in relation to planning for housing, closes on 2nd May 2017. From the Government website we see that:

Many of the changes involve amendments to the National Planning Policy Framework. The Government intends to publish a revised Framework later this year, which will consolidate the outcome from the previous and current consultations. It will also incorporate changes to reflect changes made to national policy through Written Ministerial Statements since March 2012. These are:

Support for small scale developers, custom and self-builders (28 November 2014), etc.

The statement about support for small scale developers is one of nine topics. It might prove to be one of the most important. Interesting to see the word ‘custom’ in there.

Turning things around

The history of housing legislation – in the past twenty years or so – has been littered with outmoded, poorly thought-through measures that have failed to make an impact on housing supply and that is why we now have the crisis that we see today.

It is not just the reluctance of policy-makers to embrace new methods of construction that leads of failure. It is also their inability to devise new methods of finance. We have known for a very long time that there has been a shortage of traditional mortgage finance. Tackling this issue probably does not lie in reforming banks and building societies; some of it might be but what is more likely is that we have to devise new methods of providing finance to prospective home buyers. We might well have to replace the mortgage with a new way of financing home ownership.

Sajid Javis is an old-school thinker; he is still chanting the mantra of building new houses and his record is clearly stuck in the groove of bricks and mortar.

Two groups of people are at a severe disadvantage in the housing market: the young and old. Young people have not been working long enough to have saved up enough money for a deposit. They are dependent on the ‘bank of mum and dad’ – if they are fortunate enough to be born to relatively well off or wealthy parents. Older people can often find themselves unable to access mortgages because of their age; mortgage providers frequently view retired people as being bad risks when it comes to paying off housing loans.

These two groups stand to gain from the introduction of new methods of construction. Because these units cost a great deal less, they are more affordable and much less capital is required to buy them. If smaller loans are required, existing mortgage providers might be more willing to lend, over a shorter period of repayment. This in itself will not solve the problem. What we need is a totally new approach to financing access to housing – one that is not based on lending large sums of money over twenty five years. We should rely on only the private sector to provide home loans.

Think of it this way – people are financing cars costing between £20,000 and £50,000 without facing the up-hill struggles they experience when trying to finance a home to live in. Cars do not hold their value as much as homes over a period of years. The chance of a car being written off due to an accident is considerably higher than loosing a home due to, say, fire or natural disaster.

Housing is an issue of fundamental importance; many other aspects of our lives are pivoted on having a suitable and satisfactory home. If our country is to become a better place in which to live over the next twenty years or so, we must be able to deal with the housing crisis that we face today.

References

February 2017. YMCA response to housing white paper.

February 2017. The housing white paper.