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Without embracing MMCs the construction industry cannot solve the housing crisis – Barclays

by: Matt Aston, new build manager at Barclays Mortgages
  • 19/08/2019
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Without embracing MMCs the construction industry cannot solve the housing crisis – Barclays
PropTech is moving at a rapid pace and helping to shape the modern housing market. Innovation is high on the agenda for most firms operating within the industry and that is particularly the case in the construction sector.


This is an area looking to generate a range of solutions to help close the labour skills gap, create environmentally sustainable buildings and challenge how quickly good quality homes can be built.

In order to do this, it is increasingly turning to modern methods of construction (MMC) – modern, but not always new.

Prefabricated housing was commonplace after the Second World War, while student accommodation and hotels have successfully tapped into the use of off-site manufacturing over the past couple of decades.

We are now starting to see those principles being embraced with real intent across all forms of tenure – owner occupiers, social housing, shared ownership, retirement living and Build to Rent – in an effort to address the UK’s housing crisis and help increase supply levels to reach the government’s delivery goal of 300,000 new homes each year. 


What is modular construction? 

Modular, MMC or pre-manufactured are generic terms used to cover all processes intended to reduce the amount of on-site construction activity.

This could include component sub-assembly (light fittings, windows, door furniture); panel systems; bathroom pods, multiple pods to form apartments or even complete houses. 

Traditional construction methods have been used for many years and are well understood by consumers and the construction industry. Traditional housebuilders favour the established approach and there is currently a limited adoption of MMC, but our expectation is that this will change, for several reasons. 

Also relevant in developing and shaping the construction industry is the advancement of construction robotics – from 3D printing to brick laying robots used onsite during masonry construction.


How can modular construction play a more meaningful role in addressing the housing crisis? 

The house building industry, with its existing operating model and structure, looks unable to deliver the number of homes required to address the UK housing crisis. Addressing the housing shortage is a political priority and there is increasing policy support for innovative methods to unlock supply.


How can the construction industry attract and retain talent in this challenging market?  

This is certainly a challenging area for housebuilders due to the current low level of new entrants, an ageing existing workforce and the impact that political uncertainty may have on the future labour pool.

On a more positive note, modular construction requires a more varied skillset and offers improved safety and working conditions. Factors which could attract a different kind of workforce to potentially breathe new life into the construction industry.


How are lenders supporting the new build process? 

Innovation remains key for developers and housebuilders, whether this be via construction types or ways in financing a range of projects. And it’s important for lenders to support this process where possible. 

In terms of our work as a lender, we have – in partnership with Homes England – recently agreed £155.3m of loan funding to accelerate the construction of hundreds of new homes in Wimbledon and Southampton.

We’ve also increased lending on new build up to 90 per cent loan to value (LTV) for houses and 85 per cent LTV for flats and maisonettes, and we remain at the forefront of the Green Mortgage movement.  

Many other lenders, large and small, are making similar moves to help grow the new build sector and there is every reason to suggest that this support network will continue to strengthen despite any lingering political and economic uncertainty.


The intermediary opportunity 

When looking at the construction industry and MMC, it’s clear that a balance needs to be found between quantity, quality, affordability and accessibility.

This remains an ongoing challenge but one which the intermediary market would benefit from gaining a better general understanding of.  

A greater number and wider variety of opportunities will continue to emerge from the new build sector.

And it will be those intermediaries who are best positioned to recognise which kinds of doors these might open, and for what type of client, who will put themselves in a prime position to maximise this potential.


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