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CN Briefing: Housebuilding; build-to-rent; offsite manufacturing

Go to any housing conference and you will be told three things:

  • We need more homes
  • We need more homes quickly
  • We don’t have enough workers to deliver the homes we need

It was no different at today’s Urban Land Institute residential conference.

Research shows we’ll need a staggering 90,000 new workers to deliver the 230,000 homes a year that need to be built.

But ULI vice-chair, Cast consultancy CEO Mark Farmer, believes we need to end our fixation with numbers and concentrate on how we are actually going to deliver homes at speed.

Key to this will be offsite manufacturing, which by consensus is seen as the future of housebuilding.

However, it’s clear there are a number of barriers preventing firms from investing.

For one, companies investing in an offsite factory need to have certainty of supply – something that private ownership housing cannot provide due to the stop/start nature of the market.

Given this, why is the government so focused on homeownership, when the build-to-rent sector can provide this much-needed flow of production?

It was a question posed by a number of delegates this morning.

Luckily, housing minister Brandon Lewis was there to provide answers.

He made no apologies about the government’s push for homeownership, arguing that policies including Help to Buy, direct delivery and estate regeneration funding would all provide a clear pipeline to enable firms to invest in innovative delivery, including offsite manufacturing.

But looking at the track record for offsite manufacturing so far casts some doubt over the minister’s claims.

Laing O’Rourke and, more recently, Legal and General are the only two organisations to have invested in any significant way in offsite manufacturing.

It’s still early days for L&G, which has yet to begin production. Its head of residential James Lidgate was keen to stress today that despite breathless headlines about the insurance giant setting up a network of factories across the UK, its Leeds facility is very much a pilot.

Furthermore, most companies are not willing to take the kind of long-term view on investment that L&G can.

As Barratt’s group land and planning director Philip Barnes said, companies such as his operate on a return on capital investment model, and so will not take on that level of risk. They would much rather let others take the plunge and then follow once it’s tried and tested.

So where does this leave us?

For Mr Farmer, only a collaborative approach will work. While the construction industry must drive modernisation, it cannot make a difference without the support of government, clients and funders.

Perhaps with a little government support for the build-to-rent sector, as even housebuilders are urging, we’d see a few more companies taking that leap into the unknown.

In other news

A Sweett Group trading update has revealed a £5.1m financial hit to the company, following an SFO probe and the consultant’s MENA exit.

Have a read of this roundtable write-up by deputy editor Tom Fitzpatrick on payment moving into the digital age.

A devolution deal is driving construction opportunities in new East Midlands powerhouse – want to know more?

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